STOCKHOLM Sweden will cut taxes on stock options payments for employees in small start-ups in a bid to boost investment and jobs, the government said on Monday.
The new rules, due to come in from Jan. 2018, follow criticism from music streaming company Spotify and other firms, that Sweden's high taxes make it hard for start-ups to attract competent staff.
The centre-left coalition said that, as long as the European Commission approves the changes, stock options would be taxed as capital gains when cashed in, rather than as straight income.
Capital gains are taxed at 30 percent in Sweden against income tax that can be as high as 60 percent.
The tax break will be available for companies with up to 50 employees, sales of up to 80 million crowns ($8.5 million) and be available for up to 10 years, Finance Minister Magdalena Andersson, Markets Minster Per Bolund and Enterprise Minister Mikael Damberg said in a signed article in business daily Dagens Industri.
In April last year, Spotify said it would focus recruitment outside its home base in Sweden due to worries about getting the right staff.
In an open letter to the government, Spotify founders Daniel Ek and Martin Lorentzon said expansion in Sweden was hampered by a lack of available housing and computer programmers and by high taxes on stock options.
With more than 40 million subscribers and revenues in 2015 of 1.9 billion euros, Spotify would be too large to benefit from the changes.
($1 = 9.3369 Swedish crowns)
(Reporting by Simon Johnson)