Swedish Limited Partnership (Kommanditbolag – KB)
Eligibility for Tax-Exempt Status
For a corporate entity to be considered fully tax-exempt in Sweden, such as a Swedish Limited Partnership (KB), the following requirements must be met:
Non-Resident Partners: Partners involved in the limited partnership must not be residents of Sweden.
Overseas Place of Business and Management: The primary location for the place of business and management must be situated overseas.
No Income Generation in Sweden: The Limited Partnership (KB) should not generate any form of income within the borders of Sweden.
Limited partnerships are regulated under the Partnership and Non-registered Partnership Act. This form of partnership combines elements of a general partnership and a limited company, with a select number of partners exposed to unlimited liability.
Within a limited partnership, there must be at least one partner with unlimited liability (referred to as a general partner or “komplementär”) and at least one partner with limited liability (known as a limited partner or “kommanditdelägare”).
The liability of a limited partner is confined to their capital contribution to the partnership.
A limited partnership holds legal entity status, with the general partner typically authorized to commit and represent the partnership. The limited partner typically shares in profits as outlined in the partnership agreement but typically does not engage in the management of the partnership.
The taxable income of a partnership is divided among the partners, with individual partners paying personal income tax or corporate income tax based on their status as individuals or companies.
Partners seeking registration in a limited partnership must meet certain criteria, including no bankruptcy declarations, no business prohibitions, and not having a custodian pursuant to the Parental Code.
- The business name of the limited partnership must include the term “kommanditbolag” (KB).
- General partners bear personal responsibility for the agreements and debts of the limited partnership.
- If a person becomes a general partner in an existing limited partnership, they also become personally responsible for the partnership’s pre-existing debts.
- Individuals under 18 years of age require the consent of a guardian or chief guardian to enter into a limited partnership.
- Limited partnerships with exclusively natural persons as partners and those categorized as ‘large’ must appoint an auditor.
- In cases where a limited partnership has legal entities as partners or is classified as ‘large,’ an annual report must be submitted.
Share Capital Requirements
There is no specific requirement regarding share capital for a KB.
KB Tax Exemptions
The primary advantage of a limited partnership is its flexibility, enabling partners to structure their relations as they deem appropriate within the framework of a partnership. This flexibility allows for the creation of intricate structures that can accommodate various characteristics and circumstances.
Non-resident partners, specifically when both partners are not residents in Sweden, the place of business and management is overseas, and the limited partnership does not generate income within Sweden, will enjoy tax-exempt status in Sweden. The tax liability will be attributed to the partners, with their specific tax obligations contingent on the tax regime of their resident countries.
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