Taxation of individuals

Employment income tax for residents

Employment income is taxed at the following rounded taxable income amounts (2023)

 

Taxable income (SEK*)         National Income Tax                Municipal Income Tax

From 0 to 614,000                                 0%                                             32%

Over 614,000                                      20%                                             32%

 

*1 SEK= 0,089 EUR

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Employment income tax for non-residents

Non-residents working in Sweden for a Swedish employer or a foreign employer with a permanent establishment (PE) in Sweden are taxed at flat rate of 25% at source. The same rate applies when a pension is paid by a Swedish source to a person not tax-resident in Sweden.

Non-residents working in Sweden for a non-Swedish employer without a PE in Sweden are tax liable in Sweden if the beneficiary of the employee’s work is an entity in Sweden and the work is performed under the management and control of the Swedish entity. The tax rate is 25%. An exception applies if the employees is working in Sweden for less than 15 days in a row and less than 45 days in total during a calendar year. 

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Social Contribution  

Employers pay Swedish employer social security contributions on compensation paid to employees who are covered by the Swedish social security system.
Social security contributions are levied at 31.42% of the total taxable remuneration (no cap) in cash and in kind paid by a Swedish employer or a foreign employer with a PE in Sweden. Foreign employers who do not have a PE in Sweden must register for the payment of social security contributions or may enter into an agreement with the employee that the employee pays and reports the contributions on a monthly basis. Different rates apply depending on which solution is used.
A pension fee of 7% of gross earned income, up to SEK 599,250 (i.e. a maximum fee of SEK 41,948), is payable by the employee, but the fee is normally fully tax creditable on the employee’s tax return (i.e. the effective cost for the employee is normally nil).

Taxation of legal persons

Resident legal entities are liable for tax on their worldwide income unless tax treaties or special exemptions apply. Non-resident entities are taxed on income that is deemed to have its source within Sweden.

Taxable income is subject to corporate tax at a flat rate of 20.6% applying from 1 January 2021. Until 31 December 2020, the corporate tax rate was 21.4%.

All income of corporate entities is treated as business income.

Value Added Tax - VAT

The Swedish VAT system is harmonised with the EU rules. The general VAT rate of 25% is chargeable on most goods and services. Reduced rates apply to a few goods and services, such as hotel accommodation, foodstuffs (excluding alcoholic beverages), restaurant meals, and low or non-alcoholic drinks (12%), as well as newspapers, magazines, books, e-books, passenger transport, maps, musical notes, some cultural services, transport in ski lifts, etc. (6%). Certain financial and insurance services are exempted from VAT.

VAT returns are filed and tax is paid monthly or quarterly. VAT returns must be filed monthly if the VATable turnover is estimated to exceed 40 million Swedish kronor (SEK) (estimated yearly sales excluding any reverse charge or import acquisitions). Companies with VATable turnover below SEK 40 million report VAT quarterly or may choose to report VAT on a monthly basis. For companies with a turnover of less than SEK 1 million, VAT is reported on a yearly basis in the VAT return, and these companies may also choose to report VAT quarterly or on a monthly basis.

New e-commerce regulations

On 1 July 2021, new rules for e-commerce were introduced at an EU level. E-commerce means sales to consumers in the European Union that are made at a distance (i.e. not in a physical store) and where the goods cross a national border. The new rules can be divided into three categories:

1. Platform rules

Since July 1 2021, a platform (electronic interface) that mediates the sale of a product between an underlying seller and a consumer is, in some cases, considered to have bought and sold the product for VAT purposes, even though the platform never owned the product.

2. Distance selling within the European Union

On 1 July 2021, a turnover threshold of 10,000 euros (EUR) for distance sales was introduced. Anyone who has distance sales to other EU countries that exceeds a total of EUR 10,000 (SEK 99,680) is required to charge the customer with the customer country's VAT. In order to be able to report and pay the customer country's VAT to the respective tax authority, the seller either needs to register for VAT in the customer’s countries or use the new simplified reporting (One Stop Shop or OSS) system. The OSS system means that the seller only submits one VAT return for all distance sales on a quarterly basis and pays all VAT in a lump sum to one tax authority, which then will portion it to the other relevant tax authorities.

3. Import of goods to a consumer

From 1 July 2021, someone who sells a product to a consumer where the product is sent from outside the European Union can choose to charge import VAT directly at the time of the sale. The simplification measure is only applicable for when the value of the shipment is less than EUR 150. The seller will then charge import VAT at the time of sale and declare the import VAT via the Import One Stop Shop (IOSS). The goods will pass through customs faster, and the consumer does not receive an invoice for import VAT from the freight forwarder. IOSS declarations are submitted on a monthly basis.

New reverse tax liability for mobile phones, laptops, and certain electronic devices

From 1 April 2021, reverse tax liability shall be applied to the sale of certain goods between Swedish companies when the invoice amount for these goods, excluding VAT, exceeds SEK 100,000. The reverse charge is applicable on the sale of:

• mobile phones

• integrated circuit devices

• gaming consoles

• tablets, and

• laptops.

Reverse charge only applies to sales to companies that are, or should be, VAT registered. If the buyer is not VAT registered, the seller must invoice with VAT. A seller needs to assess whether a sale should be invoiced with reverse charge in three steps:

1. Are the goods sold covered by the rules on reverse charge?

2. If yes, is the buyer VAT registered?

3. If yes, does the invoice amount for the goods covered by the regulations exceed SEK 100,000, excluding VAT?

If the conditions are met, the invoice must be inclusive of Swedish VAT. A buyer needs to check invoices relating to the purchase of such goods to ensure that VAT has been handled correctly. If the seller has incorrectly debited VAT on the invoice, even though reverse tax liability should have been applied, the buyer is not entitled to deduct the debited VAT.

Raised turnover threshold

The annual turnover threshold for VAT reporting is proposed to be raised from 1 July 2022, from SEK 30,000 to SEK 80,000. Companies with a yearly turnover lower than the threshold will not be liable to report and/or pay VAT.

Reduced VAT rate on repairs

From 1 July 2022, the VAT rate on some repair services is proposed to be reduced from 12% to the lowest VAT rate of 6%. The repair services targeted by the proposal are the repairs of bicycles, shoes, leather goods, clothes, and linen. As of 1 April 2023, the VAT on these repair services might be increased again to 12%.