Summary: Tax and Immigration seminar from a Swedish perspective, February 2012
Information on Laws Regarding Finances and Taxes For People with Swedish Background Living in the US
Presented by Madeleine Thunström
A presentation explaining new finance regulations, by Madeleine Thunström, Swedish tax lawyer, Skandinaviska Enskilda Banken (SEB), was organized by Linda Ström, (www.Getswedish.com) in collaboration with Consulate of Sweden, Seattle; and Swedish American Chamber of Commerce, Seattle (www.SACC-Seattle.org ). The presentation was shared with Swedish citizens in the Seattle area February 28, 2012.
To view the power point presentation please click here
Summary of the information
This presentation focuses on
- Dual citizenship
- Preparation for moving from US to Sweden, from a Swedish perspective
- Inheritance issues
- Properties and other assets in Sweden and the responsibility of the individual
Currently, many changes are taking place in Europe, America and other parts of the world in regard to how companies, organizations and individuals are required to report their income, revenues, assets and financial transactions. Issues explored in this presentation include taxes, property, social benefits and more.
Regulations regarding financial advice
The new US Foreign Account Tax Compliance Act (FATCA) will come into effect July 1, 2013. This will change the way Swedish financial institutes are sharing and are able to provide services to Swedish citizens or people with dual citizenship living and working in the US.
The new law states that a financial advisor not based in the US is not permitted to assist US residents with financial advice regarding investments. Thus, a person living in the US may not contact a Swedish bank or financial institution for advice, neither through writing, email or telephone.
Commonly, Swedes living in the US retain a bank account and various assets in Sweden. They may use the Internet to access their bank account in Sweden, pay bills in Sweden and carry out transactions, such as purchase or sales of shares; and transfer funds between a US account and a Swedish account; but they may not take advice regarding financial investments.
Thunström commented that Swedish banks have specific codes for accounts owned by individuals residing outside Sweden.
Issues are on the rise about which countries accept dual citizenship with specific other countries. The United States is currently not formally accepting dual citizenship between the US and Sweden, while Sweden formally accepts it, since 2001. Thus, individuals may hold two passports and two citizenships, but they should be aware that the US will not recognize their Swedish citizenship.
Benefits of dual citizenship:
- Can work in both countries
- Can obtain social benefits / pension from both countries
- Can inherit property such as land and houses in both countries
- Can live and travel without restrictions in both countries
Drawbacks of dual citizenship:
- The Swedish citizenship is not formally recognized by the US; thus the consulate may not assist if a person is taken into custody
- Border patrol may carry out extensive checks
- When a student leaves Sweden, he or she may have to pay back the “free” high school or university study fees
- Some countries do not permit that a person with dual citizenship receives an inheritance
- Some countries do not recognize marriage, divorce or custody of children when these were carried out under another country’s law.
It is worth noting that because the US does not accept dual citizenship with regard of Sweden, people with dual citizenship living in the US cannot receive legal assistance from the Consulate of Sweden. People with dual citizenship should bear this in mind. For example, if they have taken action that is lawful in Sweden but does not comply with US law, they may be challenged upon arrival at the US border or upon arrival at a US airport passport control. Thus, to avoid problems, people living in the US are advised to make themselves familiar with US laws in all relevant areas, especially with regard of family issues and real estate.
Both Sweden and the US allow ownership of land, homes or buildings for people with dual citizenship.
Because the US does not accept dual citizenship with regard of Sweden, it makes sense to show only the US passport when traveling into or out of the US.
Education in Sweden
Swedish citizens living in the US may obtain free education at Swedish universities.If you are not Swedish citizien but have adequate connections to Sweden it is some possibilities to obtain free education as well .
Laws regarding inheritance vary widely between countries. Some countries do not allow inheritance of land to foreign citizens. However, in regard to the relationship between the US and Sweden, there is no restriction for inheritance of land and assets.
Washington State does not impose tax on inheritance, however, federal law does. In 2011, IRS passed a law stating that inheritance will be taxed at 35% of the net income through inheritance, that is, the net amount after costs have been deducted. The value of the inheritance is calculated according to current values on the market. Deductions include loans and other debts and administration costs such as advice from lawyers. The taxation is administered by IRS.
Exceptions are made for donations to non-profit projects and for surviving spouses.
In the year 2012, the amount that can be inherited without taxation is $5,120,000. For the year 2011, the amount was $5,000,000.
People living in the US who are US citizens, resident aliens, or hold dual citizenship are required by the US tax office, IRS, to declare assets and income from assets or investments in both countries. Individuals who have assets and / or investments outside the US might need to use form 8938.
Individuals are required to submit form 8938 when they are:
- US citizen
- Resident alien
- Non-resident elect to be treated as resident
- Bona fide resident
- Are above $50,000 for a single person
- Are above $100,000 for a couple
- Are invested in financial institutions that are not American
- Are owned by an individual – so far these regulations do not include companies
Individuals are advised to continually check for updates, exceptions or additional clauses to these regulations.
When Swedish citizens living in the US, who hold US citizenship or green card, elect to return to Sweden, they will be required to continue filing a tax return in the US for a number of years, if they lived more than 7 years in the US. Thunström said there are cases where people are asked to continue filing a tax return for a considerable number of years after having left the US. Thus, she strongly advises anyone planning to leave the US and move to Sweden to contact a US tax advisor, before leaving, who can assist the person in preparing a final, full report. Normal procedure is to declare all assets and income, from both countries and any other country, before leaving the US.
Thunström emphasized that people who moved from the US to Sweden are advised to continue filing a US tax return for a number of years, to avoid a situation where they get in trouble when they try to cross the border to re-enter the US.
Retirement in Sweden
When Swedish citizens living abroad reach retirement age, they often choose to return to Sweden. They must then declare assets still remaining in the US to both US and Swedish tax authorities.
Summary details compiled by Brita Adkinson,