15 September 2008
Q&A – Taxation
Below you will find some questions and answers relating to the taxation of
the share savings programme in Luxembourg and neighbouring countries
(Belgium, France and Germany).
PLEASE NOTE that the information is only general and shall not be
considered as a comprehensive or exhaustive. The information relates to the
situation when the programme was launched and no general updates will be
provided. Additional information may be provided at a later stage with
respect to e.g. the reinvestment of dividends and allocation of Matching
Shares. The information should not be treated as a substitute for legal or tax
advice covering your specific situation. You are therefore encouraged to seek
independent advice at your own expense.
General questions
1.
How will I be taxed for the Matching Shares?
The Matching Shares will be given to you for free and will be considered as a
benefit in kind and taxable as employment income in Luxembourg. The
taxable benefit is equal to the fair market value of the Matching Shares
(market price) at the point in time the shares are delivered to the deposit
account. SEB Luxembourg will deduct the income tax and social security
contributions from your monthly gross salary.
2.
How will I be taxed for dividends on the Saving Shares?
For participants in the share savings programme who are resident outside
Sweden, a 15 % withholding tax will be deducted in accordance with Swedish
legislation and applicable double taxation treaties. This tax will be deducted
by SEB in Sweden and paid to the Swedish Tax Authority before the net
dividend is reinvested. Normally the gross dividend income is also subject to
income taxation in your country of residence and you have normally an
obligation to report the received dividend income to your local tax authority
regardless of the fact that is has been reinvested. Double taxation treaties
enable you to avoid double taxation of the dividend income, by allowing
various forms of set-off, deductions etc. of the Swedish withholding tax
against the local tax.
3.
What happens if I sell my shares with a profit?
The profit resulting from the sale of shares (Savings or Matching Shares) qualify as
capital gains. Such capital gains are taxable in your country of residence.
The capital gain will normally be equal to the difference between the acquisition cost
for the shares and the sale proceeds that you receive when you dispose of the shares.
15 September 2008
The acquisition cost for the Matching Shares will normally be equal to the taxable
benefit income amount.
If you sell your shares with a loss, you can normally match such loss against capital
gains on other shares. En some jurisdictions, you may even carry unused tax losses
forward to another year.
Expatriate questions
4.
I bought all the Saving Shares in Luxembourg and then moved back to
Sweden. When I receive the Matching Shares in Sweden, will the benefit
income be taxed in Sweden or Luxembourg (or both)?
From a Swedish perspective, the point of taxation occurs at matching and if you live
in Sweden at matching, the full benefit will be subject to income taxation in Sweden.
From a Luxembourg perspective, there is no specific legislation that applies to a
benefit that has “vested” in several countries during a qualification period. It could
possibly be argued that part of the benefit should be taxed in Luxembourg(pro rata),
based on how many days you worked in Luxembourg during the 3 year qualification
(vesting) period. If tax is payable in Luxembourg, you might be able to a set off such
tax against the Swedish tax, but it is not certain that the Swedish tax authorities
accept this. In the "best"-case scenario, you need to pay Swedish tax only to the extent
it exceeds the tax paid in Luxembourg and in a “worst”-case scenario, you will be
taxed in both countries.
5.
I bought all the Saving Shares in Luxembourg and then moved back to
Sweden before receiving the Matching Shares. Will any capital gain on the
shares (Saving and Matching Shares) be taxed in Luxembourg or Sweden
(or both) when I sell them?
If you sell the shares after moving back to Sweden, the Swedish Tax Authority will
charge tax on the full capital gain. The capital gain is taxed with a flat 30 % tax rate.
You will therefore not be able to benefit from the tax exemption in Luxembourg that
applies if you hold your Saving Shares for more than 6 month after acquisition or
your Matching Shares for the same period after they have been delivered to you.
