Tax in Sweden

Individuals who choose to live and work in the Kingdom of Sweden, whether they take up employment with a Swedish company or register their own business, are required to pay regular taxes to the state, the type and percentage rates of which depend on a number of factors, such as the form of employment and the type of company. Swedish taxpayers are also required to submit an annual tax return to the Swedish Tax Agency - Skatteverket - on time, preferably via the dedicated website skatteverket.se, taking into account any allowances they are entitled to for expenses incurred during the tax year. Sweden is undoubtedly one of the most taxed, yet caring countries in the European Union. The Swedish tax system is quite complicated and quite different from the Polish one, so it is advisable to study the rights and obligations of a Swedish taxpayer carefully before deciding to live and work in this country. What is worth knowing about the Swedish tax system?

1. In Sweden, tax liability applies to all persons who are Swedish tax residents, i.e.:
   • reside in the country for a minimum of 6 months continuously,
   • Sweden is their centre of interest in life,
   • they work and have their permanent residence in Sweden.
2. The type and percentage rates of Swedish taxes depend both on the legal form of business chosen and on the turnover of the company, as well as whether the company has employees.
3. Legal entities, including Swedish companies, are required to pay income tax and the rate for 2020 is 28% on the company's profit.
4. Companies that are engaged in the sale of goods and services must pay VAT (MOMS), the percentage rates of which are: 25%, 12% or 6%.
5. Swedish entrepreneurs who have employees in their company should pay both Forskuddstrekk (employee income tax) and Arbeidsgiveravgift (employment tax).
6. Individuals, including Swedish sole proprietors, are required to pay income tax; which consists of national and local tax. The local tax percentage rate for 2020 for income between SEK 0 and 490,700 is 30-35 per cent and the national tax is 0 per cent; for income higher than SEK 509,300, the local tax percentage rate is also 30-35 per cent and the national tax is 20 per cent.
7. A flat 25% SINK tax is paid by taxpayers who are not Swedish residents, as they have been in the Kingdom of Sweden for no more than 183 days in a 12-month period. In this case, it is not necessary to submit an annual tax return to the Skatteverket, and therefore no allowances can be taken into account and no tax refund can be received in Sweden.
8. Swedish taxpayers are required to complete and submit a tax return each year, for the previous tax year, taking into account any costs, allowances and income earned in that year.
9. Taxpayers whose income from Sweden is more than 90 per cent of their total income are entitled to a number of tax reliefs, including: for business rent, accommodation, commuting to work from home, interest expenses on mortgages and consumer loans, traktamente (for business travel expenses), grundavdrag (for time worked in Sweden), jobbskattereduktion (for income), dubbel bosättning (for running a dual household).
10. In Sweden, advance income tax payments, calculated by the Skatteverket on the basis of the estimated income provided when registering the company, must be paid 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.
11. The value added tax, Mervärdesskatt (VAT), on the other hand, must be paid by the 12th of each month or by the 26th for medium-sized Swedish companies.
12. In Sweden, VAT (MOMS) is paid monthly (for large companies with an annual turnover of more than SEK 40 million), every three months (for medium-sized companies with an annual turnover of SEK 1-4 million), every three months or annually (for small companies with an annual turnover of less than SEK 1 million).

While the scope and percentage rates of personal taxes differ considerably from those for corporations, both the former and the latter are obliged to account to the Swedish tax authorities on time every year. Employees of Swedish companies should receive tax cards from their employers in January: KU-10, KU-13 or KU-14, necessary for the annual settlement with the Skatteverket for the previous tax year. Individuals are required to pay taxes in Sweden, such as:

1. income tax - Swedish income tax for individuals (e.g. sole proprietorships) is calculated based on the Swedish income earned by the Swedish company in the tax year. The personal income tax rates for 2020 are: for local tax 30-35% for income between SEK 0 and 490,700, and national tax 0%; for income higher than SEK 509,300 the local tax percentage rate is also 30-35%, and national tax 20%;
2. SINK (statlig inkomstskatt för utomlands bosatta) - persons residing in Sweden for less than 183 days during the tax year are taxed with a special 25 per cent SINK tax for non-Swedish residents, which can be applied for personally (you can also opt for general taxation) or by asking your employer, who will submit a form KU-13 containing income information to the Skatteverket. In the case of SINK taxation, it is not necessary to submit an annual tax return and, consequently, the taxpayer is not entitled to deduct tax credits;
3. local income taxes in Sweden - Landsting and Kommun - are to be paid by all Swedish tax residents, with rates ranging from 30% to 35% (depending on the region or municipality);
4. in Sweden, individuals have to pay a stamp duty of 1.5 per cent when transferring or granting at a 2 per cent interest rate mortgages on real estate and land use rights;
5. if a Swedish company sells goods and services to other EU or non-EU countries, or if it moves goods needed for its business, without changing ownership, to another EU country, the business must be registered for VAT (print SKV 4620 or skatteverket.se);

