The Swedish National Debt Office has published the Governmental borrowing rate as of 30 November 2023, which amounts to 2.62%. This means an effective yield tax for life insurance policies of 1.086% for income year 2024.
Historical graph of the effective yield tax up to 2024
Click here to see a full-sized version of the graph
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 capital 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 23 November 2023, the GBR amounting to 2.62% for income year 2024 was published, which will form the basis for the taxation of life insurance policies and ISK.
Based on the GBR of 2.62%, the effective yield tax for life insurance policies amounts to 1,086% ((2.62% + 1%) x 30%) of the value of the life insurance policy as of 1 January 2024 + the full value of premiums paid up to and including 30 June 2024 and half the value of premiums paid between 1 July and 31 December 2024.
Due to the increased interest rates on a Swedish as well as global basis, the yield tax for income year 2024 has risen compared to the previous years. However, we believe that life insurance policies are still a very attractive investment vehicle due to the added succession and portability planning opportunities and ease of administration. Combined with the possibility to hold private equity and a wide range of both quoted and unquoted investments, life insurance policies continue to be an attractive long-term investment tool for managing your assets.