Advanced

Beskattningskonsekvenser vid flytt av fåmansföretag utomlands - enligt intern rätt, dubbelbeskattningsavtalsrätt samt EG - rätt

Eierborg, Maria (2008)
Department of Law
Abstract
This thesis sets out to examine which tax consequences might arise when moving a closely held company abroad, according to Internal Law, European Community Law (EC Law) and Double Taxation Treaties. To be able to illustrate the tax consequences I have chosen to look at a specific case where a shareholder undertakes a sale of shares of his Swedish company to a foreign company also owned by him. Thereafter the foreign company sells the shares of the Swedish company and the shareholder moves abroad. If an undervalue sale is made to a foreign company chapter 53 IL (Swedish Income Tax Law) stipulates that the sale of the shares are regarded to have taken place at market value. The European Court of Justice (ECJ) found in the X and Y case that... (More)
This thesis sets out to examine which tax consequences might arise when moving a closely held company abroad, according to Internal Law, European Community Law (EC Law) and Double Taxation Treaties. To be able to illustrate the tax consequences I have chosen to look at a specific case where a shareholder undertakes a sale of shares of his Swedish company to a foreign company also owned by him. Thereafter the foreign company sells the shares of the Swedish company and the shareholder moves abroad. If an undervalue sale is made to a foreign company chapter 53 IL (Swedish Income Tax Law) stipulates that the sale of the shares are regarded to have taken place at market value. The European Court of Justice (ECJ) found in the X and Y case that the Swedish rules are not compatible with the EC Law. The Swedish Government has therefore proposed changes of these rules of law. A shareholder should from now on be able to sell the shares to undervalue without any tax consequences. However, the changes will only apply to EES countries. By differences in States tax legislation, articles in Double Taxation Treaties and the EC Law, a shareholder can realise retained profits from capital gains deriving from the sale of shares with practically no tax. By introducing the ten year rule in the Swedish legislation the legislator has tried to prevent an erosion of the Swedish tax base. The meaning of the ten year rule is that individuals once resident in Sweden remain tax liable in Sweden for capital income deriving from the sale of shares of Swedish companies, up until ten year following the change of tax residency. The Swedish Government has now proposed that the ten year rule will be extended to also be applicable on foreign shares. However, this proposed extension will only have effect in those cases where the shareholder emigrates to a State that have not got a Tax Treaty with Sweden or where Sweden have the right of taxation on capital gains of foreign shares. Furthermore, the Government has proposed that an investigation should be undertaken concerning the possibility to implement an exit tax combined with postponement system. To formulate a system with exit taxes in compliance with the fundamental rights of the EC treaty will not be an easy undertaking. The basic purpose of the CFC legislation is to prevent an erosion of the Swedish tax basis. A proposal of changes in chapter 39 IL has been made by the Government in regard of the ECJ findings in the Cadbury Schweppes case. The proposition entail a possibility for partners in low tax rated companies situated in the EES to be excepted from the CFC legislation. The partner must be able to show that the foreign company has undertaken a genuine establishment and is having a genuine economic activity. If an artificial arrangement is at hand the CFC legislation will probably be applicable. According to the case law of ECJ it is not a violation of the EC law to establish a company abroad even if the only purpose is to get tax benefits. However, there are justification rules that might be applicable and tax evasion rules can be used. A Supreme Administrative Court judgement in May 2007 has created uncertainty in cases with undervalue transactions. It is possible that the Swedish Tax Evasion Law is applicable in the case where an undervalue transaction is part of a chain of planned transactions and the main purpose is to avoid taxation in Sweden. (Less)
Please use this url to cite or link to this publication:
author
Eierborg, Maria
supervisor
organization
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Skatterätt
language
Swedish
id
1557046
date added to LUP
2010-03-08 15:55:20
date last changed
2010-03-08 15:55:20
@misc{1557046,
  abstract     = {This thesis sets out to examine which tax consequences might arise when moving a closely held company abroad, according to Internal Law, European Community Law (EC Law) and Double Taxation Treaties. To be able to illustrate the tax consequences I have chosen to look at a specific case where a shareholder undertakes a sale of shares of his Swedish company to a foreign company also owned by him. Thereafter the foreign company sells the shares of the Swedish company and the shareholder moves abroad. If an undervalue sale is made to a foreign company chapter 53 IL (Swedish Income Tax Law) stipulates that the sale of the shares are regarded to have taken place at market value. The European Court of Justice (ECJ) found in the X and Y case that the Swedish rules are not compatible with the EC Law. The Swedish Government has therefore proposed changes of these rules of law. A shareholder should from now on be able to sell the shares to undervalue without any tax consequences. However, the changes will only apply to EES countries. By differences in States tax legislation, articles in Double Taxation Treaties and the EC Law, a shareholder can realise retained profits from capital gains deriving from the sale of shares with practically no tax. By introducing the ten year rule in the Swedish legislation the legislator has tried to prevent an erosion of the Swedish tax base. The meaning of the ten year rule is that individuals once resident in Sweden remain tax liable in Sweden for capital income deriving from the sale of shares of Swedish companies, up until ten year following the change of tax residency. The Swedish Government has now proposed that the ten year rule will be extended to also be applicable on foreign shares. However, this proposed extension will only have effect in those cases where the shareholder emigrates to a State that have not got a Tax Treaty with Sweden or where Sweden have the right of taxation on capital gains of foreign shares. Furthermore, the Government has proposed that an investigation should be undertaken concerning the possibility to implement an exit tax combined with postponement system. To formulate a system with exit taxes in compliance with the fundamental rights of the EC treaty will not be an easy undertaking. The basic purpose of the CFC legislation is to prevent an erosion of the Swedish tax basis. A proposal of changes in chapter 39 IL has been made by the Government in regard of the ECJ findings in the Cadbury Schweppes case. The proposition entail a possibility for partners in low tax rated companies situated in the EES to be excepted from the CFC legislation. The partner must be able to show that the foreign company has undertaken a genuine establishment and is having a genuine economic activity. If an artificial arrangement is at hand the CFC legislation will probably be applicable. According to the case law of ECJ it is not a violation of the EC law to establish a company abroad even if the only purpose is to get tax benefits. However, there are justification rules that might be applicable and tax evasion rules can be used. A Supreme Administrative Court judgement in May 2007 has created uncertainty in cases with undervalue transactions. It is possible that the Swedish Tax Evasion Law is applicable in the case where an undervalue transaction is part of a chain of planned transactions and the main purpose is to avoid taxation in Sweden.},
  author       = {Eierborg, Maria},
  keyword      = {Skatterätt},
  language     = {swe},
  note         = {Student Paper},
  title        = {Beskattningskonsekvenser vid flytt av fåmansföretag utomlands - enligt intern rätt, dubbelbeskattningsavtalsrätt samt EG - rätt},
  year         = {2008},
}