Pre-Move Tax Planning for UK HNWIs Relocating to Sweden
What potential restructuring of investments should a UK HNWI (high net worth individual) consider before moving to Sweden to ensure minimal tax leakage and compliance administration?
Sweden's tax system varies greatly from the UK. Whereas employment income is heavily taxed, there is no wealth or inheritance tax, and capital gains are in general taxed at 30% as a maximum. Sweden does not acknowledge trusts which are commonly used in the UK for estate planning. Quite often the settlor and in some cases the beneficiaries are seen as the owner of the assets within the trust and taxed on an ongoing basis rather than on distributions.
Specific tax rules apply for dividends and sale of shares from closely held companies, where depending on the size of income range from 20%-55% and then down to 30% on larger amounts. Investment vehicles where a yearly yield tax is imposed and disbursements are free of tax are used on a frequent basis.
Given the differences, planning of potential restructuring is therefore crucial ahead of moving to Sweden to avoid an unexpected tax impact that could potentially have been avoided. How long one intends to reside in Sweden naturally has an impact on the extent of restructuring recommended.
The Experts
Director, Head of Expatriate Advisory Aspia
Partner, Individual taxation Skeppsbron Skatt