How is the ISK tax calculated?

The tax is based on a flat-rate basis calculated as the capital base (average value across the quarters) multiplied by the government lending rate plus an addition. The result is taxed at 30 per cent. The flat-rate tax varies year to year depending on the government lending rate.

What is the difference between an ISK and a kapitalförsäkring?

Both have flat-rate taxation at similar levels. With an ISK you are the direct owner of the assets. A kapitalförsäkring is technically owned by the company issuing it, usually a bank. A KF allows you to name a beneficiary and may be better suited for estate planning. The ISK is the simpler and more common option.

Can I hold ISK accounts at multiple banks?

Yes. You can hold ISK accounts at multiple banks and platforms. Each account is taxed separately under the flat-rate scheme.

What happens if my ISK loses value?

The flat-rate tax is charged regardless of whether you have made a gain or a loss during the year. If your ISK has fallen in value you still pay the flat-rate tax on the average value. This is a disadvantage compared to a traditional brokerage account where you can offset losses against gains.

Glossary

ISK (Investment Savings Account)

The most common account type for fund savers in Sweden. You pay a flat-rate tax based on the account's value rather than capital gains tax on every sale.

What it is

Simple savings with flat-rate tax

The ISK, or Investeringssparkonto, is an account type introduced in Sweden in 2012. Instead of paying 30 per cent capital gains tax on each sale, you pay a flat-rate tax based on the account's average value during the year. The tax is calculated as a percentage of a standard basis and is paid via your annual tax return. In low interest rate environments the ISK is highly tax-efficient. As interest rates rise, the flat-rate tax increases accordingly.

Simple tax return: You do not need to track purchase prices, sale prices, or gains per transaction. Your bank reports automatically to the Swedish Tax Agency. The flat-rate tax is pre-filled in your annual return.
Free trading: You can buy and sell as often as you like within an ISK without tax consequences for each transaction. That makes it simple to rebalance or switch funds.
Dividends included: Dividends received in an ISK are tax-free within the account. You pay no withholding tax or capital gains tax. Everything is included in the flat-rate tax.

In practice

ISK suits most long-term savers

The ISK is simple, predictable, and tax-efficient for those holding equities or funds over the long term. It is a sensible starting point for most savers. The alternative, a kapitalförsäkring (KF), has similar taxation but suits estate planning better. A traditional brokerage account may be relevant if there are losses to offset.

“Simple structure, predictable terms. Exactly what long-term saving should be.”

Amos Fonder

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Common questions about ISK

Related concepts

Glossary

Dividend

The portion of a company's profit paid out to shareholders. A dividend can be a sign of financial strength, but it is never the only thing to consider.

Index Fund

A fund that mechanically tracks a market index and holds all constituent companies proportionally. Low cost is the advantage. The absence of selection is the trade-off.

P/E Ratio

The share price divided by earnings per share. One of the most common valuation metrics, and also one of the most misunderstood.

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