Annual settlement in Sweden
Annual accounting for a company in Sweden - general information
In Sweden, every entrepreneur, regardless of the legal form of business, is required to correctly complete and submit an annual tax return by 2 May. Between 19 March and 15 April, the Swedish Tax Agency - Skatteverket - issues and sends, to the address provided when registering the company, a preliminary annual tax return - INKOMSTDEKLARATION 1, which must be completed and submitted in person, by post or online via skatteverket.se. In Sweden, only non-residents of Sweden, who are subject to the special 25 per cent SINK tax, are not required to submit an annual tax return.
For the annual Swedish company tax return, a personal number - personnummer, which is a 10- or 12-digit number used to identify a Swedish taxpayer - assigned by the tax office, is needed. The Skatteverket is obliged to issue a tax decision within six months, after which the entrepreneur has 90 days to pay the tax and one year to appeal against the official decision, and the tax refund will be transferred to a previously specified bank account in IBAN or SWIFT format.
A Swedish entrepreneur is also entitled to deduct all business expenses he/she has incurred in a given tax year and take into account tax allowances to which he/she is entitled, such as business premises rental allowance, income allowance (jobbskattereduktion) and business travel expenses (traktamente) or time worked in Sweden (grundavdrag).
Annual accounting for the different legal forms of entrepreneurial activity in Sweden
Annual accounting in Sweden applies to all legal forms of business from sole proprietorships through companies to associations, branches and foundations. However, depending on the type of Swedish company, its income and whether it has employees, the specific requirements, deadlines and documents needed for the settlement differ slightly, so it is worthwhile to carefully read the determinants of the annual tax settlement for the different types of Swedish companies.
In Sweden, the annual return covers companies such as:
- Enskild nӓringsidkare - sole proprietorship.
- Enkelt bolag - civil partnership.
- Kommanditbolag (KB) - limited partnership.
- Aktiebolag (AB) - limited liability company.
- Handelsbolag (HB) - commercial company.
- Ekonomisk fӧrening - economic association.
- Europabolag - European joint stock company.
- Filial - subsidiary of a foreign company.
- Stiftelse - foundation.
Between 19 March and 15 April, the Skatteverket issues and sends to Swedish entrepreneurs a preliminary tax return - INKOMSTDEKLARATION 1, which must be correctly completed and submitted with all the required attachments, such as a photocopy of an identity document and documents proving the company expenses incurred during the tax year, between 1 March and 2 May. Between 15 August and 15 September, i.e. up to six months after the submission of the annual return, the Swedish tax authorities are obliged to issue a tax decision, sending the taxpayer a document with the amount of the refund or surcharge.
A Swedish entrepreneur, when registering his/her business in Sweden, should provide an estimate of the company's profit, on the basis of which the Skatteverket calculates the amount of tax to be paid. If the profit made in a given tax year differs from that stated at the start of the business, a preliminary tax return (preliminär inkomst-deklaration) with an increased or reduced advance payment of income tax must be completed and sent via the e-service (e-tjänst, skatteverket.se). These advances must be paid monthly by 17 January, 12 February, 12 March, 12 April, 12 May, 12 June, 12 July, 17 August, 12 September, 12 October, 12 November, 12 December.
The income tax rates for 2020 are:
- for corporate entities, 28% on company profits;
- national income tax - 0% (income up to SEK 490,700), 20% (income above SEK 509,300);
- local income tax - 32% (average rate, this tax is between 30% and 35%, depending on the region).
In Sweden, the income tax percentage rates are:
28% on the company's profit (applicable to legal entities);
20% national income tax (20% for income above SEK 509,300 and 0% for income up to SEK 490,700);
32% local income tax.]
Swedish companies involved in the sale of goods and services are also required, after registering the company as a VAT payer (mervärdeskatt), to submit a VAT return by the 12th day (26th day in the case of medium-sized companies) of the month via skatteverket.se.
