Companies register for tax by filing a tax application (Tax application for foreign entrepreneurs) and sending it to the Swedish Tax Agency. The application procedure is similar for limited companies and branch offices. Those based abroad and without a permanent establishment need to apply for a Swedish corporate tax ID before the tax application can be filed.
The process for tax registration can be quite slow (4-8 weeks) and therefore needs to be started in good time. It is especially important to avoid a situation where the employees are hired but the tax registration is not completed before the 31st of December.
During registration, the company will automatically receive all the documents, VAT and PAYE returns, and information required to account for and pay VAT, income tax, and social security contributions.
It is possible to apply for electronic filing, which is recommended for foreign-based companies.
The corporate tax in Sweden is 22%. The tax computation is very straightforward and based on the annual accounts made public, with a few tax adjustments. Each month, the company makes a prepayment based on an assessment on the total tax for the year.
An annual tax return must be filed within six months after the end of the financial year. The company will be refunded if the prepaid tax led to an overpayment.
There is no specific rate for small companies in Sweden, all companies are subject to corporate tax at the rate of 22%.
Capital gains and dividends from non-listed companies are exempt from corporate tax. In addition, listed companies are exempt if at least 10% of the shares are owned, and have been owned for at least a year. Special rules apply to foreign source dividends.
The tax rate for branches is the same as for limited companies: 22%
Personal income tax (pay as you earn)
Personal income tax ranges from 30-55%
Capital gains tax
Capital gains tax is 30%
Sweden has Stamp duty on the transfer of real property and the registration of mortgages; 1.5% for individuals and 4.25% for legal entities.
Real estate tax ranges from 0.2% up to 2.8% of the tax assessment value.
The standard VAT rate is 25%. The sale of real estate, insurance and financial services, health services, and some educational services are tax exempt. Some goods and services have the lower rates 12% or 6% for example public transport, books and food.
There is no sales tax in Sweden.
There are no local taxes in Sweden except that the personal income tax varies somewhat between different regions.
Sweden has tax treaties with most countries in the world.
Transfer pricing in Sweden is based on the arm’s length principle. Swedish limited liability companies must maintain documentation for transfer pricing transactions with affiliated parties.
Sweden has tax relief rules to help companies hire experts from abroad, therefore certain key foreign employees may qualify for a substantial tax reduction. In addition, benefits like relocation costs, schooling, and home travel, which normally are taxed, are tax-exempt.
Losses may be carried forward. Restrictions are imposed on the use of losses carried forward in case of a change of ownership or control of a company. The restrictions on losses could also be imposed if the parent company has a change of ownership.