SwedenTax Obligations Detailed

As of February 5, 2025, employers in Sweden have several tax obligations including social security contributions, payroll tax, and income tax withholding.

Employer Contributions (Social Security)

The standard employer contribution rate is 31.42% of an employee's gross salary and benefits. This includes:

• Health insurance: 3.55%
• Parental insurance: 2.60%
• Pension: 10.21%
• Survivor's pension: 0.60%
• Labour market: 2.64%
• Work injury: 0.20%
• General payroll tax: 11.62%

Exceptions:

• Only pension contributions (10.21%) apply to employees aged 66 or older at the start of 2025.
• No contributions are due for employees born in or before 1937.

Preliminary Income Tax (PAYE)

Employers withhold preliminary income tax from employee salaries and report it monthly through a PAYE return (Arbetsgivardeklaration). Starting January 2025, information about employee absences affecting compensation, such as parental leave, must also be reported. The due dates are the 12th of the following month (February 12th for January, March 12th for February, etc.), with possible adjustments for weekends.

Expert Tax Relief

For foreign experts, researchers, and key personnel, a tax relief can apply if certain qualifications are met, or if their monthly salary exceeds SEK 88,201 in 2025. This relief exempts 25% of their employment income from Swedish taxation and also certain benefits and expense reimbursements. Furthermore, the exempted income is not subject to social security contributions. Applications for the relief are due within three months of starting work in Sweden.

Other Tax-Related Obligations

• AGI Reporting: Employers must report if compensation reported in the PAYE return has been affected by parental leave or temporary parental benefits.
• Annual Taxes: The employer is responsible for providing employees with the necessary documentation for their annual income tax filing. The deadline for individuals to submit their tax return is May 2, 2025, with a possible extension to May 16, 2025.

It's important to note that this information is current as of February 5, 2025, and tax regulations can change. Always consult with official sources or a tax advisor for the most up-to-date information and personalized guidance.

In Sweden, employee tax deductions are handled through a pay-as-you-earn (PAYE) system, where employers deduct taxes directly from employee salaries. This overview covers the key aspects of this system for 2025.

Income Tax

• National Tax: This progressive tax applies to income above SEK 523,200 annually. The rate is 20% for income exceeding this threshold, and 0% below it. As of February 5, 2025, there is no information available about potential changes for the next taxation year.
• Municipal Tax: A flat tax rate determined by each municipality, averaging around 32.28%. This rate can vary, so employees should confirm the specific rate applicable to their location.

Other Deductions

• Social Security Contributions: Employees do not directly contribute to social security. Employers pay these contributions, which are approximately 31.42% of the employee's salary.

• Job-Related Expenses: Certain work-related expenses can be deducted.

  • Temporary Work: Deductions for increased expenses (meals, minor costs) during temporary work within Sweden are either the actual costs or a standard rate of SEK 145 per day (for the 2024 income year – tax return 2025). The standard rate information for income year 2025 will be available towards the end of the year.
  • Travel: Deductions are available for travel expenses exceeding SEK 11,000 annually. For privately owned cars, the deduction is capped at SEK 50 per 10 km (for 2024 income year). For employer-provided cars, it's SEK 24 per 10 km, or SEK 19 for electric cars (for 2024 income year). Those who are elderly, disabled or ill can deduct up to these limits regardless of distance. The rates and thresholds might change for the next tax year, information regarding changes for 2025 will be available by the end of the current year.

Expert Tax Relief

Foreign experts and key personnel can apply for tax relief, resulting in 25% of their income being exempt from tax and social security. Eligibility criteria for 2025 include being a non-Swedish national who hasn't been a tax resident in the past five years. The alternative qualification is having a monthly income exceeding SEK 88,200 (1.5 times the 2025 price base amount). The relief period is five years, although seven-year periods may exist due to previous regulations. Applications for this relief must be submitted to the Taxation of Research Workers Board (Forskarskattenämnden) within three months of starting work in Sweden.

General Information

• Tax Tables: Employers use tax tables provided by the Swedish Tax Agency (Skatteverket) to deduct the correct amount of preliminary income tax.
• Reporting: Employers submit monthly reports (Arbetsgivardeklaration) to Skatteverket, detailing withheld taxes and social security contributions.
• Payment Deadlines: Tax payments are generally due by the 12th of the following month (exceptions apply for January and August).

Additional deductions might exist. Consult with the Skatteverket or a tax advisor for personalized guidance. This information is current as of February 5, 2025, and may be subject to change.

In Sweden, Value Added Tax (VAT), known as Mervärdesskatt (Moms), is a consumption tax levied on most goods and services.

