This thesis treats the extended Swedish rules regarding deduction limitations on interest. The purpose for this thesis is to investigate whether the interest deduction limitation rules have potential to protect the Swedish tax base. The thesis also assesses whether the options presented how the extended rules could look liked had been better to protect the Swedish tax base. Furthermore thin capitalizations rules have been evaluated if this is a better method to protect the Swedish tax base.

In 2009 the Swedish deduction limitations rules on interest came in to force to protect the Swedish tax base. Despite these rules companies was still able to avoid Swedish tax and therefore threatened the Swedish tax base. The 1 January 2013 extended interest deduction limitation rules were set in to force. This new rules shall better protect the Swedish tax base. The general rule has been extended to apply on all internal loans. The exception rules, “tioprocentsregeln” and “ventilen”, scope has been limited.

The conclusion that can be made after the analysis is that the deduction limitation rules on interest have the potential to protect the Swedish tax base in a short perspective. This is because the tax base is larger which lead to more tax revenues. From a longer perspective it is deemed that the Swedish rules will not protect the Swedish tax base. This is because the interest deduction limitation rules do not provide an effective taxation as a result of the rules are unpredictable and allows for tax schemes. The authors does not believe that the negative effects caused by the fact that the rules are unpredictable will be outweighed by the fact that the Swedish corporate tax rate has been lowered. The author believes that thin capitalization rules is a better method to protect the Swedish tax rules, due to the fact that they are more predictable.