I have read a lot of stuff on the website and forum (thank you google translate) and got inspired to finally start investing.
My wife and I are currently working in Sweden and plan to continue living here for at least another 2 to 3 years. After that, we might end up moving to another country in the EU (Germany, Netherlands, and Portugal are at the top of the list).
I was planning to use Lysa to start investing but then I started thinking about how it would be once we decide to move out of Sweden.
1 - How taxes would be affected. If I need to keep declaring and paying taxes in Sweden if I keep the account.
2 - If I should keep the ISK account and keep investing or is it better to just sell everything?
3 - Given my circumstances what would be an appropriate investment plan.
Im not an expert and do not know all aspects that you should think about in this topic. But one I know from a friend that moved to Germany.
Make sure to sell everything on your ISK before you move, otherwise your ISK account will be converted to a “regular” account and you will pay tax on any profits based on what you bought your shares/fonds in the first place, i.e. paying ISK taxes every year until you move then paying normal taxes, basically paying tax twice on the earnings.
You can sell, and then buy back in a regular account, just dont keep it invested in the ISK while you move.
However, you can keep your investments in your ISK until you decide to move.
Welcome to the forum, as @OptimeraMera wrote I would plan in steps. Start with LYSA in an ISK and then when you decide to move, you can make a withdrawal and change to a similar service in that country. Since LYSA invests globally it won’t really affect anything if you move from one global exposure to another (i.e. from Lysa to a MSCI World/ACWI-exposure in another country). Btw. I do think @Lysa works in Germany?
Regarding the tax issue, I would recommend to contact a specialist. Maybe @RicardNylund, @EvidaPer know something?
As said in a previous post, unfortunately it’s not possible to keep the beneficial tax regime that ISK provides for capital gains when moving out of Sweden. I would still recommend to use it until the last day in the country in principle.
For now I would recommend to invest in EUR funds, not SEK, given the long term plan to move to a EUR country. No difference if using global equity index funds I guess.
With regards to taxes, most countries have lower tax, but to check with a tax consultant is a good idea. Normally the easiest way is to sell your assets in ISK and move them to yourself in the EU country’s bank, then reinvest there after the move. It’s important when moving out of Sweden, not to keep any connections that could link you to Sweden, like engagement in a Swedish company, property or other things. Even a property vaguely linked to you or another family member, even if it’s rented out… If you do, you may also keep an obligation to pay tax in Sweden for all your global income. This obligation can be applied retroactively many years by the Swedish tax authorities.
@Fnorrbart Is it possible to have an ISK account in EUR funds? From what I read it doesn’t seem to be possible. Or do you mean to only buy securities that are denominated in EUR (In Lysa that doesn’t seem to be possible, I need to check avanza and nordnet)?
What would be the advantages of investing in EUR funds instead of converting them when I want to move out? The one thing that comes to my mind is to split the difference in conversion rates across a big-time span instead of gambling how the exchange rate will be at the time of the move.
I guess it depends what the underlying assets are. For bonds, they may be strongly linked to the SEK or hedged to SEK even with a cost attached. That could give you an added currency risk that’s all. That is in the case you are not planning to use the assets in Sweden in the future. For global equity / stock funds, I think it doesn’t matter as the underlying assets usually aren’t linked to SEK. In most cases when you sell / move you have to take out in SEK anyway and reinvest in EUR, probably no way around that.
The ISK provider can probably answer which specific funds are OK to invest in using their ISK service and ISK tax, and if any aren’t available for ISK.
Another thing people on this forum point out sometimes is that ISK may not be ideal for certain low risk bond funds. If the anticipated gains aren’t high enough, the tax based on portfolio value (not profit) might not pay off. There is a breakpoint which changes from year to year based on the state bank interest rate, which controls the ISK tax rate. Then, an option is to use a regular stocks portfolio account and pay 30% capital gains tax on the profits instead.
So for global passive equity funds, ISK is good, SEK normally no issue. For bonds its a bit more complicated…
First, until you move keep it in ISK at Lysa or elsewhere (ISK with own portfolio)
When you are about to move, and you know to which country, I’d consider the following options. Make sure you do any change before signing out of Sweden (Folkbokföringen) as banks are difficult to deal with after that and often do not let you open an account (same for me as a Swedish citizen living abroad).
