Expats – Do you know your tax? Individuals moving to Sweden have to consider many issues, among them tax issues. First of all one has to consider one’s fiscal status as taxation is based on how long the stay will be. If an individual stays in Sweden for less than 183-days over a 12-month period, the tax liability is limited. This means that tax will be levied only on certain income arising from sources in Sweden at a flat rate of 25 %. If an individual stays for a continuous period of six months or longer, the tax liability will be unlimited. That means that the individual will be regarded as a resident of Sweden. The individual will then be liable for tax on his worldwide income. A double tax treaty may, however, limit the tax on certain items of income. Income tax in Sweden consists of municipal and state tax. Municipal tax varies by municipality from approximately 28% to 35%. A part of the municipal tax is a church tax or so-called “burial fee”. On taxable income exceeding 291,800 SEK (gross 308,800 SEK), state tax is added. Tax-free basic deduction amounts to 16,700 –26,400 SEK depending on the total taxable income. Taxable Income (SEK) Municipal tax (%) State tax (%) 1-291,800 28-35% - 291,800- 441.300 28-35% 20% over 441,300 28-35% 25% The employer normally pays social security charges, but the general pension contribution is paid by the employee and is deducted at source, together with preliminary tax. The social security costs amounts to 32.70 % and are not included in the employee’s gross salary. An employer without permanent establishment in Sweden can agree with the employee, that the employee will pay all social security costs. The employee will deduct 25% on the gross salary for paying his/her social security contribution. Gains are taxed at a flat rate of 30 % (including interest and dividends). 70% of capital losses are deductible. Losses resulting in a net loss tax reduction are granted. The reduction is 30% of the net loss up to 100,000 SEK and 21% on amount exceeding 100,000 SEK. All consideration received by an employee for his own work is taxable as income of employment. The income category includes cash payments, 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 compensations. Expenses which are wholly, exclusively and necessarily incurred in the performance of duty may be deducted from employment income if paid for or reimbursed by the employer. Expenses of this kind include, for example: additional living expenses during business travel or while living away from home travel expenses to and from work the costs of using own car in business other costs which are necessary to perform the duty. Some of these costs have to exceed a certain amount in order to be deductible. Others are only deductible up to a certain maximum limit or under special circumstances. - Emine Lundkvist © 2006, Swedish Bulletin. All rights reserved