Tax information: Bonus issue May 2007

In May 2007, a bonus issue increased the number of A-shares in Husqvarna AB from 9,502,275 to 98,380,020 A-shares.

The following is a brief description of certain Swedish tax issues that may arise for shareholders in Husqvarna who receive shares and surplus bonus share rights in the bonus issue. The tax treatment for each shareholder depends to some extent on the specific situation of the relevant shareholder. Shareholders are therefore recommended to consult a tax advisor for information with respect to the tax consequences that may arise as a result of the proposed bonus issue.

In general, no immediate tax consequences will arise for shareholders who participate in the bonus issue and receive new shares of series A in Husqvarna. Capital gains taxation will be triggered on a future disposal of the shares received.

For shareholders who receive surplus bonus share rights (Sw. överskjutande fondaktierätter), which are divested centrally on behalf of the shareholders, capital gains taxation will normally be triggered. In the capital gains calculation, bonus issue rights that are received due to the shareholding are considered to be acquired at no cost. Hence, the entire sales proceeds, after deduction for sales expenses, will normally be subject to taxation. The so-called standard method (see further below) does not apply in such case.

On a disposal of the shares in Husqvarna, the acquisition cost for all shares of the same type and class shall be determined collectively under the so-called average method. Hence, the acquisition cost for shares of series A and B shall be calculated separately. This means that a shareholder who, prior to the bonus issue, only held shares of series B in Husqvarna should be considered to have acquired the shares of series A received in the bonus issue for nil SEK. Furthermore, a shareholder's average acquisition cost for the shares in Husqvarna may be affected by the bonus issue. Since shares of series A and B in Husqvarna are listed, the acquisition cost for the shares may, as an alternative, be determined as 20 per cent of the net sales revenue under the standard method. The principles for computing the acquisition cost of the shares are illustrated in two examples on the next page.

No withholding tax (Sw. kupongskatt) is levied on the recipient of shares in a bonus issue. Accordingly, shareholders that are not resident or domiciled in Sweden for tax purposes are normally not subject to Swedish taxation as a consequence of a bonus issue or a disposal of surplus bonus share rights. Such shareholder may, however, be subject to tax in the relevant state of residency.

Example 1

A shareholder in Husqvarna who currently holds 100 shares of series A and 900 shares of series B will following the bonus issue hold 400 shares of series A and 900 shares of series B. It is assumed that the average acquisition cost for the original shares of series A amounts to SEK 100 per share. This means that the average acquisition cost per share of series A will be SEK 25 (100 ×100 / 400) following the bonus issue. The acquisition cost for the shares of series B will not be affected by the bonus issue.

Example 2

A shareholder in Husqvarna who currently holds 1,000 shares of series B will following the bonus issue hold 300 shares of series A and 1,000 shares of series B. It is assumed that the average acquisition cost for the original shares of series B amounts to SEK 100 per share. However, the acquisition cost for shares of series B should not be allocated to the shares of series A received in the bonus issue, since the acquisition cost for shares of series A and B shall be calculated separately. This means that the acquisition cost for shares of series A received should be nil SEK. However, the standard method, according to which the acquisition cost is equal to 20 per cent of the net sales revenue, may be applied on a future disposal of the shares.