Sweden tax system: audit, reporting and optimization of taxation of Swedish companies and individuals: VAT, income tax and capital gains
Basic taxes (briefly)
|Corporate tax (in detail)||The income tax rate is 20.6%|
|Capital gains tax. Details|
|VAT. Details||The standard VAT rate is 25%. Reduced rates of 12% and 6% apply to some goods and services|
|Other taxes||Social contributions, Property tax, Commercial property tax|
|Stamp duty||For real estate transactions - 4.25%|
International tax agreement
|Albania, Antigua and Barbuda, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Canada, Chile, China, Croatia, Cyprus, Czech Republic, Egypt, Estonia, Former Yugoslav Republic of Macedonia, France Gambia, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kenya, Korea (Republic of), Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Montenegro, Namibia, Netherlands, New Zealand, Nigeria, Pakistan, Philippines, Poland, Portugal, Romania, Russian Federation, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Switzerland, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom, United States, Vanuatu, Venezuela, Viet nam, Zambia, Zimbabwe|
|Andorra, Anguilla, Antigua and Barbuda, Aruba, Bahamas, Bahrain, Belize, Bermuda, Brunei Darussalam, Cayman Islands, Cook Islands, Costa Rica, Curaçao, Denmark, Dominica, Faroe Islands, Finland, Gibraltar, Greenland, Grenada, Guatemala, Hong Kong, Iceland, Isle of Man, Jersey, Liberia, Liechtenstein, Macao (China), Marshall Islands, Monaco, Montserrat, Niue, Norway, Panama, Qatar, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, San Marino, Seychelles, Sint Maarten, Turks and Caicos Islands, United Arab Emirates, Uruguay, Vanuatu, Virgin Islands (British)|
The taxes in Sweden are characterized by the following competitive tax rules:
- comparatively low effective corporate tax rate; tax exemptions on capital gains and dividends; no thin-capitalization rules; no withholding tax on interest; no stamp duty or capital duties on share capital; extensive double tax treaty network.
Taxpayers of personal tax in Sweden are:
- individuals living or regularly residing in Sweden; individuals that has been living in Sweden previously even after departure from Sweden in the case of retaining essential ties with Sweden, such as permanent home or family; foreign nationals which are present in Sweden for a period of more than 183 days during the tax year.
- municipal tax rate between 28.9 % and 34.2 %; national tax rate between 20 % and 25 %.
- 30 % to individuals earning from 0,00 SEK to 401,100 SEK (approx. 48.710 EUR); 50 % to individuals earning from 401,100 SEK (approx. 48,710 EUR) to 574,300 SEK (approx. 69,740 EUR); 55 % to individuals earning over 574,300 SEK (approx. 69,740 EUR).
- business income; employment income; capital income.
- 1,000 SEK (approx. 120 EUR) is levied for late returns by individuals; 40 % of the tax due on hidden income is levied if false information is provided.
Taxpayers of corporate tax are companies and branches that conduct business in Sweden. The rate of corporate tax in Sweden is 21.4 %. The effective rate can be lower (approx. 19.7 %) by way of using the possibilities of tax allocation reserve. The income which is subject to tax:
- worldwide income of resident Swedish companies (a company is resident in Sweden if it is registered with the Swedish Companies Registration Office; income of nonresident companies arising from sources in Sweden.
- 5,000 SEK (approx. 600 EUR) is levied for late filing; 40 % of the tax due on hidden income is levied if the taxpayer has omitted or provided false information on the return.
Tax Allocation Reserve
Companies are allowed to make annual appropriations to a “tax allocation reserve” (periodiseringsfond). This mechanism allows companies to carry back losses to offset previous years’ profits.
There are no thin-capitalization restrictions for tax purposes. Swedish companies may not deduct interest expense on loans. The added fact that withholding tax is not levied on interest makes it favourable to create structures where the return on an investment is distributed as interest.
Capital Gains Tax
Personal Capital Gains Tax Taxpayers are individuals. Capital gains are taxed at a flat rate of 30 %. Corporate Capital Gains Tax Corporate Capital Gains are tax-exempt:
- if capital gains derived from the sale of shares in a resident company; if capital gains derived from the sale of shares in a foreign company.
- unlisted shares are always tax-exempt, i.e. no qualification time or minimum holding of votes or capital; listed shares are tax-exempt if the holding represents at least 10 % of the voting rights and must have been held for a period of at least one year.
