Lex Asea is a tax law concept for tax-free dividends of subsidiaries to the shareholders of the parent company in accordance with the rules set up in the Swedish Tax Law.
Interested to know more about Lex Asea?
There are several criteria that must be fulfilled for a dividend to be tax-free according to Lex Asea and the dividend must also be made in accordance with the Swedish Companies Act’s decision-making procedure. In addition to this the requirements for a special tax law procedure must be taken into account. The rule constitutes an exception to the otherwise applicable main rule that tax on dividends is imposed upon the receiving shareholders. Unlike cash dividends, the shareholders do not receive any cash from a dividend on shares in subsidiaries, which means that it can be difficult for the recipients to immediately pay tax for any capital gain that arises in connection with the dividend. If the requirements for Lex Asea are met, taxation can instead be postponed until a future divestment of the shares in the subsidiary has taken place.
Through a Lex Asea dividend, various desirable restructurings in groups of companies can be carried out. MCL offers assistance with all legal issues in connection to Lex Asea, everything from drafting documents for board-meetings and general meetings to applications for general advice from the Swedish Tax Agency (Skatteverket). An example of when Lex Asea might be suitable is when it is desirable for a subsidiary of a listed parent company to list their own shares. A Lex Asea dividend in this situation could enable a smooth separation from the parent company at the same time as the requirement of a minimum number of shareholders is easily met.