New rules in respect of Withholding Tax on redeemed shares are now under consideration by the Swedish Parliament.
Previously, when a shareholder receives payment because shares have been redeemed by the company, the Swedish withholding tax has hitherto been calculated on the whole amount. As from January 1st 2005, however, there are new rules. Withholding tax is still to be calculated on the whole amount but the shareholder is now entitled to apply for refund from the Tax Authority. As withholding tax shall not be paid on the cost of obtaining the transferred shares that part of the withheld tax can then be reclaimed by the shareholder.
The new rules are applicable not only on redemption of shares but also when the company acquires its own shares through a directed purchase offer.
The new rules have not yet been passed by the Swedish Parliament. The enactment can be presumed to take place rather shortly and we will keep our clients updated as soon as we have further information.