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Brussels, 18 September 2008

Direct taxation: Commission requests Sweden to change restrictive exit tax provisions for companies

The European Commission has formally requested Sweden to change its tax provisions which impose an exit tax on companies ceasing to be taxable in Sweden. The provisions are incompatible with the freedom of establishment as guaranteed by Article 43 of the EC Treaty and Article 31 of the EEA Agreement. The request takes the form of a reasoned opinion (second step of the infringement procedure provided for in Article 226 of the EC Treaty). If there is no satisfactory reaction to the reasoned opinion within two months, the Commission may decide to refer the matter to the Court of Justice of the European Communities.

Under Swedish Law[1] an exit tax is levied on unrealised capital gains, and deductions made for the untaxed reserves if the company is no longer taxable in Sweden upon a change of the seat or place of effective management or in case a permanent establishment ceases its activities in Sweden or transfers its assets to another Member State.

Such provisions are likely to dissuade companies from benefiting from the freedom of establishment and, as a result, these Swedish provisions constitute a restriction of Article 43 EC.

The Commission's opinion is based on the EC Treaty as interpreted by the Court of Justice of the European Communities in its judgment of 11 March 2004, in Case C-9/02, Lasteyrie du Saillant, as well as on the Commission's Communication on exit taxation (COM(2006)825 of 19 December 2006).

The Commission's case reference number is 2007/2372.

For the press releases issued on infringement procedures in the taxation or customs area see:

For the latest general information on infringement measures against Member States see:

[1] Mainly Chapter 22, Section 7, 1st Paragraph read in conjunction with Chapter 22, Section 5, 4th Paragraph, and Chapter 30, Section 8, 4th Paragraph of Inkomstskattelagen.

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