The rates of VAT (MOMS), which must be paid monthly, quarterly or annually, for 2020 are:
- 25% - standard rate.
- 12% - reduced rate e.g. foodstuffs, handicrafts, hotels.
- 6% - low rate e.g. newspapers, books, passenger transport.
In Sweden, the VAT percentage rates are:
25% standard rate;
12% reduced rate e.g. foodstuffs, handicrafts, hotels;
6% low rate e.g. newspapers, books, passenger transport.]
Companies in Sweden do not have to register as VAT payers if their customers are all VAT payers. Services that are exempt from paying Swedish VAT are: finance, education, banking and social care.
Once a quarter, foreign entrepreneurs are required to submit a summary report if the company's turnover is exempt from Swedish VAT because the purchaser uses its own VAT identification number or is a VAT payer in another EU country.
In Sweden, VAT charged on the importation of goods must be reported in the tax return to the Skatteverket. In contrast, Swedish companies that are MOMS payers should report imports directly to the Tullverket (Customs Office).
The amount of Swedish customs duty (a levy imposed by Sweden on goods imported and exported across its customs borders), set by Tullverket, depends on the value of the goods in question, including the cost of transport to the European Union (the customs tariff ranges from 0% to 20%).
Owners of both Swedish companies and sole proprietorships have the right to deduct VAT and thus pay only the difference between the tax charged on sales and the tax paid on the service or good in question.
For both Swedish sole proprietorships and Swedish companies, the annual tax return must be submitted by 2 May at the latest, but the Swedish tax authority treats the income from running Enskild näringsidkare as the income of its owner, and thus the business tax should be included in the annual tax return, while it is slightly different for the different types of Swedish companies:
- AKTIEBOLAG (AB) - both a Swedish limited liability company and a private limited liability company (Publikt aktiebolag) and a public limited liability company (Privat aktiebolag) are subject to the Regulations (Aktiebolagsförordningen, SFS 2005:559), the Stock Corporation Act (Aktiebolagslagen, SFS 2005:551) and the Accounting, Finance and Bookkeeping Regulations;
- ENKELT BOLAG - the income from the operation of a civil law company in Sweden is considered to be the income of both its owners and its partners. In the case of this Swedish company, an annex with the income tax return must be attached to the annual tax return;
- KOMMANDITBOLAG (KB) - limited partnerships in Sweden, as well as branches, associations, foundations and European Trading Companies, should submit both a financial report on the company's activities and a tax return issued and sent by the Swedish Tax Agency in March/April, on form INKOMSTDEKLARATION 1 by 2 May, preferably via the website skatteverket.se;
- Swedish general partnerships are governed by the General Partnerships and Civil Partnerships Act, which lays down the rules for their operation and tax regime (Lag om handelsbolag och enkla bolag, SFS 1980:1102);
- HANDELSBOLAG (HB) - HB tax is paid on the value of each shareholder's profit share. For commercial companies in Sweden, formal accounts for the previous year must be submitted annually. The company's annual income must be included on its annual tax return or on the personal tax returns of both owners and shareholders;
Swedish companies are required to draw up a memorandum of incorporation (Stiftelseurkund) containing the start and end date of the financial year - which does not always coincide with the calendar year.
In Sweden, the annual tax return must be filed by 2 May by companies such as:
A Swedish entrepreneur with employees is required to register both as an employer and as a payer of business tax (F-skatt) and to pay an employer's tax - arbetsgivaravgifter - of 31.42% on the sum of gross wages and benefits paid, which consists of insurance contributions (3.55%), pension contributions (10.21%) and employment tax (11.62%).
Swedish business owners working on a contract of employment with another company at the same time are required to register as FA taxpayers (business tax F plus employment tax A).
Companies that are registered as excise taxpayers in Sweden should also submit a declaration to the Skatteverket, even when the tax is 0. A Swedish entrepreneur, after registering as an excise taxpayer, will receive a form with a tax refund date (usually, it takes 1 month for refund). Excise tax in Sweden covers tobacco and alcohol products, fertilizers, waste, sulphur, natural gravel, energy, carbon dioxide, profits from life insurance, lotteries, prizes from savings, raffles, gambling, advertisements.
