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Taxes – what to expect

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Älvstranden Utveckling/Hans Wretling
Preamble

Sweden is renowned for its high taxes. But as an individual living here, you get a lot in return, including a generous social welfare system, affordable preschools and healthcare, and world class public transport.

Body

Income taxes

Sweden has a progressive income tax and income thresholds are adjusted each year. On earnings up to about SEK440,000 per year you will pay approximately 30-33% in local income taxes, depending on which municipality you live in. On any earnings over this figure you will also pay national income taxes, with the money going to the state. The rate is 20% on income between about SEK440,000 and 640,000, and 25% on income over SEK640,000.

Paying taxes in Sweden is very straightforward: employers pay payroll tax on top of your salary every month, income tax is deducted directly from your monthly salary, and value-added tax is included in the price of food, goods and services. Every person is taxed individually, even when married.

If everything appears correct on your mandatory, pre-printed annual tax return, reporting your taxes may simply involve sending a text message from your mobile phone to the Swedish Tax Agency (Skatteverket) to confirm this. For more information visit the Swedish Tax Agency website.

Tax relief for key foreign personnel

Sweden offers a tax relief scheme for highly skilled internationals, such as experts, researchers and people who hold vital positions in Swedish companies. The scheme provides a 25% reduction of your taxable income.

To be considered for the tax relief you need to reach a certain level of remuneration, which per month must exceed two times the price base amount for the calendar year in which the work commences. The price base amount for 2016 is SEK44,300, so your monthly remuneration would need to exceed SEK88,600.

If you don’t reach this remuneration level you can still be considered for tax relief if you are an expert/specialist, researcher, executive or other key personnel. One main criterion for qualifying on these grounds is that Swedes with your skills or talents are impossible or extremely difficult to recruit in Sweden.

Applications must be made within three months of the start of your employment. To find out more about the prerequisites and to apply visit the website of the Taxation of Research Workers Board (Forskarskattenämnden).

 

Income from capital

Dividends, interest, capital gains and rental income from private residences are subjected to a tax rate of 30%.

 

Value added tax (VAT)

In Sweden you will pay a value added tax (VAT) – known as MOMS - on goods and services that you purchase. The standard is 25%, although a reduced rate of 12% is placed on for example food and hotels; and a 6% VAT rate applies to things such as newspapers, magazines, books, transport (taxis, buses, flights etc.) and concert tickets.