Working Paper No. 982

Taxes and the Choice of Organizational Form by Entrepreneurs in Sweden

Published: October 10, 2013Pages: 48Keywords: Self-employment; Entrepreneurship, Taxation of closely-held businesses, Business organizational formJEL-codes: G32; H25; G38

Taxes and the Choice of Organizational Form by Entrepreneurs in Sweden Karin Edmark and Roger Gordon


This paper estimates the role of both tax and non-tax determinants in the choice in Sweden to be a closely-held corporation vs. a proprietorship, using individual data for 2004 to 2008 on owners of closely-held businesses. While lower-income individuals face relatively neutral incentives, higher income individuals face strong tax incentives to be corporate. The data suggest a relatively strong correlation between these tax incentives and the likelihood that a firm is corporate. Many conventional non-tax determinants are confirmed in the data as well.

Karin Edmark

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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