Tax Figures
Corporate Income Tax
The corporate income tax rate is 22%, a fall from the previous rate of over 26%.
Income Tax Rate
Swedish individuals residing in Sweden are liable to pay various forms of taxes, while Swedes residing outside Sweden are taxed on their worldwide income. Generally, individuals who are present in Sweden for 6 months or more and regularly stay overnight are considered residents for tax purposes.
- From 0 to 430,200: 0%
- From 430,300 to 616,100: 20%
- Over 616,100: 25%
Non-residents employed in Sweden are taxed a flat rate of 20%. Non-Swedish residents employed by non-Swedish firms are exempt from paying any income tax provided they do not spend more than 183 days in Sweden over a 12-month period.
Payroll Tax
Payroll tax is taxed at a rate of 31.42% for employers, or 28.97% for the self-employed, although this may differ to individuals under 26 or above 66 to encourage greater labour force participation.
Sales Tax
Sales tax is 25%. Swedish VAT is in accordance with EU VAT directives, at a rate of 25%. 12% or 6% rates may apply for some goods and services such as restaurant services, artworks, books and newspapers and public transport.
Withholding Tax
Dividends paid to Swedish individuals or corporations are generally not subject to any withholding, however, non-residents are subject to 30% withholding tax of dividend payments. Sweden does not withhold tax on interest, royalties or branch profits. Withholding tax on dividends by a Swedish company to its foreign parent company is reduced or waived under most double tax treaties. Withholding tax on dividends made to a foreign company is, however, also waived according to domestic legislation if made on shares held for business reasons. Unquoted shares are always considered held for business purposes. Quoted shares are considered held for business purposes provided at least 10 per cent of the shares are held for at least one year.
Other Tax
Other than stamp duty, no transfer taxes exist. Stamp duty rates are 4.25% for the transfer or real property and site leaseholds for corporations, and 1.5% for individuals. If it is an intragroup transaction, stamp duty can be deferred. Sweden does not impose taxes upon capital duty.
Time to prepare and Pay Taxes
122 hours
Employers Social Security and statutory contributions
The social security system in Sweden is comprised of several elements:
- Health insurance
- Benefits for work-related accidents and occupational diseases
- Benefits for invalidity
- Pensions for the elderly and survivors
- Unemployment insurance
- Parental and family benefits
The system can be complex at times, but essentially to be eligible to receive any social benefits, a Swedish personal identity number must be acquired from the Swedish Tax Agency, in addition to registration with the Swedish Social Insurance Agency often being a requirement. To ensure eligibility, registration should be undertaken as soon as possible after arriving in Sweden.
Employers are required to make a contribution of 31.42% in addition to an employee’s base salary.
Employees Social Security and statutory contributions
Employees must make a 7% contribution towards the public social security system.
Payroll
There are specific rules for payroll and taxation in Sweden, depending on whether foreign national or Swedish residents are employed. The primary concerns for a foreign company that needs to comply with tax laws in Sweden: Individual income tax (IIT) for employees in Sweden, social security costs, payroll tax, sales tax, and withholding tax.
Remote Payroll
A remote payroll in Sweden is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Sweden. The only option for a non-resident company to payroll its employees (both local and foreign) in Sweden is to use a fully outsourced service like a GEO or FESCO which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in Sweden under one of the forms available, (RO, WFOE or JV) but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Internal Payroll
Larger companies with a commitment to Sweden may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Swedish payroll, and can fulfill all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Swedish employment laws.
Setting up payroll in Sweden
Currency
The official Swedish currency in the Swedish Krona (SEK), equivalent to approximately USD$0.11.
Employee Information Required
Personal/corporate identity number of payee/employee is obliged, either a Swedish TIN (Tax Identification Number) or co-ordination number supplied by the Tax Agency.
Documentation Required for New Employees
Contracts do not have to be in writing, but the Employee Protection Act stipulates that the employer must provide the employee with extensive written information about the conditions of employment within one month.
Information routines are set by the employer and sometimes in Local Agreements with the union.
Payment Mode
The employee needs a bank account as the standard procedure is to pay salaries via electronic transfer, very rarely with cash. If bank account is unknown, the payment is settled with a money order from the bank. This would usually cost an extra fee to cash for the employee.
Frequency of Salary Payment
The pay frequencies which can be processed in additional to usual monthly payrolls are two-week salary and special regulations for sailors.
The most common pay date is the 25th on monthly basis, but it can differ between companies and Collective and tie-in agreements.
Invoice / Payslips required
There is no statutory right to a payslip, but it is customary to issue one. Collective and tie-in agreements may be established that require that payslips be issued
Minimum Wage
Swedish minimum wages are not regulated by law, but subject to bargaining between employers and trade unions and form part of collective agreements
