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TAXES

Tax authorities to investigate Swedish-owned firms overseas

Swedes who start companies in Estonia and Great Britain are to receive closer scrutiny from Swedish tax authorities.

Officials from Sweden’s National Tax Board (Skatteverket) suspect that many such companies are used to evade taxes on commercial activity taking place in Sweden.

Skatteverket’s Angela Langenskiöld told Dagens Nyheter (DN) that Swedes who start companies in Great Britain for a few pounds can then open subsidiaries in Sweden.

The number of Tax and Contributions Liability notification forms sent to Skatteverket from British subsidiaries operating in Sweden has tripled over the last three years.

Advertisements and marketing campaigns for starting a company in Estonia feature the country’s low taxes, including a corporate tax rate of 0 percent.

Taxes on dividends and income are also lower in Estonia than in Sweden.

Around 100 Estonian companies have filed notification forms with Skatteverket, according to DN.

The agency’s goal is to uncover cases in which foreign companies are set up with the sole intention of avoiding Swedish taxes.

“We also want to make sure those who are not acting intentionally are properly informed of the rules,” said Langenskiöld.

Skatteverket calculates that fraud and mistakes result in about 133 billion kronor in lost revenues every year.

For members

PENSIONS

Reader question: Do I have to pay Swiss taxes on my foreign pension?

Questions about taxes and retirement in Switzerland are among the most common ones for foreign nationals living here. Here is what you should know.

Reader question: Do I have to pay Swiss taxes on my foreign pension?

Once you begin to work in Switzerland, your employer will withhold a certain portion of your salary towards the obligatory pension scheme — that is, the AHV / AVS (the first pillar) and occupational one, BVG /LPP, also known as the second pillar.

You will pay half and your employer the other half, with amounts of contributions depending on your income. (Some companies, however, are more generous, and contribute more than the obligatory half to their employees’ pension funds).

READ ALSO: Everything you need to know about retiring in Switzerland 

Once you retire and start drawing first and second pillar pensions, you will have to pay taxes on it, as it is considered income.

(The only exceptions are certain types on the third-pillar private pensions). 

What about retirement funds you receive abroad?

If you have worked in your home country before moving to Switzerland and paid into a pension fund there, then yes, these pensions will be taxed as income in Switzerland — but only if this money is deposited into a Swiss bank account.

If, on the other hand, you keep these funds in a bank in another country and don’t transfer them to a Swiss bank, then they will be taxed there, but not in Switzerland.

But if you do receive your foreign pension in Switzerland, be ready to pay Swiss taxes on this money.

However, according to Moneyland consumer platform, “foreign old-age pensions are taxed differently, depending on whether they are comparable to Swiss pension funds or not. This will be decided by the tax office.”

This means that “withdrawals from pension funds which are considered similar to Swiss pension funds are taxed at the same reduced rate which applies to Swiss pensions when performed after you reach retirement age.”

‘Withdrawals’ is the key word here, because pension savings are not taxable while they are parked in a bank; you will pay tax on them once you withdraw these funds.

What happens if a foreign pension fund is not considered comparable to Swiss pension funds?

In such a case, assets held in the fund must be taxed as wealth and you do not benefit from lower income tax rates when you withdraw your assets.

READ ALSO: Does everyone have to pay Switzerland’s wealth tax? 

Keep in mind, however, that Switzerland has tax treaties with a number of countries.

Their goal is to prevent having to pay taxes — whether on retirement income or in general — both in Switzerland and your home country.

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