Investors interested in company formation in Sweden should also be aware of the current Swedish taxes for companies, and/or for individual income.
The income tax in Sweden applies to the company’s profit and for individuals, it applies on their employment income or capital income. Understanding the different rates, as well as the tax brackets in Sweden, is important for entrepreneurs and employees.
Our team offers tailored solutions to those who wish to open a company in Sweden and we can also assist those looking for tax compliance services.
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Swedish taxes for companies
A company in Sweden pays taxes on its corporate income according to its residence status:
- if incorporated according to the Swedish Companies Act, the legal entity is a resident Swedish company that pays Swedish taxes on its worldwide income;
- if the legal entity is the Swedish permanent establishment of a foreign company, considered a nonresident corporation, it will pay tax on the income it derives from the country.
The corporate tax rate in Sweden is 20.6%, and there is no surtax or alternative minimum tax. Other relevant taxes for companies include the following:
- 0% withholding tax on dividend payments made to residents;
- 30% general dividend withholding tax on dividend payments made to nonresident individuals from Swedish companies;
- 25% standard value-added tax, with reduced rates of 0%, 6% and 12% applicable to certain types of goods and services;
- real property tax between 0.2% and 2.2% on the tax assessment value of the real property;
- social security contributions of 31.42% paid by the employer; our specialist in payroll in Sweden can give you more details about the different rates that apply according to the ages of the employees.
Investors who plan to set up a company in Sweden should consider all of these taxes, not only the corporate tax rate in Sweden. Additionally, company owners are also asked to follow the tax compliance regulations that include, but are not limited to, the following:
- the tax year is a 12-month period that can end on December 21, April 30, June 30, or August 31;
- companies file separate tax returns, consolidated ones are not accepted;
- there are four different dates to file the annual tax returns, depending on the date the company’s financial year end date;
- preliminary returns are filed and a final tax assessment is filed within six months from the filing deadline for the tax return;
- the principles of the Swedish Financial Accounting Standards Board principles can be used, and other principles in accordance with other regulatory bodies.
The individual income tax in Sweden
If you derive income from Sweden, either from employment, capital income, or other sources, you will fall under a tax bracket in Sweden. Our team briefly lists the brackets that apply in the case of national income tax below:
- 0% rate for an annual taxable income of up to SEK 598,000 (about EUR 50,936) or less;
- 20% rate for annual taxable income of over SEK 598,500 (approximately EUR 50,976).
Additionally, the employment income tax rate is progressive, with rates of about 30% to 52%, including the 20% national income tax rate. The municipal tax rate is about 32% and the capital gains, dividend, and interest taxes have a rate of 30%.
Swedish residents are taxed on their worldwide income while non-residents only on their income derived from the country (this can include pensions and some capital gains).
Deductions and allowances are available to individuals, however, companies in Sweden are not subject to tax incentives.
Contact us if you want to know more about the Swedish taxes for companies or individuals, as well as if you need assistance with company registration in the country.