# The Impact of Abolishing the Gift and Inheritance Tax on Swedish Firms 

Following Sweden’s 2005 abolition of its gift and inheritance tax, private firms with prospective family successors experienced greater growth in sales, profitability, asset value, and productivity than comparable firms without prospective successors.

August 26, 2026 • Research Briefs in Economic Policy No. 498 

By Mateja Andric, Mohamed Genedy, and Mattias Nordqvist 

Gift and inheritance taxes remain a controversial public policy throughout the world. Many countries rely on these taxes for revenue and typically intend them to limit intergenerational wealth accumulation and promote economic fairness worldwide. Yet several countries, including Australia, New Zealand, and Sweden, have abolished gift and inheritance taxes over the past five decades. This was often done to address problems such as heirs needing to sell assets to pay taxes, wealth moving to lower-tax countries, and administrative costs exceeding potential tax revenue. Despite this polarized policy debate, rigorous analyses of how these taxes affect firms’ strategic decisions remain limited.

Our research examines Sweden’s abolition of its gift and inheritance tax on January 1, 2005, to determine how this reform affected the owner-managers of privately owned firms with prospective family successors. We used data from Statistics Sweden on the financials and owner-managers of approximately 37,000 firms between 2001 and 2007. We compared privately owned firms led by owner-managers with children aged 12–30 (who would have been subject to the inheritance tax) with firms led by childless owner-managers (who would not have been subject to the tax). We chose this comparison because the children of the owner-managers in our study were at an age when their careers were forming and still malleable, rendering them potential successors. For owner-managers with children, the inheritance tax regime is highly relevant because it affects the feasibility and desirability of passing down their businesses to their children, considerations that do not arise for childless owner-managers. We studied owner-managers of similar ages to make the two groups as comparable as possible.

Our findings show that abolishing the tax increased the profitability, net sales, asset value, and productivity of private firms. From the 2003 baseline, net sales grew more among firms with potential successors than among comparable firms without potential successors. The difference in growth reached 4 percentage points by 2005, 6 percentage points by 2006, and 8 percentage points by 2007. The reform also improved firms’ financial health by increasing current assets (including cash and equivalents) and shareholders’ equity while reducing dependence on debt. It therefore appears that the reform encouraged economic growth by allowing firm owner-managers to invest funds in their companies rather than withdraw them in preparation for future inheritance taxes.

Furthermore, our findings suggest that the reform increased the profitability of firms with potential successors, which, in turn, led to higher corporate income tax payments. Between 2003 and 2007, firms with potential successors increased their corporate income tax payments at a rate roughly 10 percentage points higher than firms without successors.

The broader economic effects of this tax reform extend beyond individual firms, influencing firm performance, financial health, long-term investments, corporate tax revenue, and employee compensation. More broadly, our research highlights the need for continued research into how tax policy reforms shape firm behavior and their ripple effects on society. There is limited research on how tax policy reforms influence firms’ strategic decisions, potentially leading policymakers to overlook these broader effects on economic growth, tax revenue, and labor markets. Extending similar analyses to other countries with comparable reforms will help generalize our findings and contribute to the ongoing policy debate about gift and inheritance taxes.

**Note:** 
This research brief is based on Mateja Andric et al., “[The Impact of Abolishing the Gift and Inheritance Tax on Firm Strategic Decisions and Outcomes: The Case of Sweden](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6528658),” white paper, House of Innovation, Stockholm School of Economics, April 6, 2026.

##### About the Authors 

##### Mateja Andric 

University of Melbourne and Stockholm School of Economics

##### Mohamed Genedy 

Stockholm School of Economics

##### Mattias Nordqvist 

Stockholm School of Economics