In Sweden, Even the Heirs Can’t Take It With Them

With multimillionaires moving their families to other countries, Swedes are reconsidering the structure of inheritance taxes that can run as high as 70%.

An announcement by the 34-year-old billionaire industrialist Fredrik Lundberg that he was moving to Switzerland set off debate in the country about the tax on inheritances.

“It’s my and my family’s wish to secure the control of the company within the family in case I die,” Lundberg was quoted as saying in a newspaper interview.

When the inheritance tax and the capital gains tax are combined, the result sometimes can be a 100% tax for the heirs of the owner of a large company.

A survey taken after Lundberg’s announcement by the private polling institute Sifo indicated that three out of four Swedes felt inheritance taxes should be cut to 25% or 30%.

When a Swede leaves an inheritance of 6 million kronor ($770,000) or more, taxation goes as high as 70%.

If the heirs sell stocks left to them to pay inheritance taxes, they then have to pay an additional 24% capital gains tax on the returns from the sale.

For inheritance purposes, the stocks are valued according to their price on the stock market the day their owner died. However since share prices generally fall when large blocks are sold, the heirs of big shareholders can find themselves with stock worth less in the market than it is on the tax books.

In some cases, this system has driven inherited estates into bankruptcy.