The Swedish National Debt Office has published the governmental borrowing rate as of 30 November 2020, which amounts to -0.10%. This means an effective yield tax for life insurance policies of 0.375% for fiscal year 2021.
Historical graph of the effective yield tax up to 2021
Since 1994, life insurance policies have been taxed at a standard rate by levying an annual yield tax. Since 2012, assets in investment savings accounts (ISK) has been taxed in a similar way through a standard levying of income tax. For both forms of savings, assets are taxed as if they yield a presumed return each year corresponding to the governmental borrowing rate (GBR) as of 30 November of the previous year. This standard
presumed return is taxed with a yield tax /income tax of 30%. As of 1 January 2018, the calculation basis for taxation of both investment models is based on GBR + 1%. The lower threshold of 1.25% for calculating the tax which was introduced from 1 January 2016 still applies. On 26 November 2020, the GBR amounting to -0.10% for fiscal year 2021 was published, which will form the basis for the taxation of life insurance policies and
investment savings accounts. The lower threshold for calculating the tax, becomes applicable and the effective yield tax for life insurance policies amounts to 0.375% (1.25% × 30%) of the value of the life insurance policy as of 1 January 2021 + the full value of premiums paid up to and including 30 June 2021 and half the value of premiums paid between 1 July and 31 December 2021.
The yield tax for fiscal year 2021 remains at the same low level as for fiscal year 2020. We believe that life insurance policies are still a very attractive investment vehicle for tax purposes, in comparison with, for example,
investments made on a privately owned account. This is especially true since the Swedish interest rates remain low.
Should you have any questions, our Swedish team is here to help