Wondering about the taxation system in Sweden? Find, in this article, all that you need to know on the Swedish tax system.
Swedes take taxation very seriously ' and are quite open about it. Just like in other Scandinavian countries, in Sweden, it is possible to see exactly how much taxable income each citizen has, and how much taxes they pay. This transparency maintains a sense of equality and keeps everyone accountable: tax evasion is virtually non-existent in Sweden, as everyone understands that taxation funds things like education, healthcare and other social benefits. Taxes are deducted at the base and the rates can be quite high, yet they are fair. Here's what applies to you as an expat.
When do you start paying taxes in Sweden?
To pay taxes in Sweden, you will need to register to the Swedish Tax Agency. When you need to do so depends on your nationality and circumstances. For instance, if you are an EU or Nordic national:
- you can register right away, once you get a job/start your own business
- you can register after 3 months of living in Sweden if you are a job-seeker or self-sufficient
- you can register after 12 months if you are a student
If you are a third-country national, you can register once you have a job in Sweden or if you moved to be with your spouse. In any case, this will happen after your visa/residence permit is approved and you are allowed to stay in the country.
A different set of rules apply if you are not living permanently in Sweden, but spend a lot of time there or commute for work from a neighbouring country. You are then considered to have limited tax liability and have to pay a type of tax called SINK, at a rate of 25% of your total salary from a Swedish company.
Good to know: You do not have to pay tax if your employer does not have any infrastructure in Sweden (office, building, etc.). You are also exempted from tax if you are working for a company which is not based in Sweden for a maximum of 183 days.
How the system works
In general, the funds collected from income tax is used to consolidate the famous 'Swedish Model'. Indeed, this social and economic model guarantees employment, equal salaries for equal jobs and collective welfare of the society as a whole. These greatly contribute to Sweden's rank before the United Nations in terms of human development.
Tax is generally managed by municipalities, county councils and the Swedish parliament. The Skatteverket, that is the Tax Office, receives taxpayers' money which is then transferred to the State, county councils and municipalities and used to finance education, healthcare, defence and public administration. A huge part of taxes goes towards financing pensions and other benefits.
As mentioned above, tax is deducted at source in Sweden. So every month, your employer deducts your Income tax along with any wealthfare contributions straight from your salary. After 12 months, you get an account of your contributions for the current tax year. This document is also submitted to the Skatteverket which will then send you a tax return form in April. You will have to submit this duly filled and signed to the Skatteverket on May 2nd at the latest. The Skatteverket will then check whether there has been any mistake (wrong accounts, etc). In general
Good to know: If you have a Swedish personal identity number, you can do all that online.
Tax rates and tax types
Income tax for residents includes both national and municipal tax. Municipal tax is deducted at a flat rate which varies from one municipality to another, but it is usually between 29-34%. The national tax, for its part, applies at a rate of 20-25% based on how high your income is.
In Sweden, there is a value added tax (VAT) which applies as follows:
- 25% on most goods and services
- 12% on food, hotels and artists' own sales of works of art
- 6% on newspapers, magazines, books, public transport, concert tickets, etc.
Apart from the above, there is also a 30% flat rate taxation on income gained from capital and a local government charge on real estate, if you own a detached or semi-detached house in Sweden.
Specialised foreign employees such as scientists, researchers, technicians, specialists, etc, are eligible to the Expert Tax which is a tax relief. The purpose of this relief is to cater for the lack of skills locally. Experts will thus pay tax on only 75% of their income for the first three years of employment in the country. Note that the Expert Tax does not apply to Swedish nationals.
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