This guide is for informational purposes only. Reach out to your tax advisor for any consulting or advice.
Swedish tax residents will be liable to pay capital gains tax on any realised gains on investments in a fund. This means that capital gains tax isn't due until the fund units have been sold, exchanged, or otherwise transferred. The gains on the fund units are calculated as the difference between the selling price and the acquisition price including any cost of the sale. The current tax rate levied on capital gains is 30 percent.
Tax is also due on a standard income amount calculated on the basis of the invested capital in a fund. The capital base that is subject to taxation is the invested amount at the beginning of the calendar year. The standard income is then 0.4 percent of the capital base. The standard income amount that should be reported in the tax return is then taxed at a tax rate of 30 percent. This means that the effective tax rate is 0.12 percent of the amount invested at the beginning of the year. The standard income amount should be calculated using the value of the assets, in SEK, as of January 1.
Finally, distributions from a fund that are provided in the form of cash or new units in the fund are taxed when the distribution is received by the individual. Distribution of new shares is recognized at the market value of the shares on the date of the distribution. The applicable tax rate is 30 percent of the distributed value.
All taxes in Sweden will be levied in Swedish krona (SEK). This means that when calculating the capital gain, the acquisition price should be calculated using the current foreign exchange rate at the date of acquisition. The same applies when calculating the selling price or tax on any distributions. The current foreign exchange rate at the date of the transaction should be used.
The above applies even if Wise were to use an Irish or Luxembourg Money Market Fund, assuming that the Irish funds would have been UCITS funds before Brexit and no terms or conditions have been changed.
A sole trader using the product passively will be taxed as above and not as business income.