As Sweden is a member of the European Union and the Organization for Economic Co-operation and Development, it applies a liberal economic policy towards other members of these organizations, and consequently, Poles who emigrate to Sweden have the right to register their own business and can fully enjoy the same rights and privileges as Swedish entrepreneurs.
Formalities related to the annual Swedish business settlement
In Sweden, every entrepreneur who has registered his or her own business with Bolagsverket (Business Register) and Försäkringskassan (Social Insurance Agency) is also required to register with Skatteverket, as it is the Swedish Tax Agency that is responsible for the annual settlement of companies in Sweden.
Companies in Sweden should file their tax return between 1 March and 2 May, the document needed for the annual return - INKOMSTDEKLARATION 1 - is issued and sent by the Swedish Tax Authority between 19 March and 15 April. If the entrepreneur does not receive the preliminary return by the deadline, he or she should contact the Skatteverket and download the relevant document from skatteverket.se by 15 April at the latest. The owner of a Swedish company that has employees is obliged to provide his or her employees with the relevant tax cards (KU-10, KU-13 or KU-14) for the annual return in January. The Swedish Tax Agency has six months to issue a tax decision, upon receipt of which the entrepreneur has 90 days to make any surcharge.
Swedish business owners with a minimum of 90 per cent of their income coming from Sweden can include in their company's annual tax return the tax reliefs to which they are entitled, which include:
- running a dual household (dubbel bosättning),
- accommodation, commuting expenses or meals,
- income (jobbskattereduktion),
- interest costs on mortgages and consumer credit,
- costs related to working in Sweden,
- time worked in Sweden (grundavdrag),
- the purchase of protective clothing, tools and equipment necessary for the job,
- education needed to keep the job,
- costs of business travel (traktamente),
- running a company by Polish residents in Sweden, for which it is the only source of income (so-called abolition relief, which can be used after filing the PIT/O declaration to the tax office in Poland).
Tax benefits in Sweden:
Income from Poles running their own business in Sweden will be taxed in Sweden and not in Poland. In this case, Polish entrepreneurs may deduct a per diem of 30% (SEK 459 per day).
Entrepreneurs from Poland who run a business in Sweden should apply for both a statistical number and a VAT number (form SKV 4632 plus documents translated into Swedish by a sworn translator, such as a certificate from the Social Insurance Institution (ZUS) stating that they are not in arrears with their contributions, a copy of their passport and a certificate from the Polish tax office stating that they are not in arrears with their taxes), as well as for a decision on income tax on persons living abroad (form SKV 4350 plus a copy of an identity document). If a Swedish entrepreneur pays insurance in Poland, he or she should present an A1 form together with documents showing the amount of contributions paid. On the other hand, Polish residents who have registered a business activity in Sweden are obliged to settle with the tax office in Poland on an annual PIT-36 declaration (plus annex ZG), on which income from Sweden will be included.
In addition to income tax, VAT and excise tax, owners of Swedish companies are also obliged to pay both a 30 per cent dividend tax and corporate taxes, which include, inter alia, real estate tax, which can be deducted from the tax base of legal entities, ranging from 0.2 per cent to 2.8 per cent (applicable to any real estate except residential units and semi-detached houses).