15 September 2008
Summary – country by country
Luxembourg residents
Saving
Shares
The purchase of Saving Shares will not give raise to any income taxation in
Luxembourg
Dividends
Reinvested dividends are taxable in Luxembourg
Employee
tax reporting
obligation
Matching
Shares
The dividend is subject to a progressive income tax rate up to approx 39%,
with a 50% rebate
Based on the Double Tax Treaty, the 15 % Swedish withholding tax can be
offset against the tax in Luxembourg
Benefit of Matching Shares for free is taxable in Luxembourg
The benefit is subject to a progressive income tax rate up to approx 39 %
Capital
gains
Employee
tax reporting
obligation
Capital gains on the sale of Savings or Matching Shares are taxable in
Luxembourg
The capital gains are subject to a progressive income tax rate up to
approx 39%
If the shares are sold more that 6 months after the acquisition/allocation
of shares, the capital gains are exempt from tax
Belgian residents commuting to work in Luxembourg
Saving
Shares
The purchase of Saving Shares will not give raise to any income taxation
in Luxembourg or in Belgium
Dividends
Reinvested dividends are taxable in Belgium
Employee
tax reporting
obligation in
Belgium
The dividend is subject to a flat tax rate of 25%
Matching
Shares
Benefit of Matching Shares for free is according to the Double Tax Treaty
taxable only in Luxembourg; but the received benefit amount may have an
impact on the tax rate applied in Belgium on other Belgian sourced income
Employee tax
reporting
obligation in
Belgium
Based on the Double Tax Treaty, the 15% Swedish withholding tax is
deducted from the dividend, after which the flat tax rate of 25% applies
to the remaining 85%
The benefit is subject to a progressive income tax rate in Luxembourg up to
approx 39 %
Capital gains Capital gains on the sale of Savings or Matching Shares are in principle
taxable in Belgium
Employee
tax reporting The capital gains are exempt from tax if the transactions are considered as a
obligation in
normal management of private assets
Belgium
15 September 2008
French residents commuting to work in Luxembourg
Saving
Shares
The purchase of Saving Shares will not give raise to any income taxation in
Luxembourg or in France
Dividends
Reinvested dividends are taxable in France
Employee
tax reporting
obligation in
France
The dividend is subject to a progressive income tax rate up to approx 40% +
11% social charges or election for taxation at source at 29%
Matching
Shares
Benefit of Matching Shares for free is according to the Double Tax Treaty
taxable only in Luxembourg, but the received benefit amount may have an
impact on the tax rate applied in France on other French sourced income
Employee tax
reporting
obligation in
France
Based on the Double Tax Treaty, the 15 % Swedish withholding tax can be
offset against the tax in France
The benefit is subject to a progressive income tax rate in Luxembourg up to
approx 39 %
Capital gains Capital gains on the sale of Savings or Matching Shares are taxable in
France
Employee
tax reporting The capital gains are subject to a fixed global tax of 29%, if the gains exceed
obligation in
EUR 25.000
France
German residents commuting to work in Luxembourg
Saving
Shares
Purchase of Saving Shares will not give raise to any income taxation in
Luxembourg or in Germany
Dividends
Reinvested dividends are taxable in Germany
Employee
tax reporting
obligation in
Germany
The dividend income is subject to a flat tax rate of approx. 26 %.
Matching
Shares
Benefit of Matching Shares for free is according to the Double Tax Treaty
taxable only in Luxembourg, but the received benefit amount may have an
impact on the tax rate applied in Germany on other German sourced income
Employee tax
reporting
obligation in
Germany
Based on the Double Tax Treaty, the 15 % Swedish withholding tax can be
offset against the tax in Germany
The benefit is subject to a progressive income tax rate in Luxembourg up to
approx 39 %
Capital gains Capital gains on the sale of Savings or Matching Shares are taxable in
Germany
Employee
tax reporting
obligation in
Germany
From 2009 the capital gains are subject to a flat tax rate of 25% + solidarity
surcharge and church tax
15 September 2008