Significant Developments In Domestic Tax Legislation

The proposal by a Committee to introduce management and control as a criteria for residence in Sweden has not yet been submitted to the Parliament.

The Ministry of Finance has proposed some amendments as regards restructuring of companies:

A. Today it is possible to sell the shares in a subsidiary to a foreign group company at a loss and get deduction for the loss (if it is a "real" loss) against other incomes of the selling company. It is proposed not to admit deductions for such losses on sales taking place after the end of 1996.

B. Today it is possible to get a postponement of the taxation if a transfer of shares take place in accordance with the rules in the EG-merger directive in the form of an exchange of shares. It is also possible to get a similar tax deferral under domestic legislation. Under the merger directive the gain to be postponed shall be decided on at the time of the share exchange as well as the acquisition value of the received shares while under the