Swedish companies' annual return - summary
The annual Swedish company return covers all entrepreneurs who have registered their own business, regardless of the legal form of the business. Owners of Swedish companies are obliged to submit each year by 2 May to the Swedish Tax Agency a correctly completed return for the previous tax year, together with the required attachments, and failure to do so may result in increased inspections or even financial penalties. After receiving the preliminary tax return, the tax return must be supplemented with the tax allowances to which every Swedish entrepreneur who earns at least 90 per cent of his or her total income in Sweden is entitled, and after the Skatteverket issues a tax decision, there is one year to appeal against it. In the case of Swedish companies, the provisions regulating their tax system, which are worth becoming familiar with when running a company in Sweden, are contained in such acts as Aktiebolagsförordningen, Aktiebolagslagen, Lag om handelsbolag och enkla bolag, Bokföringslagen. Swedish business owners can also benefit from the professional assistance of certified accountants, who can guide each entrepreneur step by step through the annual process of accounting for a company in Sweden.
- What is the deadline for filing the annual company tax return in Sweden?
The annual company return in Sweden for the previous tax year must be submitted between March and 2 May.
- What documents do I need for my annual company tax return in Sweden?
The documents needed for the annual Swedish company return are the preliminary tax return - INKOMSTDEKLARATION 1 - sent out by the Skatteverket between 19 March and 15 April, a photocopy of an identity card and documents proving the company costs incurred during the tax year.
- What tax reliefs can I take into account when filing my annual company tax return in Sweden?
When submitting your company's annual tax return in Sweden, you can take into account all the tax reliefs you are entitled to, including. : for travelling to work from your place of accommodation in Sweden (18.5 SEK per 10 km) tractamente (for business travel costs it allows you to deduct a per diem of 230 SEK for the first 90 days and 69 SEK for subsequent days), for travelling to work from your permanent place of residence (you are entitled to deduct 1 trip per week by the cheapest means of transport), jobbskattereduktion (for income), grundavdrag (for time worked in Sweden, you are entitled to full deduction, if you have worked the whole year in Sweden or 90% of your income is from Sweden), dubbel bosättning (for having a dual household).
- What should I do if I do not receive INKOMSTDEKLARATION 1 - the document needed for the annual accounting of my company in Sweden?
If you do not receive INKOMSTDEKLARATION 1 by the deadline, you must report this to the Skatteverket and download the relevant form no later than 15 April from skatteverket.se.
- What are Swedish tax cards?
Swedish tax cards (KU-10, KU-13, KU-14) are documents needed for the annual tax return, which should be issued by the employer to its employees in January.
- How long is the tax year in Sweden?
In Sweden, the tax year lasts 12 months (January to December), for companies the tax year does not always coincide with the calendar year.
- Who is required to declare special tax on pension costs in Sweden?
In Sweden, the special tax on pension costs - SLP (särskild inkomstskatt på pensionskostnader), is to be declared by foreign entrepreneurs (according to the Income Tax Act).
- What does the Convention between the Government of the Republic of Poland and the Government of the Kingdom of Sweden concern?
The Convention between the Government of the Republic of Poland and the Government of the Kingdom of Sweden of 15 October 2005 protects Swedish and Polish companies against double taxation and tax avoidance by Swedish and Polish entrepreneurs.
- Can I do my annual tax return in Sweden electronically?
Yes, in Sweden it is possible to do the company's annual return electronically through the Swedish Tax Agency's website skatteverket.se, in order to do so you must set up a digital mailbox by 27 February at the latest, to which you can log in via BankID.
- What is SINK?
SINK (statlig inkomstskatt för utomlands bosatta) is a special 25 per cent tax for non-resident Swedes, i.e. temporary workers staying in Sweden for no more than 183 days in any consecutive year. Such taxpayers are not required to submit an annual tax return to the Skatteverket, but they are also not entitled to deductions and tax refunds (unless they choose general taxation). You can either apply for such taxation yourself or ask your employer to submit form KU-13 (with income data) to the Swedish Tax Agency.
- How much is the tax-free amount in Sweden?
In Sweden, the tax-free amount, which is deducted from the income tax base, is between SEK 18 900 and SEK 34 300 for low earnings and SEK 13 100 for earnings above SEK 350 660.
- What is the penalty in Sweden for not filing an annual tax return with the Skatteverket?
There is a penalty of SEK 1150 and above for failing to submit an annual tax return.