Futures Day Trading in Sweden - Tax Implications

Discussion in 'Taxes and Accounting' started by Traderesque, Oct 7, 2019.

  1. Just wondering what the latest situation is in Sweden with regards to Futures day trading.

    I'm currently in London trade via a UK limited company and a US-based brokerage account. I'm considering moving to Stockholm and was wondering what the tax implications are.

    In the UK I pay about 19% Corporation tax and higher rate 32.5% tax on dividends (I have another company where I get my main income and salary) - so any dividend extracted would be at a higher rate or more.

    I've read that dividends are taxed at a flat rate of 30% in Sweden - is this the case even if you day trade or is it taxed as regular income?

    If day trading is your sole income how is your social security contributions calculated? are there any local/municipal taxes I need to be aware off.
    Douryan likes this.
  2. otctrade


  3. If you're trading in your own private name you can get away with the 30% capital gains tax. If you get an ISK (as linked above) you can currently (IIRC) effectively pay less than <0.5% of account value yearly owing to current low interest rates and pay no capital gains tax whatsoever. But I haven't heard anyone offering futures in an ISK (or if it's legally possible, but I would guess it is as I've been trading other derivatives on one).

    In short, Sweden has the last decade been a pretty good place to be rich in provided you're making capital gains from public companies/other financial instruments, not having your own business. It's likely going to change at some point provided social democrats retain power. Linking ISK tax rate to interest rates just shows that the people issuing this rule had no clue about how much wealth inequality it causes.

    I am not a tax attorney or even well educated in these matters, just describing what works for me and people I know for last few years.
    Last edited: Oct 7, 2019
  4. Thank you both - I saw someone mention the same type of account - there is an equivalent in the UK called an Shares & Stocks ISA (Individual Savings Account) - where you don't pay any capital gains tax or tax on dividends but you are limited to investing £20,000 max per year and you can only trade certain type of stocks or bonds - for example you can't trade US traded ETFs (but you can buy US stock).

    (using Google translate) I figured out that some of the banks over there offer this type of account but unclear whether anyone actually trades futures in these accounts.
  5. Kravm


    Hi, I can answer most questions about trading and tax in Sweden.

    If you want to trade and tax in Sweden, there are four structures you can use. 1. Traditional capital taxation for a individual investor - 30% tax on profits, 30% tax on dividends. Capital losses are deductable against other types of income. 2. Capital Insurance account - a really low tax percentage on the value of the account regardless of profits or losses. But shortsales over night not allowed. 3. ISK account - really similar to option 2. 4. Trading via a privately held company - flexible but very high taxes.

    Depending on your trading needs, a combination of tax structures might be the best (I use three of them).

    As for your question if the extent of your trading will impact the tax rate - no, only what tax structure used will impact the tax rate (there are tax court rulings about this).

    You might need a Swedish ID number to use some of the tax structures (like the ISK account mentioned above).

    If you use structure 1,2,3, there are no further municipal taxes.

    If you need any more specific information, feel free to PM me!
  6. Thanks Kravm - I will pm you later.
  7. Do you by any chance know of anyone offering kapitalförsäkring with access to foreign brokers like Interactive Brokers.

    I found one who did in fact offer access to IB in the past, but not anymore. I assume the answer is no, because I did not find anyone else.

    I am aware of Degiro’s ISK account.

    Thank you for your courtesy.
    Last edited: Oct 7, 2019
  8. This is correct and very unique for Sweden. I have not found any other country where this is the case - except for the usual no tax countries like Monaco, Dubai, Bahamas etc.
  9. There is no ceiling. However, you have to use a Swedish bank to open an ISK and trade through them, which makes almost any type of trading close to impossible. Many of the banks do not even offer a USD account to do the trading. You cannot short stocks. I am not sure whether you can trade futures, but even if you could I don't think the Swedish ISK providers offer access to CME.

    The 30% is still quite good though - with consistent profits in terms of taxes it is better than New York and LA.
    Last edited: Oct 7, 2019
    Traderesque likes this.
  10. Kravm


    No, after the introduction of ISK the Capital Insurance structure has become rather uncommon. Foreign providers like Victory Life or Friends Provident have for various reasons stopped offering the service.
    #10     Oct 7, 2019
    Maverick2608 likes this.