VAT Rates

• Standard Rate: 25% (Applies to most goods and services)
• Reduced Rates: 12% (e.g., food, non-alcoholic beverages, hotel accommodations, restaurant services) and 6% (e.g., passenger transport, books, newspapers, cultural events).
• Zero-Rated: Certain goods and services are zero-rated. Examples include pharmaceuticals, intra-community, and international passenger transport.
• Exempt: Some supplies are VAT exempt, such as healthcare, financial services, and insurance. These sales are exempt without the 'right to deduct', meaning the VAT paid on related purchases isn't deductible.

VAT Registration Threshold

• As of January 1, 2025, the annual turnover threshold for mandatory VAT registration in Sweden is SEK 120,000. Businesses with turnover below this can register voluntarily.
• There's no threshold for non-resident businesses; they must register upon starting operations in Sweden. Non-EU businesses also require a fiscal representative approved by the Swedish Tax Agency and established in Sweden.
• For EU businesses engaged in distance selling to Swedish consumers, the threshold for VAT registration is SEK 99,680. However, if goods are stored in Sweden (e.g., through programs like Fulfilled-by-Amazon), registration is mandatory regardless of sales volume.

VAT Filing and Payment

• Monthly: Businesses with an annual turnover exceeding SEK 40 million must file monthly. Returns are due by the 26th of the following month (27th in December).
• Quarterly: Businesses with a turnover between SEK 1 million and SEK 40 million can choose between monthly and quarterly filing. Quarterly returns are typically due by the 12th of the second month following the reporting period, with exceptions for January and August (17th).
• Annually: Businesses with a turnover below SEK 1 million (and subject to VAT) file annually. They can opt for quarterly or monthly filing. Annual returns are due by the 26th of the second month following the fiscal year (27th in December).

New Invoicing Rules for 2025

As of January 1, 2025, Sweden has updated VAT invoicing rules, including a new framework for simplified invoices for smaller transactions or specific scenarios. Businesses must adapt their processes accordingly. Specific changes cover sales via payment machines, public transport tickets, toll payments, and combined electricity/network service invoices. The update aims to simplify compliance and reduce administrative burden.

EU-Wide Small Business Scheme

The EU-wide small business scheme, applicable to Sweden, provides VAT simplifications for businesses operating in multiple EU states. Specific criteria apply regarding turnover thresholds.

Other Important Information

• Intra-Community Acquisitions: The threshold for reporting Intrastat returns is SEK 90,000.
• VAT Grouping: Available but limited to specific financial services and commissionaire structures.
• VAT Recovery for Foreign Businesses: Permitted.

This information is current as of February 5, 2025, and might be subject to change. Always consult with a tax professional for personalized advice.

Sweden offers a few tax incentives, primarily focused on attracting highly skilled foreign workers and promoting research and development.

Expert Tax Relief

This incentive targets foreign experts, researchers, and key personnel working for a Swedish company or a foreign company with a permanent establishment in Sweden.

• Eligibility:
  • Non-Swedish citizen.
  • Not a tax resident in Sweden for the past five years.
  • Intending to stay in Sweden for a maximum of seven years.
  • Employed by a Swedish company or a foreign company with a permanent establishment in Sweden.
  • Monthly salary exceeding SEK 88,201 (as of 2025). Alternatively, eligibility can be based on specific expertise regardless of salary level.
• Incentive Type: Tax relief.
• Benefit: 25% of the salary is exempt from income tax and social security contributions. Certain expenses like moving costs, home travel, and school fees are also tax-exempt.
• Application: Submit an application to the Taxation of Research Workers Board within three months of starting work in Sweden.

Tax Relief for Donations

This applies to donations made to certain non-profit organizations approved by the Swedish Tax Agency.

• Eligibility: Individual donors.
• Incentive type: Tax deduction.
• Benefit: 25% of donations between SEK 200 and SEK 1,500 are deductible if total donations are at least SEK 2,000.
• Application: Declared through the individual’s annual tax return. The organization receiving the donation must be pre-approved.

Investment Savings Accounts (ISK) Tax Exemption

• Eligibility: Individual holding an ISK account.
• Incentive type: Tax exemption.
• Benefit: Yield tax exemption on amounts up to SEK 150,000 within the ISK in 2025 and SEK 300,000 in 2026.
• Application: Automatic exemption applied upon tax filing.

Other Incentives

• R&D Deductions: There are also existing R&D deduction schemes, although specific details aren't available at this time. More information might be available from tax advisory services or directly from the Swedish Tax Agency.
• Reduced tax on so-called agricultural diesel: An expanded tax reduction is proposed for diesel used in work machinery, ships, and certain boats in professional agricultural, forestry, and aquaculture operations. The changes are proposed to enter into force on 1 January 2025. However, the older provisions will continue to apply to consumption of diesel that occurs before the new rules enter into force.

Note: This information is current as of February 5, 2025, and might be subject to change. Consulting with a tax advisor is recommended for personalized guidance.