Gift tax - transferring money from abroad to Sweden (?!)

Hi Edin!

My answer is that you got the gift 2014 since you could claim the ownership first 2014. The reason is that before that date you couldn´t sell it or do whatever you wanted with the property since you were not the owner. Because of this you are not going to pay any gift tax.

Kind regards

Daniel  

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Hi Daniel!

Three more quick questions if u don´t mind

1.  Does it make any difference insofar as possible "hussle" with Skatteverket if the money is transferred all at once or in installments?

2.  Do I need to have all the documents pertaining to the property (the seeling/purchase contract + proof of gift from my mom + the restitution document proving ownership starting 2014...) translated into English/Swedish or Skatteverket will avail itself of its own translators?

3. Do I need to have my original deed of gift  (gåvobrev) "standardized" to meet any Swedish legal norms in form and content or the original one (verified by notary in Croatia) is just as valid??  If I need to change, how do I go about it?    Thanks!  /Edin

Hi Edin!

1 No, it doesn´t.

2 If Skatteverket ask they would like the original and then they translate them so you don´t have to do the translation yourself.

3 No, you don´t have to "standardized" to meet any Swedish legal norms.

Kind regards

Daniel

Regarding question 1, in previous years, banks have not reported transfers below ca 10 thousand Euros. I can add that I live in HR, am a Swedish citizen, and have transferred millions of SEK to SE from inter alia Saxobank Zagreb, and never been asked a question. Note though that banks have systems that should spot patterns. 

My advice though would be to leave the funds in a Croatian bank for 1 year at 0 interest which is what most of them pay and then transfer it to SE as the banking system here is not safe. The reason ? Well as you sold your property while a Swedish tax subject, SKV might want 22 percent tax on any profit you might have gained. In your case your entry value must be what the property was worth in 2014 when you received ownership. You might be able to skip this ie a K6 if you wait a year. If they then ask just say it a cash gift from a relative as SE does not have a gift tax. If they then ask for interest earned, just print out the bank account statement which will show 0 interest. If they ask again, write a gift letter. But as said, I have in recent years transfered millions from HR to SE and never been asked a question.

Also note that HR starting this year, report according to CRS - common reporting standard to inter alia SE, which includes property ownership. They will have reported to SKV all your acounts here, as well as your ownership of property, from January 1, 2016 and forward. Hence, if you sold your property prior to january 1, 2016, minor problem. Otherwise you might have to consider a K& in a so caled Swedish self correction. I have a Danish eighbor here, who is a tax resident in DK, who is going through this issue now as HR has reported her property to DK and they have a 3 procent property tax world wide she tells me (unlike Sweden). She is planning to sell, which will have tax consequences for her in DK as they do tax capital gains on prperty, as they do in Sweden, but do not in HR as we both know. Daniel et al can handle a self correction which might be wise to do if you sold after january 1 2016. In such an event, you will need an assessment of your entry value of the property 2014, receipts of home improvement costs  2014 till sale, receipt of transfer tax paid which was probably 5 percent of assessed value 2014 etc. But Daniel  can handle this. My Danish neighbor, of Croatian origin but a Danish tax subject, is doing this now. And note that SE has had no tax on foreignr Swedish property, i.e. a form on annual property tax since 2007. But your sale if it occured after 2016 might though trigger certain problems or risks in SE if 2016 and forward. Note also that I do not work for this site, but have been using them for years in an ongoing Swedish tax process. They are good, know their stuff, are easy to deal with, reasonable and even nice to deal with. I have nothing to gain from recommending them and your errand, assuming you sold after 2016, is rather simple and hence should not take much time, assuming you collect required documentation, to self correct. Good luck . But the people here are good. And if you have any questions about the DTA betwen SE and HR or HR tax law, that keeps changing, contact me here. I follow it closely as a resident of HR.

If sale after 2016, ypou can get eg a real estate agent or two to come up with an assessment if you decide to do a so called self correction. This you can, however ignore if you were not a Swedish tax subject at the time of the sale. Note though, that SKV can go back ca 5 years in time. Also note that your ownership probably already has been reported if you did not sell prior to january 1, 2016.

Correction, there is a HR capital gains tax on property, if you held it less than 2 years perhaps. I can check. If so, that tax, which would be 12 percent if any, is deductible from SE tax. But if sale before January 1, 2016, nothing has been reported to SKV. 

And please note that there is no gift tax in either SE or HR !

Thanks Daniel.

