Taxation in Sweden on salaries for an employee involves contributing to three different levels of government: the

municipality A municipality is usually a single administrative division having corporate status and powers of self-government or jurisdiction as granted by national and regional laws to which it is subordinate. The term ''municipality'' may also mean the go ...

, the

county council A county council is the elected administrative body governing an area known as a county. This term has slightly different meanings in different countries. Ireland The county councils created under British rule in 1899 continue to exist in Irela ...

, and the

central government A central government is the government that is a controlling power over a unitary state. Another distinct but sovereign political entity is a federal government, which may have distinct powers at various levels of government, authorized or dele ...

. Social security contributions are paid to finance the social security system. Income tax on salaries is deducted by the employer (a

PAYE A pay-as-you-earn tax (PAYE), or pay-as-you-go (PAYG) in Australia, is a withholding of taxes on income payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as ...

system) and paid directly by the employer to the

Swedish Tax Agency The Swedish Tax Agency ( sv, Skatteverket) is a government agency in Sweden responsible for national tax collection and administering the population registration. The agency was formed on 1 January 2004 through the merger of the Swedish Nationa ...

(''Skatteverket''). The effective taxation rate in Sweden is commonly cited as among the highest in the world; see

list of countries by tax rates A comparison of tax rates by countries is difficult and somewhat subjective, as tax laws in most countries are extremely complex and the tax burden falls differently on different groups in each country and sub-national unit. The list focuses on ...

Tax revenue as a percentage of GDP (1985-2014)

Sweden Sweden, formally the Kingdom of Sweden,The United Nations Group of Experts on Geographical Names states that the country's formal name is the Kingdom of SwedenUNGEGN World Geographical Names, Sweden./ref> is a Nordic country located on ...

has a taxation system for income from work that combines an

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

(paid by the employee) with

social security Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...

contributions (employers contributions) that are paid by the employer. The total salary cost for the employer is thereby the gross salary plus the

payroll tax Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the em ...

. The employer makes monthly preliminary deductions (

) for income tax and also pays the

to the Swedish Tax Agency. The income tax is contingent on the person being taxable in Sweden, and the social security contributions are contingent on the person being part of the Swedish social insurance plan. The income tax is finalised through a yearly tax assessment the year following the income year. 27% of taxpayer money in Sweden goes towards education and healthcare, whereas 5% goes to the police and military, and 42% to social security.

Value added tax

The

value added tax A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end ...

(''mervärdesskatt'' or ''moms'') rate in Sweden is 25%, with exceptions for food and services like hotel room rental fees (12%), and for sales of

publication To publish is to make content available to the general public.Berne Conve ...

admission ticket A ticket is a voucher that indicates that an individual is entitled to admission to an event or establishment such as a theatre, amusement park, or tourist attraction, or has a right to travel on a vehicle, such as with an airline ticket, ...

s to cultural events and travel within Sweden (6%).

Income tax

Sweden has a

progressive income tax A progressive tax is a tax in which the tax rate increases as the taxable amount increases.Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), ''Concepts of Taxation'', Dryden Press: Fort Worth, TX The term ''progre ...

, the rates for 2021 are as follows (based on yearly incomes):

Taxable income Taxable income refers to the base upon which an income tax system imposes tax. In other words, the income over which the government imposed tax. Generally, it includes some or all items of income and is reduced by expenses and other deductions. Th ...

is reduced by general deductions which means that the marginal tax in practice varies between 7% on incomes just above 20,008 kronor to 60.1% on incomes above 675,700 kronor. For an average salary, on an additional pay of 100 kronor, the employee first pays 32 kronor in income tax (direct, 32%).

Payroll tax

In 2018, the Swedish social security contribution paid by the employer is 31.42%, calculated on top of the employee's salary before taxes. The percentage is lower for old employees. The specifics of the

(

National Insurance National Insurance (NI) is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their famil ...

in UK English) may be found at the Swedish Tax Agency's Website. In addition, the employee pays 7% in pension contributions to the public system, with a cap at an annual income of 420,447 kr. Thus, the maximum employee contribution is 29,400 kr. However, this contribution is neutralized by a corresponding income tax reduction (tax credit) for the employee.

Corporate & capital gains tax

Sweden has a flat tax rate of 30% for capital gains. The Swedish tax authorities defines capital gains as incomes that can not be attributed to business operations or service. For example; rental of private assets, dividends, profit from the sale of assets and interest payments. Corporate net income is taxed at a flat rate of 22%.

Registering a non-Swedish company or sole trader in Sweden

A foreign company conducting business in Sweden, whether a natural or a legal person, may become taxable for

VAT A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...

, employer's contributions and/or income tax. The company should then apply for registration at the

, and may apply for a

Swedish F-tax certificate F-tax is a tax paid by a self-employed person in Sweden. Sole proprietors (sole traders) in Sweden who actively conduct business usually hold an F-tax certificate, which signifies that the sole proprietors themselves are liable to pay their own cor ...

. In the ‘Tax application for foreign entrepreneurs´ brochure and form, SKV 419 an
SKV 4632
respectively, there is information on how to submit the application. Sole traders who have a Swedish personal number, and corporations that have a representative who has a Swedish personal number and who is also authorised to sign (authorised to sign by himself) on behalf of the company, may submit the application electronically through th
verksamt.se
website. Verksamt.se is jointly managed by the

, the

Swedish Companies Registration Office Swedish Companies Registration Office ( sv, Bolagsverket), is a Swedish government agency which mainly handles the registration of new companies and registry changes for existing businesses, such as change of address and change of board of direct ...

and the

Swedish Agency for Economic and Regional Growth The Swedish Agency for Economic and Regional Growth ( sv, Tillväxtverket) is a Swedish government agency organized under the Ministry of Enterprise, tasked to promote entrepreneurship and regional growth, and to implement structural funds programm ...

. Other foreign companies may submit their application directly to the International Tax Offices at the Swedish Tax Agency by post. When registered with the Swedish Tax Agency, the foreign company receives a unique Swedish identity number. For natural persons to receive such a number they must verify their identity with a passport or another such identity card or documentation. For a legal person it is required that the identity is verified with some form of attested certificate of registration/incorporation and that the representative demonstrates his/her authority to represent (sign) on behalf of the legal person when it requests registration for taxation. Foreign legal persons active in Sweden should first contact the Swedish Companies Registration Office to ask if they are required to register a branch office. If such a registration is made with the Swedish Companies Registration Office, they will supplied with a Swedish registration number by the Swedish Tax Agency. For contact information, see the Swedish Companies Registrations Office website. Further information in English can be found on the Swedish Tax Agency's website.Skatteverket.se: Tax registration of foreign companies
,

Note that buying a Swedish company or Swedish real-estate does not necessarily give right of residence in Sweden. Fraudsters in e.g. Egypt have sold such assets claiming they would give right of residence.

Value added tax

Income tax

Payroll tax

Corporate & capital gains tax

Registering a non-Swedish company or sole trader in Sweden

See also

References

Further reading