Monday, September 15, 2014

How to Live in High-Tax Sweden Almost Tax-Free

This post is directed largely at American men aged 50-65 who were enthralled with NBC’s summer 2014 hit mini-series “Welcome to Sweden.”

In 2005, Sweden abolished inheritance and gift taxes.  This opens the door to the possibility of almost tax-free living in Sweden.  But it’s not quite so simple as it sounds.

Swedish Inheritance Law is complex.  For an American man to fully realize its benefits, he should be (1) single (divorced, widowed, or never-married), (2) preferably childless, (3) willing to live a good part of the year in a cold, dark climate, (4) prepared to learn Swedish, (5) become a Swedish citizen, and (6) adjust himself to some peculiar Swedish norms and behaviors.  It would help to have excellent social media skills.

He should plan to arrive in Sweden by early June, when the weather warms and the foliage bursts into green, and be prepared to stay for the summer.  He should seek out Swedish women aged late 40s to mid-60s.  To minimize the pitfalls of Swedish Inheritance Law, he should look for Swedish women who are: (1) single (divorced, widowed, or never-married), (2) childless, (3) an only child, (4) the child of married parents who have no other children from other relationships, and (5) have wealthy parents.

Local and expat social media can provide information on where he is most likely to meet such a woman.  If he hits it off with her, he should state that wants a lifelong marriage, not cohabitation or a summer of “love.”  He should get to know her parents, who will be happy to see her married before they pass away.

Getting married to a Swede in Sweden is not too difficult.  Thereafter getting Swedish citizenship is straightforward.  While these processes are underway, her mom and dad can provide tax-free gifts to support the starry-eyed couple.

When mom and dad pass away, his new wife will inherit tax-free the assets of her late parents.  These are likely to include a fully-furnished house or apartment in Stockholm, country and/or island houses, several cars, plus financial assets on which they can draw for living expenses.   Since he will retain his U.S. citizenship, it is important that income from the estate flows largely to her to avoid his being subject to US personal income tax.

All that’s left is to minimize taxes on consumption.  Swedes face a staggering 25% value-added tax on most purchases (VAT is equivalent to a sales tax).  Since the happy couple will already own all the big-ticket items, they will be spared the 25% sales tax on cars, consumer durables and other household items.  They will benefit from reduced 12% rates on food and restaurant dining (excluding alcohol), and a 6% rates on cultural events.

It’s really important for him to love his wife since the money is hers, and to love living in Sweden.  If she loves him, given the fact that she has been single for a long time, their remaining years will be truly golden.

(Caveat: The reader is advised to study Swedish norms and behaviors before embarking on his possible new life.  He can learn a lot reading English-language blogs about life in Sweden and talking with American men who live with Swedish women in Sweden.)

No comments :