One more question though:

The money from the sale of the property in question (400 K EUR) will be paid to me in two installments:  the one has already been paid out (200K EUR) and the other (cca. 240 K EUR) is due to be paid in 3 years. The reason for this kind of lopsided payment is that I agreed with the construction company (who bought my construction lot) to be paid interest on the second installment (200 K EUR + 20% in 3 years) in exchange for "loaning" them the money to use in building a real estate property. Now, would the second installment, given it will have grown in these 3 years  (240 K EUR) be subject to gift tax exemption like the first??  If not, will I only pay tax for those "extra" 40K EUR?        Thanks!   /Edin

Hi Edin, seems to me that you need professional tax advice. First, you sold your lot while a Swedish resident, second youi are dealing with interest. Regarding the second I think tax is due when the second installment is paid according to the so called cash principle which applies in HR as well as SE. Who has the taxation right of this I do not know, but according to article 11 in the double taxation agreement, had I done a similar deal with HR residency, interest would be taxed in HR. I assume it is mirror image for you as a SE resident. But seems to me you need professional advice. I am sure Daniel can help you sort things out.

I can add that taxation on interest in Sweden is 30 percent, tax on real estate gains as a private individual is 22 percent. Good luck and let Daniel sort this out for you. I think the amounts also speaks for this. If Daniel has questions about the DTA he can contact me here or through Kaj

@ Matgus3

Thanks for your comments, but frankly - they´ve confused me more than anything. First off, Daniel says that my money is eligible for gift tax exemption, then I read your messages which I couldn´t understand as they contain references to generic financial and economic terms, procedures etc. and which speak of different "dangers" involving money transfer...? What dangers? If the money, as said, is exempted from gift taxation - then what are we talking about, why the fuss and complications?

As for the intererest on the second installment (200K EUR + 40K EUR) - do you mean I´d have to pay tax on the interest itself (40K) OR the whole sum (240K)??  Please be clear.     /Edin

@Daniel    -     could you please give me answer to my latest question insofar as the transfer of the second installment (including 20% interest as I´m lending the sum to the very company who bought my construction lot).  Do I have to pay tax on the interest itself (40K EUR) OR the whole installment (240K EUR)?   Thanks   /Edin

Hi Edin!

Sorry, I didn´t see the last question. The interest is taxable in Sweden, in your case the taxable amount is 40 K Eur, the 200 K that you get is just a repayment of a loan and is taxfree. The Swedish tax interest is 30 percent, so the Swedish tax is 12 in your case.

Kind regards

Daniel

Be happy for the free advice you can get Edin!

 That should do the trick ! Sometimes I wonder why I live here ? Must be the Slavic soul, ie great egos and small brains. No matter what, be careful about the entry value, gift, house or, lot. They started reporting from jan 1 2016 in 2018 here in HR. But good luck in SE ! None of my fuckin business !

 @ Daniel

Thank You very much!  Appreciate your time and expertise.   /Edin

@ matgus3

Thanks to you too matgus. :)  Maybe we got off the wrong foot by me writing that your commentary mostly confused me - which is true :D - but that should not by any means be taken as a sign of my ingratitude, but rather of being caught up in the moment of nearly experiencing a nervous breakdown given all the special vocabulary being thrown at me.

I´m not sure what you mean by "entry value"... The amount of money I´ll be transferring to Sweden will be the same one (!) I sold my property for. The interest I will get in the next 3 years on the second installment I will reinvest in Zagreb, and only move here the installment itself. So the money won´t be taxed, as Daniel confirmed.

Not sure though I understand the part of "Slavic soul, ie great egos and small brains" Are you Croatian yourself...do you speak the language?     /Edin

C

@ matgus3

I re-read some of your messages...."Entry value" of the property sold has always been arbitrary and subject only to my and the seller muatual agreement. In other words, the "entry value" of the property when I gained the right of ownership back in 2014 was as volatile and arbitrary as it was when I sold it 3 months ago. I  made sure of asking a few experts in Zagreb about the value of property and noone could give me a "fixed" price. 

In case I´m missing something - could you pls explain what you meant? 

W

@  Daniel

Sorry but in the light of all this new info by matgus3, I feel I have to ask you again.

1.  What is "entry value" (matgus3  has mentioned it) and should I be concerned about it when transferring the money to Sweden?

2. Am I still exempted from paying tax in Sweden on that money given - as you yoursefl ascertained - the money is a gift from my mom?

Should also add that I hold Swe citizenship since 2016.   Thanks!  /Edin

Hi!

1 The entry value is the value you use when reporting the sale of a property, it is what the property was bought for. It is of no concern when you just transfer the money.

2 In Sweden there is no tax on gifts, regardless if you got a property or money.

Kind regards

Daniel