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BANKS

Post-Brexit bank changes for Brits in Sweden: Here’s what we know so far

As the end of the Brexit transition period looms, the UK has so far failed to negotiate access to the European passporting scheme for banks. What does this mean for you if you're a British citizen and live in Sweden?

Published: 22 September 2020 10:59 CEST
Updated: 28 September 2020 08:34 CEST
Post-Brexit bank changes for Brits in Sweden: Here's what we know so far
The Canary Wharf financial district in London. Photo: Paul Ellis/AFP

What's happened?

Last week, it was reported that, with just three months to go until the Brexit transition period ends, the UK has so far not managed to negotiate a continuation of EU banking rules – known as passporting.

This means that all UK banks will need to apply for new banking licences to provide certain services in each of the 27 different EU countries.

Some banks have decided it is not worthwhile to their business to continue to provide these services, and have already began informing British customers abroad that their accounts will be closed.

Which banks are affected?

Brexit doesn't mean any blanket closure of accounts for all Brits overseas. It depends on who you bank with, where you live, and what kind of account you have. 

The Local has contacted 10 major British banks, and at the time of writing had received responses from four. Santander, Lloyds, and HSBC said there were no current plans to close the accounts of customers in Sweden. Nationwide said that no decision had yet been taken. 

Barclays did not respond to The Local's request for comment, however several readers of The Local Sweden said they had been contacted by Barclaycard and told their accounts would be closed in November unless they could provide a UK billing address.

Digital bank Revolut has an EU banking licence, but currently does not have a UK one, although it has reportedly applied for one and has approval to operate in the UK post-Brexit (but this affects exactly what services are available).

If you have been contacted by your British bank, please let us know by emailing [email protected] or filling out our questionnaire.

Which types of accounts are affected?

Again, this will depend from bank to bank, because it's a question of which services the bank deems worth paying to continue.

It may be the case that only certain products become unavailable, such as credit cards or business accounts. Straightforward current/checking accounts are less likely to be closed. 

Can I provide a 'care of' British address to keep my account?

Many British people living overseas use a 'care of' address in the UK, for example the address of a relative or friend.

It is not entirely clear if this would be sufficient to prevent affected accounts from being closed.

One British reader said she had been told by Barclays that she needed to provide a UK address by November 16th to keep using her MasterCard, but she was told that providing the addresss of a relative would be sufficient.

Another reader said they were told they would have to close their Barclaycard account despite having a 'care of' contact address in the UK, because they did not have a UK billing address or residential address.

Barclaycard is separate to Barclays bank. The Local has contacted the company for further details about which customers are affected, but it has not commented on the record so far.

What have the banks said?

Here is what the banks who have responded to The Local have told us. We will update this page with any further comments we receive.

  • Santander

    A press spokesperson told The Local: “We have no current plans to close any of our retail or corporate accounts.”
     

  • Lloyds

    A press spokesperson told The Local: “We have written to a small number of customers living in affected EU countries to let them know that due to the UK's exit from the EU, regrettably we will no longer be able to provide them with some UK-based banking services. We want to keep customers informed and offer advice on next steps.”

    Customers in Sweden are not among those who have been contacted.
     

  • Nationwide

    No decision has yet been taken. A spokesperson said: “Because the outcome of Brexit is not yet clear and the position continues to evolve, there is currently no certainty as to any actions we will be required to take. Regrettably we cannot provide any further detail on the impact on specific products and transactions at this point. However, we will communicate with members as soon as possible about any necessary changes that impact them.”
     

  • HSBC

    A spokesperson told The Local: “HSBC UK customers who reside in the EU will continue to have access to the banking and/or wealth management products and services that we currently provide to them. We are monitoring the situation closely, and will keep our customers informed in the event of changes that may impact how we are able to support them.”

    They directed customers to their Brexit Q&A for retail customers.

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MONEY

EXPLAINED: What is a Swedish ISK account?

Sweden’s government has proposed scrapping tax on ISK accounts with a balance of 300,000 kronor or less - but what are these accounts and how do they work?

Published: 15 April 2024 15:33 CEST
Updated: 20 April 2024 12:50 CEST
EXPLAINED: What is a Swedish ISK account?

What is an ISK?

ISKs, literally ‘investment savings accounts’ were introduced in 2012 as a way for people in Sweden to easily invest in shares and funds. An estimated 3.5 million people in Sweden have an ISK, with 75 percent of these accounts having a balance of 300,000 kronor or less.

How are they currently taxed?

They’re not subject to capital gains tax, but they are instead taxed at a fixed rate – known as schablonsskatt – an annual rate paid on the entire value of the sum held.

This differs from traditional AFs, where AF stands for aktie- och fondkonto or ‘share and fund account’, where any profits or losses on the sale of shares throughout the year must be declared individually in your yearly tax declaration.

If you have an ISK, you pay tax of 1.086 percent on your savings under current rules, which – to put it simply – means if you had 100,000 kronor invested you’d have a yearly ISK tax bill of 1,086 kronor, which you would pay whether your portfolio made a profit or not. Any figures needed for tax purposes are automatically added to your tax declaration by your bank, so there’s no need to do this yourself.

There’s a third type of investing savings account – a kapitalförsäkring or KF, which is an insurance product where shares, funds and other savings are held in your name by a bank or insurance company. A KF differs slightly from an ISK, but they are subject to the same amount of tax (although you might need to pay tax on a KF each quarter rather than each year). 

As a general rule, it makes financial sense to invest through an ISK or KF rather than another type of investment-based savings account if your yearly returns exceed the government loan rate – statslåneräntan – plus one percentage point. The government loan rate was raised to 2.62 percent at the end of 2023, meaning you should aim for your ISK or KF to have an average return of at least 3.62 percent.

In an AF, you pay 30 percent tax on any profit you make through sold shares in a tax year. If you make a loss, you pay nothing at all.

How do I open one?

Most consumer banks in Sweden, like Swedbank, SEB and Handelsbanken, offer ISKs and KFs, as well as specialist stockbrokers like Avanza or Nordnet, which are often significantly cheaper. 

It’s somewhat less convenient to have your savings in a separate place to your bank account, but this can also be a good thing if you’re the kind of person who is tempted to sell your shares or funds at the slightest sign of a downturn.

It’s relatively easy to set up an automatic investment each month from your salary account to an ISK, even if these are in different banks.

You can often open an ISK in minutes via mobile banking on your phone, although it’s a good idea to do your research first and compare fees between providers before you open one – small differences in fees can make a huge difference if you’ll be saving over an entire lifetime.

Having said that, it’s a good idea to be aware of specific rules in your home country, especially if you are still eligible to pay tax there.

In the US, for example, ISKs are very difficult to report to tax authorities, and you may be penalised for owning mutual funds over a certain amount – which is common both in ISKs and KFs.

How would the new proposal change things?

Under a new proposal, which has been co-authored by the government and the Sweden Democrats, tax on ISKs and KFs would be scrapped for any accounts where savings are less than 300,000 kronor. Currently, an ISK with 300,000 kronor saved would cost 3,258 kronor in tax in a calendar year, so it’s a sizeable saving for those with a balance above this amount.

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