On the 26th of January 2010, the Supreme Administrative Court in Sweden gave five rulings which greatly affect the possibility to keep a close company within a family by transferring the ownership of the company to the next generation. The five rulings concern the interpretation of the prerequisite, same or similar activity, which can be found in section 57, clause 4 of the Swedish Income Tax Act.     The prerequisite is fulfilled when an entire or parts of a business is transferred to another close company and the receiving company’s business activity is within the framework of the transferring company’s business activity or when the companies have a similar connection. Depending on which shares that are being evaluated, the prerequisite can refer to both the shares in the receiving or the transferring company. When the prerequisite is fulfilled, a standardized amount of the business income will be taxed as capital gains and the surplus will be taxed as earned income. This tax treatment will continue as long as the original shareholder or a family member is active in either of the companies.  The present interpretation of the prerequisite results in problems when shareholders want to transfer ownership of the company to the next generation and at the same time place some of the business income in a passive asset management company. The current interpretation of the prerequisite shows that the shares in the asset management company are affected and will continue to be affected by the previous business activity, when it is controlled by the next generation. Therefore, the special tax treatment will continue to affect the original shareholder.   The current interpretation of the prerequisite results in a more favorable tax treatment when the original shareholder sells the company to a third party instead of transferring ownership to the next generation.