On 20 November 2018, the Stockholm Administrative Court decided that dividends to eleven persons who indirectly owned units in the private equity firms Valedo Fund I AB and Valedo Fund II AB, shall only be taxed in the capital income tax category.
The reason is that the so called third party rule is applicable.
Vinge acted for the companies in the civil proceedings where the court decided that neither Valedo I nor Valedo II has a structure which is typical for a private equity firm. The so called third party rule is thus applicable. The rule entails that passive and active shareholders are taxed according to the tax rate for capital income provided that the passive owners have a profit share of at least 30%.
An international and traditional structure for private equity firms makes the shareholding qualified, which means that dividends are taxed in both the income category of services and the income category relating to capital. For the operations which are focused within the Nordic region, it is more beneficial to combine the operations in a company with a Swedish limited liability company structure.
The Administrative Court considers that the dividend structure in Valedo I and Valedo II has not counteracted the purpose of the rules governing dividends in respect of qualified holdings. Accordingly, no special grounds exist and the third party rule shall thus apply.