(edit title) Captial Gains Tax Loss How Does it Work in Sweden Options

[Mib]

Hi,

I made a loss last year when I lost money on some shares in the UK. Can you off set the loss against my tax liability for last year which was purely based on income...not any CGT? ie. I paid 10,000kr tax for last year on my income and say I lost 2,000kr in shares, does that mean I could reduce my tax liability to only 8,000kr? Or is there another way to use that loss to reduce my tax liability?

Thanks in advance.

[Yorkshireman]

Depends if You are Tax resident or non-Tax resident in Sweden. Which are You?

non-Tax residents are only liable for taxes/rebates on Sweden sourced income.
Tax Residents are liable for taxes/rebates on Global Income.

Which are You?

(btw... Sweden does not have CGT, it is translated into income)

[John.Smith]

Sorry to hijack but related topic...

I have a property in Ireland that I need to sell. I expect to make a loss on same of about €40k (couldn't have come at a worse time but that's life). I will end up owing the bank this amount on the balance of the mortgage on the property but they are agreeable for me to repay this over a period of time which is thankfully manageable.

However, would I then be entitled to offset some of this loss against my earnings for this year? I pay about 200k sek a year in tax (approx). Any damage limitation would come in handy right now!!

[Yorkshireman]

@John.Smith, same applies here, depends if You are a Tax-Resident in Sweden or not.

If YOu are then Yes, there is something You can do, You fill out form K5 (If I remember correctly) detailing the purchase price, selling price etc... I guess You didnt do anything in SEK, so the conversion rate that is to be used is that that was valid on the date of purchase and again on the date of sale converting to SEK. (not sure what source the rate is taken from!)

That net result goes into the declaration for the tax year the sale is done, so if it isn't done already, but will be this year, then next years declaration due May 2013.

The net result goes into the declaration as a loss on income from kapital, and can only claim 50% of that, then a calculation is used, if (loss/2) > 100.000 SEK then the amount the tax office calculates will work out as 30.000 SEK + 21% of everything over 100.000 SEK. If (loss/2) < 100.000 then 30% of (loss/2)

[Mib]

I am tax resident in Sweden

[Yorkshireman]

I made a loss last year when I lost money on some shares in the UK. Can you off set the loss against my tax liability for last year which was purely based on income...not any ... (show full quote)

I made a loss last year when I lost money on some shares in the UK. Can you off set the loss against my tax liability for last year which was purely based on income...not any CGT? ie. I paid 10,000kr tax for last year on my income and say I lost 2,000kr in shares, does that mean I could reduce my tax liability to only 8,000kr? Or is there another way to use that loss to reduce my tax liability? ... (hide full quote)

Since You are a Tax resident of Sweden, then You declare Global income.
Share dealings are classed as income from capital.
Off-top-of-head, it is form K4 You need to fill in. (K5 was for property?)

It gets complicated for share dealing because You have to list all the trades,
and calculate the omkostnadsbelopp (Tax Basis, and average price or Sweden's favourite word schablong! Always makes Me chuckle, Waynes World ...Shwiiing... )

OK, a simple example, with nice numbers ... and using average price.

Bought 100 x UK Ltd for 10.000
omkostnadsbelopp (Tax Basis) = 10.000
Genomsnittligt omkostnadsbelopp (Average price) = 10.000 / 100 = 100
Sold 100 x UK Ltd for 8.000
Profit/Loss = (Sold price - (average price * shares sold)) = (8.000 - (100 * 100)) = -2.000

(The above is more-or-less what goes in K4)

The -2.000 result is what goes into main tax declaration.

To make it 1 step further, so You see a little effect of the average price...

Start with Your 100 UK Ltd = 10.000
Buy 100 more UK Ltd for 8.000
Total Tax Basis = 18.000
Average Price = 18.000 / 200 shares = 90

Sell 100 x UK Ltd for 9.000
Profit/Loss = (9.000 - (90 * 100)) = 0

It gets a little more involved if there are share-splits, and multiple trades, and mixture of profit and loss

The next part the Tax Office handle, based on the total figures on the declaration.

An income from capital loss is deductable to 70% of other capital income,
For a total loss in income from capital then for shares I believe it is a tax reduction (refund) of 30% of the loss, if the loss is greater than 100.000 then it is 30.000 + 21% of the amount over 100.000.

Note, depending upon if You have been here for a few years, and not previously declared share trading outside of Sweden, then it is possible they will want to do a control check, and if they believe it economic enough, maybe even go back a few years, to make sure that profits were also declared!

Get out of jail free clause!.
This is just My understanding, and it can be completely wrong!, especially the math at this time in the evening. Check with Skatteverket

[Kibiri]

If you made 2000 sek loss, then you get tax reduction for 70% of it at capital income tax rate, which is 30%.
2000 * 0.7 * 0.3 = 420 sek - or you could say 21% tax return.

If one stock made 3000 sek loss, and another made 1000 sek gain, then you simply offset your loss with gain, and say (3000 - 1000 = ) 2000 loss. So gain is 100% offsetable from loss, or vice versa. But for fonds, skatteverket form was saying something like "if the fond is in the good-fonds list" then you offset. Otherwise you pay 30% on 1000 sek gain and get back 21% of 3000 sek loss. I don't know where is this list of fonds, or how UK stocks are treated in this manner.

But you don' t make these calculations, decide on offsetting etc., you just give to skatteverket what was your buy/sell price. If you sold partially instead of all at once, then you need to make Yorks calculations. In the buy-price you include the courtage, and from the sell-price you deduct the courtage - so it becomes the actual money you spend/get while buying/selling.