Response to interpellation 2023/24:284 on effective capital taxation upon relocation
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerns effective capital taxation upon relocation and deficiencies in the current ten-year rule. M argues that the issue is complex and that a new regulatory framework must not damage the business climate or the recruitment of foreign expertise. M emphasizes that they are working against tax evasion by updating the EU's list of non-cooperative jurisdictions and by investigating VAT fraud 1. S believes that the government does not intend to address the loophole in the tax legislation after they shelved an inquiry into exit tax 2. S argues that profits created in Sweden should be taxed here and advocates for effective exit tax regulations, bank tax, and increased pressure against tax havens 2 3.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Mathias Tegnér has asked me if I consider that there are problems with the current so-called ten-year rule and if I intend to take measures for an effective capital taxation upon moving from Sweden.
Among others, the Swedish Tax Agency and the National Audit Office have noted that there are problems with the effectiveness of the ten-year rule.
As I have explained in previous interpellation debates with, among others, Mathias Tegnér during 2023, the question of a reform of the ten-year rule is still being prepared within the Government Offices. The question of changes to the existing relocation taxation is complex, and there are different solutions to the problems that have been highlighted. Sweden is a small and open economy that builds its prosperity on trade and export. It is therefore important that any new regulatory framework in Sweden does not entail negative effects on entrepreneurship and the business climate or complicates the recruitment of foreign expertise in an unjustified way. It is also important to have clear and distinct rules that do not create unnecessary complications.
Mathias Tegnér (S)
Madam Speaker! I want to start by thanking Finance Minister Svantesson for the answer. We have now, for a period of a year, debated the issue of an exit tax and the problems with the current ten-year rule. In some ways, I appreciate today's answer more than the previous ones. In previous answers, it has appeared that the government will try to close the gap that exists in our tax legislation. But now I perceive the answer more clearly. The answer is – admittedly in political terms: We will not do a damn thing. In substance, I naturally regret that, but it is still reasonable that you stand by the choice of path. Thank you for that, Finance Minister!
For those of you who cannot count to ten on your five fingers, it is about the following: The current government chose to scrap the so-called exit tax investigation in January last year. The exit tax investigation was commissioned by the previous Social Democratic government in 2022. The purpose was to investigate the possibility of closing a loophole in our tax rules concerning persons who move from Sweden with unrealized capital assets. In practice, it often concerns successful medium-sized companies valued at over 10 million Swedish kronor where the owner or owners want to sell the company and would prefer to do so without paying tax on the capital gain or on untaxed reserves in the company. Historically, there has been a consensus here in the Swedish Riksdag that this type of transaction should be taxed in Sweden. These are profits that have been created in Sweden, and according to international tax principles, they should also be taxed here.
The Riksdag was in agreement when the rules were introduced in 1983. The Finance Minister's Moderate representative Anders Borg pushed through changes to the ten-year rule when it did not work a decade ago. What is actually remarkable today is that the government knows that the ten-year rule does not work. It commissions an investigation to address the problem, and instead chooses to do precisely nothing.
Madam Speaker! What worries me is that the Minister for Finance may have been influenced by the biased debate that has been conducted on editorial pages and elsewhere linked to an exit tax. I believe that the same newspaper's editorial page, which the other day called the Minister for Finance a leftist, has previously called earlier proposals for exit tax rules for a DDR for entrepreneurs in Sweden.
Then I want to remind the chamber of other DDR countries here in our vicinity such as Denmark, Norway, Germany, the Netherlands, France, Spain and Canada. All these countries, in fact, have functioning exit tax rules. The reason I bring this up is that the debate about an exit tax has, in many respects, actually been completely utterly unserious.
In his answer, the Minister for Finance says that the issue is now being prepared at the Government Offices. As I mentioned, I interpret that in this context as that the government does not intend to do a single thing. I want to ask the Minister for Finance: Is it the case that the government does not intend to do anything?
Then we do not need to have these interpellation debates, however pleasant they may be. I can work elsewhere to achieve a fair taxation in Sweden, and the Finance Minister can be on the other side of the water at the Government Offices. If it is the case that the Finance Minister claims that the government sees the problem and intends to do something, the Swedish people need to find out what the government intends to do.
Therefore, I ask the Minister for Finance: Is the interpretation correct? Is it the case that you do not intend to do a single thing about this hole in the Swedish tax legislation?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Thank you, Mathias Tegnér, for your diligence!
We have discussed this issue before. I will repeat what I have said in previous answers. The Government takes both tax evasion and tax avoidance seriously. We naturally want to defend the Swedish tax system so that we can improve welfare and secure the state's basic tasks. That is why it is so important to work to reduce aggressive tax planning and tax evasion.
