Foreign acquisitions and tax rules

When an acquisition occurs, the merged company's operations can become more efficient if the companies' assets complement each other well, but acquisitions without efficiency gains are also possible. A company's domestic owner pays both a tax on the company's profit and a capital tax on the capital gain that arises from a potential sale. The foreign owners pay capital tax in their home country and can also be assumed, for example, via transfer pricing, to be able to export untaxed profits to their home country. High Swedish property taxes or unfavorable conditions for Swedish business ownership in general risk leading to inefficient foreign acquisitions. Inefficient owners from countries where ownership is more favored, for example, through low taxes, can acquire companies with efficient Swedish owners because they do not have to pay as high taxes. This study aimed to study the types of ownership and tax disadvantages that risk leading to inefficient ownership.