Taxpayers of VAT in Sweden are natural or legal persons selling goods or services which are subject to VAT in Sweden. VAT is charged in every step of the production and distribution chain of products and services. If the business is related to selling goods or services, the VAT registration is obligatory regardless of the annual turnover of the company. If the Company is liable to pay VAT, the business must be registered for VAT with the Swedish Tax Agency no later than two weeks before the business is started. The tax rates for VAT:
- 25 % – general tax rate, applies to most goods and services; 12 % – reduced tax rate, applies to food, hotels accommodation, artists’ own sales of works of art, cultural and sporting events, restaurant and catering services (except for wine, beer and spirits, where the standard tax rate applies), etc.; 6 % – reduced tax rate, applies to newspapers, magazines, books, public transport, etc.
- real estate business; medical and dental care; social services; education; banking services; financial services.
- the calendar year, if the annual turnover of the company is less 1 million SEK (approx. 119,900 EUR); the calendar quarter/calendar month (at the Company’s choice), if the annual turnover of the company exceeds 1 million SEK.
- in case of selling goods to a VAT-registered purchaser in another EU country who quotes a valid VAT registration number. The purchaser reports the VAT in his own country; in case of exporting goods, regardless of who the purchaser is.
Dividends Dividends distributed to corporate Shareholders are exempt from withholding tax:
- if a Shareholder is registered in the European Union (EU tax resident) and own not less than 10 % of the LLC share capital and the form of entity is analogous to Swedish LLC; if a Shareholder is resident in a country with which Sweden has signed a tax treaty; if a Shareholder is resident in a country with similar taxation on corporate income as in Sweden; This condition is met if the net corporate income is taxed at a rate of at least 10 to 15 %.
Real Property Tax Taxpayers of the Real Property Tax are owners of real property. The taxation base includes real property at the territory of Sweden. The tax rates of real property tax in Sweden range between 0.2 % and 2.8 % on the tax assessed value (as determined by the tax authorities). A Real Property Fee is paid instead of property tax on:
- dwellings – 6,512 SEK (approx. 780 EUR) or 0.75 % of the property’s assessed value; duplex dwellings – 1,302 SEK (approx. 156 EUR) or 0.4 % of the real property’s assessed value.
Stamp duty is levied on the transfer of real estate and on mortgage loans. As from 1 January 2011, the standard rate for real estate is 4.25 % if the transferee is a legal entity. For mortgage loans, the rate is between 0.4 % and 2 %.
There is no exchange control in Sweden.
Regardless of the type of company and scope of the business the company's transactions must all be accounted for in accordance with the Swedish Accounting Act (Bokföringslagen). Accounting is a system of organization and processing of a company's financial transactions; it involves saving receipts, invoices and other documents. A Company's accounts normally consist of:
- day book; general ledger; annual report and other financial accounts.
- Annual Return – including balance sheet, income statement, directors’ report, additional notes to the Directors’ report and financial statements. Large companies must also submit a cash flow statement; audit report, when relevant; minutes of the general meeting of Shareholders, if the meeting has adopted a dividend payment resolution (profit distribution); consolidated accounts and audit report for the majority of parent companies, if the company is part of a group.
- profit and loss account: it must show correct details of income and expenditure for the financial year; balance sheet: it is a summary of the company's wealth, assets, liabilities and equity at the balance sheet date; Directors’ report; additional notes to the Directors’ report; financial statements.
The role of the Auditor is to ensure that the Company’s management complies with the Companies Act and Articles of Association. Only a certified accountant and public accounting firms registered by the Supervisory Board of Public Accountants (Revisors Namnden) may audit Limited Liability Companies. A Limited Liability Company needs to have an Auditor if it meets at least two of the following criteria, for each and every one of the two most recent financial years:
- average of more than 3 employees; balance sheet total exceeding 1.5 million SEK (approx. 179,800 EUR); annual net sales exceeding 3 million SEK (approx. 360,000 EUR).
- average of more than 50 employees in past two years; balance sheet total exceeding 40 million SEK (approx. 4,795,000 EUR) in past two years; annual net sales exceeding 80 million SEK (approx. 960,000 EUR); listed on the stock exchange.
The financial year of a Limited Liability Company covers 12 months. The first financial year begins on the day the Company is registered. The Company’s financial year is stated in the Articles of Association. It is permissible to have a financial year of less than 12 months or to extend the financial year to a maximum of 18 months.
Taxes of Sweden
|Min. rate for corporate tax||20,6%|
|Capital gains tax||Regular rate|