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Global expatriate tax guide

Expatriate tax - Sweden

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Expatriates taking up employment in Sweden will be subject to comprehensive rules and in some cases, employment visa requirements. Grant Thornton Sweden’s Global Mobility team can help employer and their expatriates to deal with Swedish tax and social security.

In particular, Grant Thornton Sweden can help to identify Swedish tax planning opportunities and review tax equalization policies; as well as providing compliance services regarding Swedish tax filing requirements.

Click on each of the areas below to expand for more information:

Facts and figures
Pre arrival procedures

An individual from a non-EU/EEA country must apply and be granted residency and a work permit at the Swedish Embassy or consulate general in his/her home country before arrival to Sweden.

Registration for tax and residence purposes

An individual should register for population purposes with the local tax office, if the assignment is expected to last for more than one year. The individual will then be receiving a normal tax identification number.

If the expected stay is less than one year but continuous for more than six months an individual should apply for income tax purposes resulting in a co-ordination number being assigned to the individual. If the individual is to work in Sweden for less than six months, there is a possibility to apply for SINK-taxation, see more below. Also with SINK, the individual will receive a co-ordination number for income tax purposes.

Employment visas

Nordic citizens are not required to apply for a work permit or a residence permit. An EU/EEA citizen arriving in Sweden with the intention to stay for more than three months must apply for a residence card at the Swedish Migration Board. A work permit is, however, not required for EU/EEA citizens.

Tax year

The tax year is the calendar year, 1 January to 31 December.

Tax returns and compliance

The taxpayer is liable to submit a tax return by 2 May the year after the income year. Final tax assessment statements will be sent out continuously and latest in December.

The employer shall withhold preliminary tax on employment income, ie, Pay As You Earn (PAYE). The preliminary PAYE tax is based on annual tax tables prepared by the Tax Agency, unless SINK is approved.

Since 2021, it is no longer possible for the employee to manage the tax payments themselves and instead the foreign employer must register as an employer and manage the reports and tax payments to the Swedish Tax Agency also in case there is no Swedish Pe for CIT purposes..

In addition, foreign businesses that have employees working in Sweden should apply for F-tax. Otherwise, Swedish companies are obliged to withhold 30% tax on invoices from foreign companies that carries out work in Sweden.

Income tax rates - 2022

Income tax in Sweden consists of municipal and state tax. Municipal tax on salary income varies by municipality from approximately 29% to 35%. On taxable income exceeding SEK 598,500, state tax of 20% is added.

Taxable income (SEK)

Municipal tax (%) State tax (%)
15,400*–598,500 29–35%

598,500 + 29–35% 20%
 
* Minimum basic deduction

 

Sample income tax calculation

 

 Income/Reduction

 SEK

Employment income

 

Salary

800,000

Car benefit

58,900

Total earned income

858,900
Basic deduction -15,400

Taxable income:

843,500

 

 

Capital income

 

Dividend

2 500

Bank interest

1,000

Interest on loan

-15,000

Total capital income

-11,500

 

 

Income tax thereon

 

Municipal income tax 844,700 * 31%

261,485
State tax: (844,700 - 540,700) * 20%
49,000
Capital tax reduction: (-11,500 * 30%)
-3,450
General pension contribution
42,000
Tax reduction on general pension contribution
-42,000
Tax reduction on employment income
-30,365
Total tax
276,670

 

Basis of taxation
Charge to tax

Taxation of expatriates moving to Sweden is based on the length of their stay.

A Swedish tax resident is liable to pay tax in Sweden based on worldwide income at ordinary income tax rates. A non-resident individual is subject to tax in Sweden on source income only. A Special Income Tax for non-resident individuals (SINK) of 25% tax is applicable on employment and pension income. An application for SINK must be submitted to and approved by the Tax Agency for it to apply.

A bilateral or multilateral income tax treaty may limit the right for Sweden to impose tax on certain types of income  

Residence

An individual will be considered a Swedish resident for tax purposes if:

  1. the individual is domiciled in Sweden, i.e. has his/her actual and permanent home in Sweden, or
  2. the individual stays in Sweden continuously for more than six months or on a regularly occurring stay in Sweden (short stays abroad for holidays, etc. are disregarded). The tax liability will apply from the first day.

There are no explicit rules in Swedish tax law governing what would constitute a continuous stay in Sweden. However, the Swedish Tax Agency’s opinion is that an individual who regularly stays overnight in Sweden in a consecutive period exceeding six months should be considered resident in Sweden. It should be noted that an individual could be deemed to stay in Sweden regularly where the stay in total does not exceeds six months but is considered to be ‘continuous and recurring’.

An individual who has been domiciled in Sweden may be considered tax resident in Sweden also after a move from Sweden in case (s)he maintains so called essential connections with Sweden, e.g. earlier permanent home is maintained or family resides in Sweden. 

 

Income from employment

Generally, all earnings deriving from an activity, occasional or regular, are taxed as income from employment provided that the income is not considered business income or income from capital. All earnings from an employer to an employee are reportable and taxable as income from employment, i.e. wages, fees, sickness allowances, severance pay as well as benefits in kind i.e. free meals, a company car, interest free loans, travel benefits and expense allowances, e.g. subsistence allowances and travel compensation.

Source of employment

The source of employment income follows the OECD model treaty which means that the source of employment is generally determined by the place where services are performed.

Benefits in kind

In principle, all fringe benefits, i.e., any remuneration in kind received by an employee from the employer for services rendered, are taxable at their fair market value. For most common forms of fringe benefits there are standardized valuations set annually by the Swedish Tax Agency.

