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Tax charged on International life insurance plans held by Residents of Sweden
Taxation of an Offshore Life Plan Before Benefits are Taken:
Yield tax is levied on foreign life insurance plans. A Swedish resident plan owner will be liable to pay an annual yield tax levied at a rate of 30 percent of a deemed yield on the exit value of the plan as at 1 January each year.
Swedish Yield Tax for 2018
For fiscal year 2018, the Swedish State Borrowing rate for 30 November 2017 was announced by the Swedish Debt Office (Sw. Riksgälden) on 23 November, amounting to 0.49%
On 30 November the Swedish parliament decided on the Swedish government’s proposal to increase the previous calculation for the base of taxation from State borrowing rate + 0.75% to the State Borrowing rate + 1% for both life assurance and investment savings account. The increase of the base for calculation with the additional 0.25% will come into force per 1 January 2018. The minimum threshold for taxation of life assurance and investment savings accounts that was introduced per 1 January 2016 of 1.25% is still valid.
It means that the effective annual yield tax rate for life insurance contracts in 2018 is 0.447% (1.49% x 30%).
Taxation of an Offshore Life Plan when Benefits are Taken:
Withdrawals, surrenders and payments upon the death of the last life assured should be free of tax. In addition, there is no wealth or inheritance tax in Sweden.
* The above is for information purposes only and should not be consider financial or taxation advice.