Title: Dormant companies – Taxation of closely held companies Problem: Many companies are facing a business transfer and fall within a smaller company with a few owners and therefore that tax jurisdiction is current. They risk facing high taxes but it can be avoid by setting the company in an inactive status for five years. Purpose: The purpose is to describe the inactive company rules and the verdict from the Swedish Supreme Administrative Court. Also to investigate how this verdict will affect company sellers. Method: Based on a case study and by analyzing the Swedish Law conclusions has been determinate. Result: A dormant company must be inactive for five years, and then the company can benefit from a different taxation. The owner and it´s relatives can´t be active in the company during this five year period. The tax benefit, in percentage, is at its highest level when lower transaction cost takes place. The higher transaction cost the lower percentage difference occurs. Even if the percentage difference is at its lowest for high transaction costs the difference in currency is higher the higher the transaction cost is. It’s up to every individual to decide if the five year inactivity time is worth the beneficial taxation.

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.

Ansökan om lagfart som blir vilandeförklarad vid köp av del av fastighet kan användas för att säkra ägandet. En expeditionsavgift à 825 kronor skall erläggas av köparen när vilandebeslutet tas. Ytterligare en expeditionsavgift à 825 kronor skall erläggas av köparen när den vilande lagfarten blir en beviljad lagfart eller avslagen. Vid motbeslutet uppskov skall ingen expeditionsavgift erläggas för när beslut om uppskov tas. En expeditionsavgift à 825 kronor skall erläggas av köparen när uppskovet blir en beviljad lagfart eller avslagen.  Denna studie är begärd av Lantmäteriet och grundar sig i frågan om ett avskaffande av expeditionsavgiften skall ske. Syftet med denna studie är att öka kunskapen kring vilande lagfart vid köp av del av fastighet. Studien undersöker även om expeditionsavgiften påverkar köparens tillvägagångssätt vid köp av del av fastighet. Målet med denna studie är att klargöra hur fastighetsmarknaden ser på expeditionsavgiften för lagfartsansökan som får ett vilandebeslut.    För att ta reda på svaret till studiens vetenskapliga frågeställningar har två metoder tillämpats. En kvalitativ studie där intervjuer med tre olika målgrupper har valts ut samt en kvantitativ studie där statistik ur Fastighetsregistret har undersökts.    Studiens resultat visar på brist i kunskap om vilande lagfart hos studiens målgrupper. Resultatet visar även att fastighetsmäklare och banktjänstemän sällan rekommenderar försäljning av del av fastighet. Det brister även i informationen ut till kunder och berörda parter om i vilket skede en lagfartsansökan kan göras vid köp av del av fastighet. Handläggare från Fastighetsinskrivningen letar efter orsaker till att lagfartsansökan skall få ett uppskov istället för ett vilandebeslut för att kunden skall slippa den dubbla expeditionsavgiften, vilket tyder på ett ohållbart system. Studiens diskussion omfattar de åsikter som framkommit från studiens resultat. Dessutom diskuteras hur ett avskaffande av expeditionsavgiften för vilande lagfart skulle påverka köp av del av fastighet.    Slutsatsen för studien är att fastighetsmarknaden överlag ser på vilande lagfart vid köp av del av fastighet som ett misstag eller som att något saknas istället för en trygghet. Samt att användning av vilande lagfart vid köp av del av fastighet inte skulle ändras vid köp av del av fastighet. / An application for registration of ownership that is dormant declared when buying a part of a property can be used to secure ownership. An expedition fee of SEK 825 must be paid by the buyer when the dormant registration of ownership is taken. An expedition fee of SEK 825 is to be paid by the buyer when the dormant registration of ownership becomes a registration of ownership or becomes rejected. In the case of a respite decision no expedition fee is paid for the respite decision. An expedition fee of SEK 825 shall be paid by the buyer when the respite decision becomes a registration of ownership or becomes rejected.  This study is requested by Lantmäteriet and is based on the question of whether an abolition of the expedition fee should take place. The purpose of this study is to increase the knowledge of dormant registration of ownership during the process of buying a part of a property. The study also examines whether the expedition fee affects the buyer's approach when buying a part of a property. The aim of this study is to clarify how the real estate market looks at the expedition fee for the application for registration of ownership that receives a dormant decision. To find out the answer to study's research questions, two methods have been applied. A qualitative study in which interviews with three different target groups have been selected and a quantitative study in which statistics from the Real Property Register have examined. The results of the study show a lack of knowledge of dormant registration of ownership among the study's target groups. The result also shows that realtor and bank clerk rarely recommend sale of a part of a property. It is also a lacking information to customers and interested parties about the stage at which an application for registration of ownership can be made when buying part of a property. Registration clerks at Registration of real property are looking for reasons why the application for registration of ownership should receive a respite decision instead of a dormant decision for the customer to avoid the double expedition fee, which indicates an unsustainable system. The study's discussion covers the opinions that emerged from the study's results. In addition, it is discussed how the abolition of the expedition fee for dormant registration of ownership enforcement would affect the purchase buying a part of a property. The conclusion for the study is that that real estate market generally looks at dormant registration of ownership during the process of buying a part of a property as a mistake or as something missing instead of a security. And that the use of dormant registration of ownership when buying a part of a property should not be changed.