STOCKHOLM (Reuters) - A government commission is set to propose a 15 percent payroll tax on Sweden’s financial services industry, a source familiar with the matter told Reuters on Friday, a move that banks have said could cost thousands of jobs and raise costs for borrowers.
Sweden’s centre-left government has been trying to impose a tax on financial services, which are exempt from value-added tax, but has struggled to come up with a way to do it.
“The proposal will mean a 15 percent payroll tax on VAT-exempt financial services,” the source said, adding it would not only affect banks.
“It will hit all companies which have revenues from financial services, which is many,” the source said.
The government believes a tax would level the playing field between financial sector firms and other companies.
“The banking sector is under-taxed and has therefore received an advantage compared to other businesses,” Anna Soderstrom, a spokesperson for Financial Markets Minister Per Bolund said.
Bankers in Sweden said a tax would hit employment in the financial services industry, which is trying to attract firms to the country in the wake of Britain’s decision to leave the European Union.
“It will have a dramatic effect on the number of jobs in this sector,” said Johan Hansing, chief economist at The Swedish Bankers’ Association.
“You lose existing jobs but also reduce the possibility of attracting new jobs,” he said.
Around 120,000 people in Sweden are employed by financial firms and insurance companies.
Industry lobby groups and a trade union representing bank workers said last month such a tax could cost up to 16,000 jobs.
Others think additional costs will be passed on.
“We believe this tax hike will be directly pushed onto the customers, Swedish households and businesses,” Andreas Hakansson, banking analyst at Exane BNP Paribas, said.
Nordea, the Nordic region’s biggest bank, has previously said it could consider moving its head office from Sweden if a bank tax is introduced.
On Thursday, Dutch newspaper NRC reported Nordea had made an approach regarding a merger to ABN Amro, which would include a move to the less-regulated Netherlands.
An ABN Amro official on Friday, speaking to Reuters on condition of anonymity, confirmed the approach but said it had been rebuffed.
The head of the government commission, Christer Sjodin, declined to comment.
On Thursday, a budget document seen by Reuters showed neighbouring Norway’s right-wing government plans to impose a 5 percent payroll tax on the banking industry in 2017.
Denmark already has such a tax.
Reporting by Johan Sennero and Johan Ahlander; Editing by Susan Fenton and Elaine Hardcastle