Value-added tax (VAT)
The Swedish VAT system is harmonised with the EU rules. The general VAT rate of 25% is chargeable on most goods and services. Reduced rates apply to a few goods and services, such as hotel accommodation, foodstuffs (excluding alcoholic beverages), restaurant meals, and low or non-alcoholic drinks (12%), as well as newspapers, magazines, books, e-books, passenger transport, maps, musical notes, some cultural services, transport in ski lifts, etc. (6%). Certain financial and insurance services are exempted from VAT.
VAT returns are filed and tax is paid monthly or quarterly. VAT returns must be filed monthly if the VATable turnover is estimated to exceed 40 million Swedish kronor (SEK) (estimated yearly sales excluding any reverse charge or import acquisitions). Companies with VATable turnover below SEK 40 million report VAT quarterly or may choose to report VAT on a monthly basis. For companies with a turnover of less than SEK 1 million, VAT is reported on a yearly basis in the VAT return, and these companies may also choose to report VAT quarterly or on a monthly basis.
New e-commerce regulations
On 1 July 2021, new rules for e-commerce were introduced at an EU level. E-commerce means sales to consumers in the European Union that are made at a distance (i.e. not in a physical store) and where the goods cross a national border. The new rules can be divided into three categories:
1. Platform rules
Since July 1 2021, a platform (electronic interface) that mediates the sale of a product between an underlying seller and a consumer is, in some cases, considered to have bought and sold the product for VAT purposes, even though the platform never owned the product.
2. Distance selling within the European Union
On 1 July 2021, a turnover threshold of 10,000 euros (EUR) for distance sales was introduced. Anyone who has distance sales to other EU countries that exceeds a total of EUR 10,000 (SEK 99,680) is required to charge the customer with the customer country's VAT. In order to be able to report and pay the customer country's VAT to the respective tax authority, the seller either needs to register for VAT in the customer’s countries or use the new simplified reporting (One Stop Shop or OSS) system. The OSS system means that the seller only submits one VAT return for all distance sales on a quarterly basis and pays all VAT in a lump sum to one tax authority, which then will portion it to the other relevant tax authorities.
3. Import of goods to a consumer
From 1 July 2021, someone who sells a product to a consumer where the product is sent from outside the European Union can choose to charge import VAT directly at the time of the sale. The simplification measure is only applicable for when the value of the shipment is less than EUR 150. The seller will then charge import VAT at the time of sale and declare the import VAT via the Import One Stop Shop (IOSS). The goods will pass through customs faster, and the consumer does not receive an invoice for import VAT from the freight forwarder. IOSS declarations are submitted on a monthly basis.
New reverse tax liability for mobile phones, laptops, and certain electronic devices
From 1 April 2021, reverse tax liability shall be applied to the sale of certain goods between Swedish companies when the invoice amount for these goods, excluding VAT, exceeds SEK 100,000. The reverse charge is applicable on the sale of:
- mobile phones
- integrated circuit devices
- gaming consoles
- tablets, and
Reverse charge only applies to sales to companies that are, or should be, VAT registered. If the buyer is not VAT registered, the seller must invoice with VAT. A seller needs to assess whether a sale should be invoiced with reverse charge in three steps:
- Are the goods sold covered by the rules on reverse charge?
- If yes, is the buyer VAT registered?
- If yes, does the invoice amount for the goods covered by the regulations exceed SEK 100,000, excluding VAT?
If the conditions are met, the invoice must be inclusive of Swedish VAT. A buyer needs to check invoices relating to the purchase of such goods to ensure that VAT has been handled correctly. If the seller has incorrectly debited VAT on the invoice, even though reverse tax liability should have been applied, the buyer is not entitled to deduct the debited VAT.
Raised turnover threshold
The annual turnover threshold for VAT reporting is proposed to be raised from 1 July 2022, from SEK 30,000 to SEK 80,000. Companies with a yearly turnover lower than the threshold will not be liable to report and/or pay VAT.
Reduced VAT rate on repairs
From 1 July 2022, the VAT rate on some repair services is proposed to be reduced from 12% to the lowest VAT rate of 6%. The repair services targeted by the proposal are the repairs of bicycles, shoes, leather goods, clothes, and linen. As for the 1 April 2023, the VAT on these repair services might be increased again to 12%. There is a suggestion on changes in the regulation by October 2022.
As a member of the European Union, Sweden is also part of the Customs union enforcing the Community Customs code. Most EU Customs duties are calculated as a percentage of the value of the goods being imported. All imported goods must be classified according to the EU Customs tariff (TARIC), and the duty rates applied depend on the economic sensitivity of the goods. The actual duty rate to be applied also depends on other factors, such as the country of origin of the product and any free trade agreements that may be applicable.
The three main Swedish excise duties are harmonised with EU rules. These are the alcohol tax, the tobacco tax, and the tax on fuels and electricity. There are, however, still differences in local legislation between the member states, and the taxation of fuels is partly EU harmonised, partly national. Fuels are subject to energy tax, carbon dioxide tax, and sulphur tax. Depending on the use of fuels, taxes may be partly or fully reduced. An excise duty also applies on certain electronics and household appliances.
Real estate tax
The annual real estate tax rate on business premises is 1% of the property tax assessment value. For industrial property, the tax rate is 0.5%. Other rates exist for special property.
Stamp duty at 4.25% is levied on a direct transfer of real estate. The tax base consists of the highest of the purchase consideration or the tax assessed value of the real estate the year before the transfer. Stamp duty on an intra-group transfer of real estate may be deferred as long as the real estate remains within the group.
There are no payroll taxes other than social fees (see below).
Mandatory social security charges payable by employers on remuneration to employees (or by the self-employed) are levied at approximately 31,42%. A reduced rate is applicable for people over the age of 65 and under 18. Social security charges are deductible for corporate tax purposes.
Pension benefits beyond the mandatory system are customary amongst most Swedish employers. A special salary tax is levied at approximately 24% on these additional pension premiums/commitments and is deductible for corporate tax purposes.