Profits Gone Astray: The Taxation of Criminal Proceeds as Lawful Income

This thesis examines the taxation of income derived from criminal activities within the Swedish legal system. The central legal problem arises from the lack of explicit statutory guidance, which has left the development of the law largely to judicial interpretation. As a result, the current legal framework is characterized by uncertainty and limited predictability. The purpose of the study is to clarify the prevailing legal position on the taxation of criminal proceeds and to assess the consistency of its application. In addition, the thesis evaluates whether criminal law mechanisms—particularly forfeiture—constitute a more appropriate and effective response than taxation. Employing a legal-dogmatic method, the analysis focuses on the criteria used to classify different categories of income and how these criteria are applied to illegal activities. The analysis reveals a significant systematic tension. Although income derived from criminal conduct is generally regarded as taxable, it is almost invariably classified as income from services rather than income from business. This classification is justified by the assumption that the risk of forfeiture negates the existence of an objective profit motive, irrespective of the activity’s degree of organisation, continuity, or independence. This results in a form of “half-legalisation,” whereby criminal conduct is acknowledged as an economic reality for tax purposes while simultaneously being denied a coherent systematic classification. The study also highlights inconsistencies in the treatment of different types of criminal activity, where certain offences are excluded from taxation on the basis that they fall outside the economic sphere, while others are subject to tax. The thesis concludes that the current reliance on taxation as a response to criminal income undermines fundamental principles of legality and predictability. It argues that criminal proceeds should be excluded from the tax system and addressed exclusively through criminal law. Forfeiture is identified as a more suitable instrument, as it neutralises criminal gains without compromising the internal coherence of tax law.