Working Paper No. 1245

The Taxation of Private Foundations in Sweden 1862–2018

Published: November 6, 2018, revised February 2019 and October 2019Pages: 52Keywords: Family firms; Foundations; TaxationJEL-codes: K34; N23; N24

The Taxation of Private Foundations in Sweden 1862–2018 Dan Johansson, Mikael Stenkula and Niklas Wykman

It has been argued that the Swedish tax system has favored firm control through private foundations, which should have inhibited entrepreneurship and economic growth. However, research has been hampered due to a lack of systematic historical tax data.

The purpose of this study is to describe the evolution of tax rules for private foundations in Sweden between 1862 and 2018 and to calculate the marginal effective tax rate on capital income (METR). The calculations show that the METR for an equity financed investment is below 20 percent most of the time and occasionally peak at about 40 percent.

Treating the requirement that private foundations have to donate the bulk of capital income (less capital gains) to charitable purposes as a tax, the METR seldom is below 50 percent when financing investments with new share issues, and often exceeds 100 percent.



Mikael Stenkula


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Niklas Wykman


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Interdisciplinary European Studies

The European Union in a Changing World Order


This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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