Legal entities are required to pay a number of taxes in Sweden, which include:

1. income tax - the Swedish income tax rate for 2020 for corporate entities is 28% on the company's profit, in the case of rotation of company reserves and deposits this tax can be reduced to 26%, while advance payments for income tax (preliminärskatt), calculated by the Skatteverket on the basis of the estimated income provided, both at company registration and at the beginning of each subsequent tax year, must be paid on: 17 January, 12 February, 12 March, 12 April, 12 May, 12 June, 12 July, 17 August, 12 September, 12 October, 12 November, 12 December;
2. VAT (MOMS) - value added tax, the percentage rates of which are: 25% (standard rate), 12% (reduced rate e.g. hotels, handicrafts or foodstuffs) or 6% (low rate e.g. books, passenger transport, newspapers) - is paid monthly, quarterly or annually. Swedish companies whose customers are all VAT payers are not required to register for VAT. In contrast, services that are completely exempt from paying VAT in Sweden are: Foreign entrepreneurs must submit a summary report to Sweden every 3 months if:
   • they transport goods from Sweden to other EU countries,
   • their turnover is exempt from VAT in Sweden because the purchaser is a VAT payer in another EU country,
   • the purchaser uses its own VAT identification number.
   VAT charged on the importation of goods must be reported in the tax return to the tax authority - Skatteverket. For companies that are not Swedish VAT payers, the import must be reported directly to the customs office (Tullverket). Owners of both Swedish companies and sole proprietorships have the right to deduct VAT and thus to pay only the difference between the tax charged on sales and the tax paid for the service or good in question;
3. CIT - a 22 per cent tax on the income of companies;
4. excise tax - imposed on selected consumer products. In Sweden, entrepreneurs who are registered as excise taxpayers must submit a declaration to the Swedish tax authorities even if the tax is 0. Once registered as an excise taxpayer, the Swedish entrepreneur will receive a form with a tax return date, which is usually expected within a month. Swedish excise tax covers goods such as:
   • fertilizers,
   • natural gravel,
   • tobacco products,
   • alcoholic products,
   • pesticides,
   • waste,
   • carbon dioxide,
   • sulphur,
   • energy,
   • announcements,
   • lotteries,
   • gambling,
   • prizes from savings,
   • profits from life insurance;
5. customs duty - which is a charge imposed by Sweden on goods that are exported and imported across its customs borders. The amount to be paid depends on the value of the goods in question (plus the cost of transport to the EU), while the tariff in Sweden ranges from 0% to 20% (for private items, no duty has to be paid). Tullverket, or the Swedish Customs Authority, sets the customs duties;
6. property tax - in Sweden, the property tax, which covers all properties except semi-detached houses and dwellings, ranges from 0.2% to 2.8% (it can be deducted from the tax base of legal entities). Legal entities have to pay stamp duty of 4.25 per cent when transferring or granting with 2 per cent interest a mortgage on real estate and usufruct rights to land;
7. dividend tax - Swedish dividend tax is 30 per cent, this can be reduced through a double taxation agreement;
8. employment tax - Arbetsgivaravgifter, includes: a payroll tax of 11.62%, a pension contribution of 10.21%, as well as insurance premiums of 3.55%. Owners of foreign companies that do not have their business premises in Sweden do not have to pay allmän löneavgift, the general wage tax contribution, the employees themselves pay the SA tax each month;
9. taxed capital gains - the tax rate is 22%, as gains from the sale of a company are recognized as income in Sweden. Where capital gains are derived from the sale of a company that is Swedish resident, they may be exempt from tax if they are used for business purposes. Business purposes are taken into account if the company owns at least 10 per cent of the shares in a subsidiary - if the company operates within the EU, if outside the EU, the size must resemble a Swedish business association or a Swedish limited liability company;
10. Swedish corporate taxes - these include:
    • property tax,
    • corporate tax,
    • environmental taxes (sulphur tax, energy tax, carbon tax).
    • Stamp duty on mortgages.

Foreign business owners who intend to do business in Sweden without a permanent place of business are required to send the Skatteverket a tax declaration in Swedish for foreign entrepreneurs on form SKV 4632. The Skatteverket has two to six weeks to send the F-skattesedel tax card and a certificate of registration as taxpayer F. In contrast, Swedish business owners who simultaneously work on a contract of employment in another company must register as a payer of FA tax, which is a combination of business tax (F) and employment tax (A). Swedish tax residents are required to submit an annual tax return, which contains all the information needed to determine their tax liability, such as income, allowances and expenses incurred during the tax year. For Swedish companies, the Swedish Tax Agency - Skatteverket - issues and sends out INKOMSTDEKLARATION 1 between 19 March and 15 April, which must be correctly filled in and submitted by 2 May at the latest, preferably via the skatteverket.se website, for which a personal identification number - personnummer - must be applied for in advance and a digital mailbox must be set up by 27 February at the latest.

