Question about 10-year rule
Skriven av EuropeanBro den 7 juni, 2018 - 22:32
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Hej,
I found this forum by googling for the Swedish 10-year rule discussed here: https://www.skatter.se/?q=node/6974&page=1
I am stuck in international tax law and I am not sure if I understood everything in that thread correctly. My situation is as follows. I have been living in Sweden since 2013 and I have a large amount of unrealized capital gains (mostly non-Swedish ETFs and mutual funds, few individual stocks). Around 50% of the assets were bought in Germany where I lived before I moved to Sweden. Unfortunately, I never set up a KF account.
In the fall/winter, I will move to the U.S. on a H1B visa. All my assets are PFICs from the U.S. perspective and I want to dispose them and realize my gains. The question that blows my mind is where I realize the gains and how I will be taxed.
I know that I pay 30% when I dispose the assets in Sweden. Then I could just rebuy everything in the U.S., that is U.S. funds and ETFs. That's the worst case. My U.S. tax adviser tells me I could also sell the assets pretty much immediately after arriving to the U.S. and then potentially pay 0% (respectively a much lower tax determined by my income tax rate based on the mark-to-market taxation of PFICs) because as a non-resident alien the U.S. will only tax U.S. income, not foreign income, for the year 2018. Paying 0% seems to good to be true, but she says it's a loophole. However, that is conditional on Sweden, the moment I deregister in Sweden, gives up its tax claims on my unrealized capital gains. Unfortunately, Sweden giving up the tax claim does not seem to be the case generally (see the 10-year rule for unrealized capital gains).
But my understanding from the above thread is that the 10-year rule does not apply to mutual funds and ETFs (and from my google translate understanding of 3:19 Inkomstskattelagen)? Fwiw, I will cut all my ties to Sweden (I own no home, I have no family here).
What about the individual stocks that I have bought before I moved to Sweden, are they subject to the 10-year rule?
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You have not lived in Sweden for 10 years. Hence, the 10 year rule does not apply to yiou. But let Daniel confirm this.
<p>Mats</p>
Hej!
The 10-year rule does not apply to funds and ETF, so if you sell them after you move from Sweden they are not taxed in Sweden. The stocks are taxed if they are Swedish stocks or foreign stocks bought when you were living in Sweden.
Unfortunately, the 10-year rule does apply regardless for how long time you have been living in Sweden. It is enough that you have been living in Sweden.
Kind regards
Daniel
Daniel Andersson är skattejurist hos Skattepunkten AB
Thanks, that was my understanding too.
One brief follow up question. Let's say I stay more than 183 days in Sweden during 2018 and I move to the U.S. only for the last couple of months of the year. Then selling the ETFs/funds in the U.S. will unfortunately still trigger Swedish capital gains tax in 2018, right?
So then in theory I could move to a 3rd country before I get my visa for the U.S. to avoid being 183 days in Sweden... it is ironic that many of the funds would actually be tax free if they were sold in Germany because they were bought before a tax reform in 2009. Instead, I am facing a 30% tax in Sweden. So I am contemplating moving back to Germany for a couple of months to avoid hitting the 183 days in Sweden.
No, you will be limited taxable from the day you move from Sweden so if you move to USA let us say 30 of the September, then Sweden will not be able to tax the funds/ETF if you sell them the 1 of September or after.
Kind regards
Daniel
Daniel Andersson är skattejurist hos Skattepunkten AB
Wow, then I will indeed end up paying 0% tax on my gains froms funds and ETFs if I realize them after, say 30th of September, and before 1st of January 2019 because the U.S. will not be able to tax them either because I don't fullfill their substantial presence test.