ODINT--Ai-Logo-white (1)

Corporate Taxes in Sweden in 2022-23: Complete Guide

This article discusses the various corporate taxes in Sweden. Any firm established in Sweden is subjected to pay the various corporate taxes in Sweden.

GET EXPERT
ASSISTANCE

Table of Contents

Corporate Taxes In Sweden

Sweden’s economy consistently rates as being among the most dynamic in the globe and is the fourth most attractive economy in the European Union. Sweden is renowned for its vibrant economic environment,  high level of international competition, a wide range of linguistic abilities, and dedication to innovation.

corporate taxes in sweden

The nation’s free-market atmosphere and fully advanced educational system are responsible for a substantial portion of this. All this situation makes Sweden an ideal place to incorporate a business.

However, any firm established in Sweden is subjected to various corporate taxes in Sweden. This article will discuss the various business taxes in Sweden and further describe the corporate tax rate in Sweden.

Business Taxes in Sweden

5 business taxes in sweden

Every firm registered in Sweden, be it a resident corporation or a non-resident corporation is liable to pay the corporate tax rate in Sweden. Whenever a firm is established, it also registers for tax purposes in order to pay the Sweden corporate taxes. Here, are the numerous corporate taxes in Sweden that has to be paid by an entrepreneur when they register their business in the nation.

 

Corporate Income Tax in Sweden

Businesses and subsidiaries that operate in Sweden and maintain a fixed place of business there are subject to Sweden corporate taxes. Resident corporations are liable to pay Sweden corporate taxes on their global revenue except when specific exclusions or applicable taxation agreements exist. Non-resident corporations are liable to pay Sweden corporate tax rate on the revenue that is presumed to have its origin in Sweden.

The corporate tax rate in Sweden is imposed on taxable income at a fixed amount of 20.6% beginning on January 1, 2021. The Sweden corporate tax rate remained at 21.4% through December 31, 2020. All organizational entity revenue is regarded as business revenue.

Value-Added Tax in Sweden

The business taxes in Sweden, the Value-Added Tax, complies with EU regulations. Most goods and services are charged VAT at the standard rate of 25%.However, certain services and products are subjected to reduced rates of 12 and 6 percent Value-Added tax in Sweden. 

The reduced rate of 12% is applicable on products and items including hotel lodging, meals, restaurant food, and low- or non-alcoholic liquids. In addition to that, transportation services, guides, musical notation, some cultural services, transportation in ski lifts, etc. are subject to a reduced rate of 6%. 

The VAT is not applied to some economic and insurance activities. Prescription drugs are also exempt from VAT. 

All Swedish businesses, international businesses with permanent establishments, and businesses that sell products or services to individuals in Sweden must register for VAT. If international businesses without permanent establishments offer services in Sweden, they must also register for VAT. VAT returns are submitted and tax payments are made monthly or quarterly. If the expected VAT revenue is greater than SEK 40 million then monthly VAT returns should be completed.

Businesses having a VATable turnover under SEK 40 million may elect to declare their VAT on a monthly level or on a quarterly schedule. For businesses with a revenue of under SEK 1 million, VAT is declared annually in the VAT return. These businesses could also elect to declare VAT either quarterly or monthly.

Stamp Duty in Sweden

The stamp duty is assessed at 4.25% when real estate is transferred directly. The tax base is made up of the greater of the acquisition price or the real estate tax assessment valuation during the year prior to the transference. As long as the property remains within the group, stamp duty is not applied to property investment transfers inside the group.

Social Tax in Sweden

One of the corporate taxes in Sweden is the social tax. In Sweden, employers are obligated to contribute income and social taxes. State pensions, medical insurance, maternity health coverage, work sickness insurance, employment market charge, and basic payroll charge are all included in the social tax, which has a current rate of 31.42 percent.

Young individuals born in 2002 to 2004 and seniors born from 1938 to 1954 are subject to a low social rate of taxation of 10.21%.

The social tax rate is 19.8% for international corporations without a fixed place of business. Due to the fact that they do not pay the employment market charge, foreign businesses are eligible to lower social taxes.

