Trust Functioning in Sweden Jurisdiction

September 3, 2021
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Sweden is a jurisdiction with quite interesting holding legislation. Not only tax policy regarding dividends and capital growth in the country is compared with the concepts of Cyprus, but also at the same time in Sweden, tax-free distribution of resources within certain enterprises is allowed. A trust in Sweden is quite flexible, but at some points, this flexibility is not enough for practice. Further, the legislator of the jurisdiction tries to put some rules for combining flexibility, loyalty and quality of the structure. Therefore, developing a trust in this country and following it from scratch is a very time consuming procedure. In such a situation, experts of ELI Deal service are ready to help you. We offer reliable legal services on any issues related to setting up companies and obtaining licenses, consulting in the commercial field and accompanying a client at every stage of the procedure.

Main Points of Trust in Sweden

Now a trust in Sweden jurisdiction is one of the types of investment funds, the main feature of which is the transfer of property to a third person. When deciding to establish a trust, it is important to understand that in this case, control over the property transferred to the trust is lost. On the other hand, a trust agreement, which does not provide for the possibility of its termination unilaterally for the founder, is unlikely to be recognized as fictitious by the court. This circumstance significantly increases the degree of protection of assets from claims of creditors.  Advantages of establishing such a structure in this country are as follows.

  • Protection of beneficiaries, namely their wealth.
  • Registration procedure is one of the most flexible and efficient tax planning tools.
  • Asset protection. The trust establishment can provide protection against risks, such as the imposition of foreign exchange controls against the wealthy by the government.

To create a trust in Sweden, you do not need to be a millionaire; there are no requirements that call the starting amount of investments or assets. However, opening a trust, you need to pay attention to the little things, not just at the stage of selecting a good manager, but also when choosing a jurisdiction. Each state has its own benefits and requirements for registration. Before registering a trust, the owner must draw up a paper with the requirements for the distribution of profits from the share of all beneficiaries separately. If you open a non-fixed type of trust, then in the future the manager himself will make decisions on how to distribute the profit.

For trust funds, Swedish law does not provide for withholding tax on royalties and interest payments to a foreign company. However, for the purposes of calculating corporate income tax, royalties are considered income received by a foreign company from sources in Sweden and are therefore taxable on the use of intellectual property as part of the income of the permanent establishment thus formed.

The conditions when tax breaks work, are beneficial for owning shares, are beneficial for companies from states with high and medium taxes. However, given that this is a rather difficult procedure, you need to think about contacting professionals. The ELI Deal team of professionals that have been working in this area for many years and help to create not only trust in Sweden, but also other types of business.

If you are interested in this type of company, please see our offer

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