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Offshore investment bonds in Sweden

Offshore Investment bonds for Swedish residents, are taxed very differently compared to the UK. Investment bonds are often referred to as or “kapitalforsakringar”. The Swedish tax authorities use a yearly formula regardless of whether the investment bond has made a gain or not. They look at the value of the investment bond and whether you have made any additional contributions in the tax year.
If you are tax resident in Sweden, bonds are taxed using the formula below:
30% of (Surrender value of the bond on 1st January plus 100% of the premiums paid before 1st July plus 50% of the premium paid after 1st July X Government base rate + 0.75% or 1.25% if lower.
For example if an investment bond is worth SEK400,000 on 1st January and the Government base rate is 0.25% we would add 0.75% to give us 1.0% but this is below the minimum rate of 1.25%
Hence the yearly tax on the investment bond is SEK400,000 x 1.25% x 30% = SEK1,500
This is very different to the UK where gains are taxed as income in the hands of the bondholder. For offshore bonds in Sweden there is no tax on the following:

  1. Full or partial surrender.
  2. Death of the last life assured.
  3. Fund switching.
  4. Capital gains tax.

Furthermore, unlike many other European countries, there is no wealth tax and there is no inheritance tax. You do not need to report any gains on death. You cannot offset any losses against gains from other investments.

The above article is based on our interpretation of  Swedish law and we cannot accept any responsibility for any actions taken without us giving advice.

Read this article translated in Swedish.