The social tax rates are subject to yearly adjustment, particularly the lower tax rate.

Dividend Tax in Sweden

Interest and services charges given to non-resident businesses or people are not subject to corporate taxes in Sweden. Such contributions to domestic businesses and people are subject to regular income tax.

Depending on domestic legislation and taxation agreements, Withholding taxes on dividends and royalty varies.

Given that the beneficiary is a member of an EU nation and owns a minimum of 10% of the paying company’s stock, dividends given by non-listed resident companies to international business shareholders are normally exempt from Swedish withholding tax.

A dividend to an “international enterprise,” which is the comparison of a Swedish limited liability corporation abroad, is also exempt from withholding tax if the beneficiary is a Swedish corporation and the payout is tax-exempt under Swedish participation exemption laws. Therefore, Swedish withholding tax is typically not applied to dividends on non-listed stocks.

Exemptions from tax on Capital Gains and dividends

In order to be eligible for capital gains tax exemption, the stocks either need to be unlisted or, if listed, should reflect a minimum of 10% of the voting rights and should have been kept for a duration of a minimum of 1 year.

Tax exemptions are also possible for stocks held in overseas corporations. This is true if the overseas business may be compared to a Swedish limited liability corporation on a global scale.

Capital losses on shareholdings for commercial purposes are not deductible due to the tax exemptions.

Dividends that a Swedish firm receives are also exempt from tax.

Tax environment for Corporate taxes in Sweden

The Swedish business tax climate is briefly described as follows:

  • The tax system in Sweden is open, effective, and adjusted to the requirements of overseas companies. Corporations can profit from advantageous tax laws, attractive holding company arrangements, and tax breaks for important overseas staff.
  • The tax structures for enterprises are competitive with those of other OECD countries. In addition to being modest by global standards, the corporation tax rate is also exclusively determined by a firm’s annual revenue, and no additional license taxes or regional corporate taxes are levied.
  • For businesses that establish a holding corporation, a branch, or a subsidiary in Sweden, the tax environment is favorable. The tax plan exempts Intra organizational dividends and capital gains from taxes, does not have thin capitalization limits, does not impose withholding taxes on interest expenses, and imposes minimal or no withholding taxes on dividends.
  • The unilateral tax agreements Sweden has with over 80 countries help to prevent double taxation.
  • Income tax exemption is provided to significant overseas personnel to encourage the recruitment of worldwide competence to Sweden.

Finance

Book free end-to-end experts consultation with Odint legal, accounting and company formation experts.

GET EXPERT
ASSISTANCE

Conclusion

Every entrepreneur who established a company in Sweden has to pay business taxes in Sweden. The Sweden corporate tax rate is 20.6% from 2021 onwards.

If you want to establish a business in Sweden, you should know about the various corporate taxes in Swede. You can consult our experts at Odint consulting for any queries relating to Sweden corporate taxes. Our experts will be glad to help you with your queries.

FAQ’s

The corporate tax rate in Sweden is imposed on taxable income at a fixed amount of 20.6% beginning on January 1, 2021. The Sweden corporate tax rate remained at 21.4% through December 31, 2020.

Yes, non-resident corporations are liable to pay Sweden corporate taxes on the revenue that is presumed to have its origin in Sweden.

The majority of products and services are subject to the regular VAT rate of 25%. However, certain services and products are subjected to reduced rates of 12 and 6 percent Value-Added tax in Sweden.

The Swedish Tax Agency (Skatteverket) oversees the civil registrations of private citizens and receives taxes such as excise duty, corporation taxes (CIT), and personal income taxes.

Stamp duty is assessed on the transaction of real estate and is determined on the higher of the evaluation for real estate taxes and the sales price, at a rate of 1.5% for persons and 4.25% for corporate organizations.

Looking for an Expert Guidance?

Get 30 minutes of free consultation with our company formation experts!

Will help you to setup your company anywhere in the world

Get Dedicated company formation consultant

End-to-end management and consulting

GET EXPERT
ASSISTANCE