Sweden’s reputation as a country that taxes its citizens and corporations heavily is very much in the past. Today, the Nordic country has one of the most competitive tax systems in the world, and is solidly pro-business.
Most family businesses in the country acknowledge the fact and are less keen to stash their personal wealth in offshore centres than they once were.
“In the last 10 years, the government has abolished gift and inheritance tax,” said Mattias Nordqvist, professor of family business at Jönköping International Business School in Sweden. “It has also changed the wealth tax system and all this means that Sweden has one of the most beneficial tax regimes in Europe for family businesses.”
But that doesn’t mean the sector isn’t without its challenges. “These days most family businesses make sure they don’t fall into the usual traps when it comes to succession,” Nordqvist says. “So this isn’t such a big issue, but what is worrying many privately-owned businesses is ownership transition.”
Nordqvist said family businesses are trying to figure out whether they want to keep the business, sell it, or sell part of it and bring in outside shareholders.
Another challenge for the sector, says the academic, is more philosophical and involves what a family business should be in the 21st century.
“Often the most successful family businesses are more business families,” said Nordqvist. “They invest in different businesses, new ventures, and they build portfolios of companies.”
Sweden has specialised in these business families. The obvious examples are Investor AB, controlled by Sweden’s most revealed family dynasty, the Wallenbergs, the Steinbeck family-controlled Investment AB Kinnevik and Axel Johnson. But newer investment groups are also gaining ground such as Mellby Gård, founded by Rune Andersson, and Melker Schörling.
“All these groups approach investments with a long-term approach,” Nordqvist said. “Maybe this is unique to Sweden, but it’s being increasingly adopted by other families in Europe and is likely to become more popular as a business model as time goes on.”
Sweden is becoming a beacon for business families, and exporting its approach. Not bad for a country with a population of just 9.5 million.