Kapitalförsäkring / endowment insurance that’s taxed in the same way as ISK. And you can keep it that way even as limited taxable in Sweden (when the ISK taxation doesn’t work any more). Limited taxable means basically that you are taxed in Sweden on what you have in Sweden. The crux is that you need to check how your new country taxes endowment insurances. Some countries treats it like an insurance and doesn’t tax it as long as there is not payout from it. Other countries treat it as any other investment vehicle and taxes it both on capital gains (value increase over the year) and wealth tax (if applicable in the country). We use endowment insurancea now as investment vehicle as Swedes living abroad.
A regular depå / investment account where there is not tax consequences unless you sell/trade ie if you do not sell anything there is no trade to declare in the Swedish tax declaration. Disadvantage is a 30% tax on capital gains but that is not triggered until you do a trade. Advantage is that you can offset capital gains vs losses and only tax on the difference. Also to prevent trades that need to be declaured annually in Swedish tax declaration, avoid funds/stocks that pay a dividend. Otherwise it could become a lot of stuff to declare every year.
As long as you keep the investments in Sweden you will be taxed on it, and have to register a tax declaration for quite some years after having left the country. So an option might be to repatriate the money to your home country. Makes life a bit simpler not having to declaire taxes when you don’t live in Sweden. If you don’t have a bank account, you will probably have difficulty to keep the BankId and that in turn can make it more cumbersome to handle declarations. We’ve generally chosen to repatriate the money from wherever we worked back to Sweden as Swedish citizens.
If you move out with no remaining link to Sweden (begränsad skattskyldighet), I assumed you would normally not be taxed in Sweden for it, even if you make a sale / profit? Its of course subject to double taxation agreement and also assuming Avanza or the holder of your investments has been informed with proof of your new tax residence certificate from the new country’s tax authorities.
As long as you keep the investments in Sweden…) I am wondering whether a non-Swedish/non resident can get the bank-id (a card) if he/she no longer lives in Sweden and do not have any connection with Sweden. If I understand correctly, Swedish/people have connection with Sweden (e.g. family/bussiness) can get a bank card (bank-id) no matter where they live if they have a residental address (registered in SVK) in Sweden. It is impossible to login into the internet bank or do the tax declaration online without bank-id. Sometimes it the the banks stopped people from keeping their ISK not the law!
That’s what i mean in option 3. Its not easy without bank account and bank id as a non-citizen that is not present in Sweden. That’s why we repatriated money back to Sweden as Swedish citizens. Someone with a different nationality might want to repatriate the money to his/her home country.
You need to check that in the double-taxation treaty between Sweden and German or call Skatteverket to ask any of their experts or hire a tax consultant eg at PWC or the likes.
That is per my understanding impossible. A Swedish KF will always be taxed in Sweden, no way around that. This is automatically done by the insurance company and I never heard of any exceptions to that. The only question is if Germany also want to tax it, and if so, werther double taxation is avoided through the tax treaty, or not.
You could probably put money into the Swedish KF while living in Germany, at least as long as you have Bank ID or the likes.
Getting the money out, already taxed in Sweden, to a different country - that’s what you need to look into.
Honestly, I have friends from all kind of countries that lived and worked in various countries. In my experience, leaving capital behind in a 3rd country (ie not the one of you nationality, and not the one you currently live in) has without exceptions created problems. In particular if it is a country that you don’t regularly visit or have any connection to, other than you have some money there.
So, my general advice is to repatriate the money to a country that you plan to live in. Even if that might cost a bit more in taxes.
End of the day it is more important to ensure a return OF the capital than optimizing the return ON capital.
Aha, I am a Swedish citizen, I wrote in English because the thread is in English.
The wording of my post was perhaps not so good. My motivation of keeping a Swedish KF is to be able to buy and sell funds/stocks and not have to pay German capital gains on every transaction. In other words, I would pay the German capital gains when I remove the money from the KF. Or perhaps in some years I will leave Germany and return to Sweden and use the money in Sweden. If I have to, it might be worth continuing to pay the schablonskatt in Sweden while I live in Germany, especially if interest rates go down again.
Or perhaps there exists a similar product to kapitalförsäkring in Germany.
Jag ska forska lite mer på frågan, tack för svaret!
and also assuming 