Warning: Entrepreneurs Prepare to Leave Sweden if Red-Green Bloc Wins Election

Sweden’s wealthiest are beginning to prepare for a possible political shift. Ahead of the parliamentary election, concern is growing among entrepreneurs and investors that a future Social Democrat-led government will be pressured by the Left Party and Green Party to introduce new taxes on large fortunes. For some, preparations are already underway to move assets and businesses out of Sweden.

The Left Party is pushing for a specific tax for billionaires and has also pointed to the need for an exit tax for those leaving the country. The party also wants to investigate a new state property tax on expensive homes. The Green Party, meanwhile, wants the wealthiest to be taxed more heavily and believes that large capital gains are currently taxed too lightly.

The proposals take on extra significance because, according to polls, the opposition is ahead of the government parties and the Sweden Democrats. If the Social Democrats need support from the Left and Green Parties after the election, the issue of taxes on wealth and capital may become part of political negotiations.

It is precisely this development that is worrying several Swedish business owners and investors.

Klas Tikkanen, former Chief Operating Officer at the investment company Nordic Capital, told Bloomberg that individuals in his business and investor network are already looking into the possibility of moving abroad.

Tax lawyers are also noticing the concern. Mattias Schömer at the law firm Vinge says that entrepreneurs and investors among his clients have already begun preparing for possible changes. This includes foreign corporate structures, generational transfers, and wills.

For business owners with international operations, a relocation can have much greater consequences than just changing tax address. Company structures and headquarters could also be affected.

Andersson says no – but the issue is far from settled

Social Democrat leader Magdalena Andersson has tried to set a boundary by rejecting a return to Sweden’s previous wealth, inheritance, and gift taxes. But this is not necessarily enough to calm the business community.

The key question is what the Social Democrats might be forced to accept to get their policies through if, after the election, they need support from the Left Party and Green Party.

– The closer we get to the election and the clearer it becomes what support Andersson will need to pass her policies, combined with the Green and Left Parties’ proposals in this area, the greater the concern has become, says Schömer.

This means that a political promise from the Social Democrats before the election may confront an entirely different reality after the vote. If the Left and Green Parties gain significant influence over economic policy, the issue of taxing the wealthiest could once again top the agenda.

Norway became the warning signal

After the 2021 change of government, taxes on the most affluent were increased in neighboring Norway. A number of Norwegian billionaires and other wealthy individuals subsequently chose to move abroad.

For Swedish entrepreneurs, this development serves as a concrete example of what can happen if taxes on large fortunes are raised.

The question is therefore not only how much the state can collect in increased tax revenue—but also how much capital, investment, and business risk leaving the country.

Sweden has much to lose

The conflict is particularly sensitive because Sweden has long built a strong ecosystem for entrepreneurs and tech companies. Stockholm has become a European tech hub with companies like Spotify and Klarna, and Sweden has produced a large number of so-called unicorn companies.

This also exposes a fundamental issue with taxing wealth that consists of shares. A successful entrepreneur might be a billionaire on paper, but have most of their wealth tied up in their own company. If the state demands a tax on wealth, the entrepreneur must be able to free up funds—which in some cases means selling shares.

It is precisely this type of development that critics are warning about.

– Rich people will be affected to some extent, but it is the Swedish economy that will be hit hardest, says Tikkanen.

– And a very large share of all future unicorn companies will never become reality.

Sweden has already tried wealth taxation. The Swedish wealth tax was abolished in 2007 after long-standing criticism, including concerns about capital flight and the ability to avoid taxation.

“It is destructive”

Robert Falck, founder of the autonomous truck company Einride, has himself admitted that he has considered leaving Sweden. He points to a problem central to the debate: the difference between being wealthy on paper and actually having cash on hand.

– There is something fundamentally sympathetic about the idea that we should have a common tax system and that taxation should be fair, says Falck, but he adds that the hard question is how to achieve that.

His objection is that a large part of an entrepreneur’s wealth may be tied up in the company that person has built.

– This kind of rhetoric is destructive when it comes to building this type of company.

For the Swedish electoral campaign, this issue presents a political balancing act. The Left Party and Green Party want to go further in taxing the wealthiest, while the Social Democrats are trying to avoid a return to the old wealth and inheritance taxes.

At the same time, Swedish entrepreneurs and investors are left with a different question: what will happen to their money and businesses if the political proposals actually become reality?