Expatriate concessions

Under certain conditions, foreign key employees working in Sweden for limited periods can qualify for a reduction of the income tax liability on their earnings. There are two alternatives for the tax relief to be applicable.

One, if the monthly salary level exceeds two basic amounts per month (approx. SEK 105 000 for the income year 2023 and SEK 114 600 for 2024). Two, if the employee is considered as an expert, a researcher or a key employee. The reduction amounts to 25% and is applicable only if the employer/employee has applied for a ruling within three months after the work started in Sweden.

The expert tax relief scheme can only apply for five years. An individual who has been resident in Sweden during any of the five years prior to the start of the assignment in Sweden cannot qualify for tax relief status. The individual may not be a Swedish citizen.

The tax relief exempts the following remuneration from Swedish tax and social security contributions:

  • 25% of salaries and benefits
  • moving expenses (to and from Sweden)
  • home travel expenses, two return tickets per year to the home country for the individual and family members
  • children’s school fees.
Relief for foreign taxes

Sweden has signed tax treaties with a large number of countries to avoid or relieve double taxation of income. An individual may be considered as tax resident in Sweden and in another country at the same time. For Swedish tax purposes, residency in another country does not affect Swedish residency. However, if Sweden has a tax treaty with the other country that claims residency, tax reliefs are available.

In addition, Swedish internal tax laws allow reliefs to avoid double taxation on income provided certain conditions are met.

Deductions against income

All taxpayers with unlimited tax liability are entitled to a basic deduction, provided that 90 % of the salary income is taxable in Sweden. This adjustment is made automatically by the Tax Agency when assessing the final taxes. The tax-free basic deduction amount ranges from SEK 15,400-40,500 depending on the total taxable income (or SEK 22,300 for the lowest taxable income).

All taxpayers with unlimited tax liability and an income from employment are entitled to a tax reduction on employment income. The tax reduction is only deductible on municipal income tax and not state tax, real estate tax or property tax.

Expenses, that are wholly, exclusively, and necessarily incurred in the performance of duty may be deducted from employment income if claimed in the income tax return. Expenses of this kind include, for example:

  • additional living expenses during business travel or temporary assignment.
  • travel expenses to and from work.
  • the costs of using a personal car for business purposes.
  • other costs which are necessary to perform the taxpayer’s duty.

Some of these costs must exceed a certain amount in order to be deductible. Others are only deductible up to a certain maximum limit or under special circumstances.

Employee mandatory foreign social security contributions are, with certain limitations, also deductible if the income is subject to income tax in Sweden.

Other taxes
Personal asset tax

Interest income, dividends and capital gains are taxed at a flat rate of 30%. Generally, 70% of capital losses are deductible. A tax reduction is granted on losses exceeding income on capital, resulting in a net loss. The reduction is 30% of the net loss up to SEK 100,000 and 21% on amounts exceeding SEK 100,000.

Inheritance & gift taxes

There is no gift or inheritance tax in Sweden.

Investment income

See ‘Capital gains tax’ above.

Local taxes

Not applicable, except municipality tax on employment/pension income.

Real estate tax

A municipal charge is levied on family houses instead of real estate tax. The charge varies depending on the type of house and construction year and the highest charge amounts to SEK 9,287 (2023) per building. Family houses abroad are not subject to the municipal charge.

Real estate tax is still levied on other property, e.g., undeveloped land.

Social security taxes

The statutory social security charges amount to 31.42% (for income year 2023) of the total remuneration paid to employees including all taxable benefits in kind. Employees do not contribute to these charges and are only payable by the employer. Further, an employer pays, on average, an additional 24.26% of salaries to cover the cost of contractual pension plans.

Employees are charged a pension insurance fee of 7% of employment income. The maximum charge is SEK 42,000 (2023). The charge is fully credited so this has no real effect on the income tax payments for the employee.

The social security charges for foreign employers without a permanent establishment in Sweden is reduced to 19.8% (2023). A foreign employer without a permanent establishment in Sweden can agree with the employee, that the employee will pay the social security costs on the employer’s behalf. The employee has to file an application and register with the Tax Agency to pay monthly contributions under such agreement. Please however note that this is less common after the legislation update during 2021 that foreign employers are obliged to register as an employer and report and pay the income taxes. It is then easier if the foreign employer also reports the social security contributions.

Stock options

Stock options classified as employee stock options according to Swedish legislation are generally taxed as employment income upon exercise. The taxable benefit is equal to the difference between the fair market value of the stock on the date of exercise, and the option (exercise) price.

As the tax treatment of equity-oriented plans is complex in Sweden, and the classification of each plan is very important, we strongly recommend that this issue is discussed with a Grant Thornton Sweden tax specialist.

Wealth tax

There is no wealth tax in Sweden.

Other specific taxes

An individual who is not a member of the Swedish Church, or some other specific Church, still has to pay a burial fee. The fee depends on the municipality, but the average burial fee is 0.258%.

Tax planning opportunities
Earnings description Planning possible
Base salary Y
Bonus Y
Childcare N
Club membership N
Company car Y
Cost of living allowance Y
Education/Schooling Y
Home leave Y
Housing Y
Medical expenses Y
Moving expenses Y
Pension scheme Y

 

For further information on expatriate tax services in Sweden please contact:

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Aino Askegård Andrésen

E aino.a.andresen@se.gt.com

  

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Maria Malm

E maria.malm@gt.se.com