In Sweden, when completing the annual tax return, the taxpayer is entitled to take into account all the tax allowances to which he or she is entitled, such as for:

• commuting to work from the place of permanent residence - 1 trip per week can be deducted, by the cheapest means of transport; the lowest ticket price for train or plane travel is not taken into account;
• business travel expenses - treatamente - consisting of a deduction of SEK 230 per diem for the first 90 days and SEK 69 per diem for subsequent days;
• costs related to work in Sweden - up to SEK 5,000 may be deducted, but receipts, bills or invoices must be provided;
• relief for the payment of health insurance contributions in Poland;
• to an income relief – jobbskattereduktion;
• costs related to the purchase of protective clothing needed for work (not applicable to work clothing);
• double household - dubbel bosättning, persons who can prove that they have a household in Sweden and e.g. in Poland, may use this relief for 3 years (for formal and informal unions) or 1 year (for single persons who can certify that their family will move to Sweden);
• interest costs on mortgages and consumer loans;
• costs of training needed to maintain a job in Sweden;
• costs of commuting to work from the place of accommodation, if the person cannot use public transport, SEK 18.5 per 10 km may be deducted;
• accommodation - for temporary employees of Swedish companies who present bank statements confirming payment of rent and utilities, the housing contract and accommodation bills;
• time worked in Sweden - grundavdrag - both for those who have worked in Sweden for a full year and for those whose at least 90% of their total income comes from Sweden;
• board - for temporary Swedish employees;
• purchase of tools and equipment needed for work (not for computers and mobile phones);
• rent of premises, e.g. for a company in Sweden.

It is worth remembering that every Swedish entrepreneur has 90 days, from the moment the Skatteverket issues a tax decision, which should be sent between 15 August and 15 September, to settle accounts with the tax authorities and pay any surcharge. On the other hand, if the taxpayer does not receive INKOMSTDEKLARATION 1 by 15 April, he or she should contact the Skatteverket and download a new form from skatteverket.se. The Swedish tax system covers both legal and natural entities, and consequently, whether the taxpayer is self-employed or contracted to work for a Swedish company, he or she is obliged to pay any required taxes, such as income tax, on time, and to submit an annual tax return to the Swedish tax authorities each year. Failure to comply with these obligations may have consequences in terms of financial penalties, so it is advisable to familiarize yourself in advance with both the applicable deadlines, laws and documents, as well as the percentage rates and the detailed scope of the taxes required by the Swedish authorities.

1. What does the amount and scope of taxes required in Sweden depend on?
   In Sweden, the amount and scope of taxes required depends, among other things, on whether they apply to natural or legal entities, the legal form of the business, whether the company has employees, as well as the turnover of the Swedish company.


2. Who is liable to tax in Sweden?
   Swedish tax liability applies to all persons who live and work in Sweden.


3. What are the import restrictions in Sweden?
   Restrictions on import into Sweden apply to e.g:
   • dangerous tools,
   • tobacco,
   • alcohol,
   • ammunition,
   • weapons,
   • medical syringes with needles,
   • animals.
   Pornography, drugs and doping substances may not be brought into Sweden.


4. What do the export restrictions from Sweden relate to?
   Restrictions related to export from Sweden include:
   • items that are of exceptional cultural importance,
   • products of strategic importance,
   • combustible materials.


5. What are the Swedish property tax rates?
   In Sweden, the real estate tax, which covers all real estate except semi-detached houses and dwellings, ranges from 0.2 per cent to 2.8 per cent (it can be deducted from the tax base of legal entities).


6. How much is the Swedish tax on dividends?
   The Swedish tax on dividends is 30%, this can be reduced through a double taxation agreement.


7. What authority in Sweden determines the duty?
   The Swedish authority responsible for determining the amount of customs duties is the Tullverket, or Customs Authority.


8. What taxes do we count as Swedish corporate taxes?
   Swedish corporate taxes include taxes such as:
   • property tax,
   • environmental taxes (carbon tax, sulphur tax, energy tax),
   • corporation tax,
   • stamp duty on mortgages.


9. What is PAYE?
   PAYE is a form for calculating and paying employment tax, which contains information such as employee tax, employer contributions, employee wages and other employee benefits. Skatteverket sends this form to the employer (upon notification by the employer about the hired employees).


10. What taxes are included in the Swedish employer tax?
    The Swedish employer tax (Arbetsgivaravgifter), which must be paid by the 12th of each month, includes taxes such as:
    • insurance premiums - 3.55%,
    • pension contribution - 10.21%,
    • payroll tax - 11.62% (paid to an individual account at Skatteverket).


11. How often do I have to settle the VAT in Sweden?
    In Sweden, VAT must be settled once a year, once a month or once a quarter.


12. When must a Swedish company be registered for VAT?
    When a Swedish company sells goods and services to other EU countries, or to countries outside the EU, or when it moves goods needed for its business, without changing ownership, to another EU country (registration of the company as a VAT payer should be done on form SKV 4620 or via skatteverket.se).