Regarding the problems with the ten-year rule, both the Swedish Tax Agency and the Swedish National Audit Office have highlighted the issues. This includes, among other things, that the tax treaties are not fully applied. In the same way, an exit tax would have problems in its application. This includes, among other things, that it involves a taxation of a capital gain that has not yet been realized. It is unclear how it would function within the EU.
With that said, we are, of course, working hard to counteract both tax evasion and aggressive tax planning. As I have said before here in the chamber, that work was prioritized when we held the presidency in the EU. This was done, for example, by us leading the work on an update of the EU's list of non-cooperative jurisdictions in the tax area. That list was updated in October, and now there are three new ones that have been added.
All of this is important to oppose and counteract tax evasion and tax avoidance. In our work with tax treaties, we also work to actively improve our cooperation between countries regarding tax evasion. But more absolutely needs to be done. That is why we are also conducting a very active effort here at home.
Over the past year, I have, among other things, had the opportunity to receive two inquiries in this area. One is an inquiry regarding measures to prevent VAT fraud. The other is a partial report from another inquiry regarding a review of certain tax procedure rules to counter fraud and crime in the working life. Both of these inquiries were sent out for consultation as soon as they reached the Ministry of Finance. We will, of course, work with these.
Madam Speaker! Mathias Tegnér and I have debated this question several times here in the chamber. I hope that Mathias feels that he is getting a little closer to the answer. He has received an answer. This is my answer. Furthermore, it is my concluding statement this time. I will not add anything further to this debate. I wish the interpellator a continued pleasant week.
Mathias Tegnér (S)
Madam Speaker! I think it is important to zoom out when discussing this type of tax issues. Tax issues are extremely important for the cohesion in our society.
If one zooms out a little, we know that inequality is increasing in the world and has done so for several decades. A busload of the world's richest people own as much as half of the earth's population. In our country, five people own more than 5 million Swedes do. Since 2020, according to Oxfam, the world's five richest men have doubled their fortunes while 5 billion people have become poorer.
Then, of course, one must be serious when discussing statistics. Crises usually reduce inequality. That has also happened in certain respects. We know, for example, that the richest percent in the world currently own approximately 45 percent of the earth's total assets, which is marginally less than 49 percent 20 years ago. But I still believe that the fact that we can state that 1 percent of the earth's population owns 45 percent of the earth's total assets shows that the earth is an unfair place to live on.
The world is strikingly unequal. Therefore, an active policy was needed to reduce the gaps. Therefore, a government was needed that actively works on issues regarding gaps in our country but also works on issues linked to inequality and linked to tax evasion and tax avoidance.
Madam Speaker! On the contrary, the Government has lowered taxes for the richest and scrapped investigations that could have made Sweden more just. We know that increased inequality usually leads to lower trust between citizens and between citizens and the state. That is not what Sweden needs today.
What Sweden needs is for the tax evasion law to be expanded to include, for example, withholding tax on dividends. We need to update the bilateral tax treaties not only against Germany and France but also against other countries where it makes a difference. We must increase the pressure against tax havens. We must ensure that the Swedish Tax Agency's resources are prioritized. We must stop tax rules also within the EU that create low-tax jurisdictions within the union. We need to review the 3:12 rules.
Finally, as we are discussing here today, the ten-year rule probably needs to be updated so that Sweden also gets an effective exit tax regulation. In addition, as was discussed in the previous interpellation debate, Sweden would also benefit from a bank tax.
As the Minister for Finance points out in his response, Sweden also needs good rules for entrepreneurship and growth. On this, we are in complete agreement. Sweden is a small open economy that builds its prosperity on trade and export.
If the Minister for Finance had wanted to pursue a more effective business policy, our budget proposal with 175 million kronor more for Vinnova would have been a good example. Or why not reintroduce an active policy for startup and scaleup companies and strengthen the innovation infrastructure and perhaps stop the overhaul of our successful export strategy, which is currently being redesigned for ideological reasons? Or why not take responsibility for the green transition? There is much to be done to improve Sweden as a business country.
Madam Speaker! Finally, could the Minister for Finance also produce my old reports on the security systems for entrepreneurs? I actually happen to have a copy with me for the Minister for Finance which I intended to hand over in a little while.
TREDJE VICE TALMANNEN
The Minister for Finance announces that she waives the right to make further speeches in this interpellation debate.
(Finance Minister ELISABETH SVANTESSON (M): Madam Speaker! I thank Mathias Tegnér for the evening's entertainment.)
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.