K10
The regulations that regulate how dividends and capital gains (profits from share sales) are taxed at owners of closely held companies are called the 3:12 rules.
The regulations that regulate how dividends and capital gains (profits from share sales) are taxed at owners of closely held companies are called the 3:12 rules. The purpose of the rules is to determine whether the dividend or capital gain should be taxed as income from capital or services. The division between them is declared in the owners’ K10 appendix. The purpose of the K10 form is to calculate the so-called limit amount, which is the maximum amount that a partner can withdraw in the form of dividends or capital gains in the income category capital.
A K10 form should (though not required) be submitted annually along with the private income tax return to keep track of how large the saved dividend space is. Of course, it is possible to submit it to the Tax Agency afterwards if you have made an error or forgotten to submit it. The limit amount on the K10 is the capital gain or dividend that can be obtained at 20% taxation (2013). The excess is taxed as earned income, even if there is a maximum amount for this.
For calculating the threshold amount, there are two different approaches. The simplification rule, which is the most common method that everyone can use, is a standardised way of calculating the limit amount in the K10. The rule means that you may withdraw 2.75 times the income base amount in dividends or capital gains at 20% taxation multiplied for your ownership share. Together with the previous year’s saved limit amounts, an owner’s total limit amount is obtained. New from 2013 is that shareholders in closely held companies may only use the simplification rule in the K10 form for one company. The main rule is the second procedure for calculating the limit amount according to the K10. If the main rule is chosen, there is a possibility that the limit amount in the K10 will be significantly higher per year as it is partly based on salaries paid in the company. On the Swedish Tax Agency’s website you will find the K10 form.