Taxation in Gothenburg, Sweden
What are the tax rates in Gothenburg, Sweden? How are corporations taxed? Here’s Teleports overview of personal, corporate and other taxation topics in Gothenburg, Sweden.
Personal taxation in Gothenburg
Effective personal income tax rate
| Annual income | $25,000 | $40,000 | $80,000 | $125,000 | $200,000 |
|---|---|---|---|---|---|
| Rate | 29% | 29% | 39% | 45% | 49% |
Teleport city rankings for personal income tax
Personal taxation puts Gothenburg in position 260 of all Teleport Cities.
Basis
Swedish residents are taxed on worldwide income. Nonresidents are taxed only on Swedish-source income, including pensions and certain capital gains.
Residence
An individual living or regularly residing in Sweden is considered resident for tax purposes. An individual that has been
Filing status
Spouses and children are taxed separately for income tax purposes.
Rates
Employment income is taxed at national progressive rates of approximately 30% to 57%, and capital income (dividends, interest, capital gains) is taxed at 30%.
Deductions and allowances
Personal allowances adjusted in relation to the total amount of income are available. Expenses incurred for the purpose of acquiring or maintaining income are deductible against the same source of income. Other deductions from employment income include work-related travel expenses and increases in living expenses resulting from work-related travel or maintenance of more than one dwelling and alimony. A tax reduction equal to 50% of the labor costs relating to housekeeping is available, but the reduction is limited to SEK 25,000 per year. There also is a tax reduction equal to 30% of the labor cost relating to repair, maintenance and rebuilding of a private dwelling, limited to SEK 50,000 per year.
Taxable income
An individual's income is divided into three categories: business income, employment income and capital income. An individual may be subject to both national income tax and municipal income tax (the latter is imposed only on earned income).
Capital gains
Capital gains generally are included in capital income.
Other taxes on individuals
Stamp duty
Stamp duty is levied on the transfer of real estate and is payable by the purchaser. The standard rate is 1.5% of the market/transfer value of the property if the purchaser is an individual. Stamp duty of 2% is levied on the value of a real estate mortgage.
Social security
Social security contributions of 31.42% for employed individuals are paid by the employer, except for the pension insurance fee of 7% on employment income up to SEK
Compliance for individuals
Penalties
An initial late fee of SEK 1,250 is levied for late returns by individuals, with additional penalties applying if the failure continues. A surcharge of 40% of the tax due is levied if false/insufficient information is provided (which may be reduced under certain circumstances). If filing is incomplete or the taxpayer fails to file a return, the tax authorities may estimate the tax payable. Interest penalties are levied on outstanding taxes.
Filing and payment
Individuals with taxable employment income of at least SEK 18,800 during the tax year must file a tax return and submit it to the tax office by 2 May of the year following the tax year.
Corporate taxation in Gothenburg
Teleport city rankings for corporate income tax
Corporate taxation puts Gothenburg in position 210 of all Teleport Cities.
Basis
Residents are taxed on worldwide income. Nonresidents are taxed on business income from real estate or a permanent establishment (PE) in Sweden, income derived from the disposal of a Swedish housing association and dividend income from shares in Swedish associations. A royalty payment made to a foreign recipient is deemed to constitute a permanent establishment (PE) for the foreign recipient and is taxed accordingly.
Taxation of dividends
Dividends received by a Swedish resident company from another Swedish company normally are exempt from tax, provided the shareholding is business-related. Dividends received from a nonresident company also may be exempt if the shareholding is business-related (see under “Participation exemption”). Other dividends are included in business income and taxed at the corporate tax rate of 22%.
Residence
A corporation is resident in Sweden if it is incorporated in accordance with the Companies Act.
Losses
Losses may be carried forward indefinitely. However, restrictions apply after a direct or an indirect change of ownership.
Participation exemption
The participation exemption applies to dividends derived by a Swedish resident company from another resident company and to capital gains from the sale of shares in a resident company, provided the shares qualify as business-related (shares held as inventory do not qualify). Unquoted shares constituting fixed business assets always are deemed to be business- related. Quoted shares that constitute fixed business assets are deemed to be business-related if the holding amounts to at least 10% of the company's voting rights or is considered necessary for conducting the business of the company whose shares are held. In addition, quoted shares must be held for at least one year. In certain cases, the participation exemption may be extended to dividends received and capital gains derived from the sale of shares in a nonresident company. An exemption also exists for partnerships or holdings in partnerships. Special rules apply to investment companies.
Foreign tax credit
Foreign tax paid may be credited against the Swedish tax on foreign income.
Taxable income
Corporation tax is imposed on a company's profit, which consists of all types of income. Expenses incurred in obtaining or safeguarding income subject to tax normally are deductible.
Capital gains
Capital gains derived from the sale of shares in a resident company normally are tax-exempt if the shareholding is business-related (see under “Participation exemption”). Shares in an EU resident company (including shares held as inventory) are considered business-related if the holding represents at least 10% of the capital. Shares in a non-EU resident company may be considered business-related, provided the features of the foreign entity are similar to those of a Swedish limited liability company or a Swedish economic association. Taxable capital gains are regarded as other business income and taxed at a rate of 22%.
Other taxes on corporations
Stamp duty
Stamp duty is levied on the transfer of real estate and on mortgage loans. The standard rate for real estate is 4.25% on the higher of the acquisition value and the tax assessed value if the transferee is a legal entity. For mortgage loans, the rate is between 0.4% and 2%.
Social security
The general aggregate contribution by an employer on behalf of an employee is 31.42%. No social security contributions are paid for employees born in 1937 or earlier. For employees born from 1938 to 1949, the rate is 10.21%, and for employees born in 1989 or later, the rate is 15.49%.
Payroll tax
No, but see under “Social security.”
Transfer tax
No, although some transfers are subject to stamp duty.
Real property tax
Real property tax is levied annually at rates ranging between 0.2% and 2.8% on the tax assessed value (as determined by the tax authorities) on all types of real estate (however, see below). The tax is deductible in computing the corporate tax liability.
Compliance for corporations
Consolidated returns
Consolidated tax returns are not allowed, but contributions between Swedish group companies are allowed under certain circumstances as a way to equalize profits and losses.
Penalties
A fee of SEK 5,000 is imposed for late filing, with additional fees up to SEK 15,000 if no return is submitted within five months from the filing deadline. A surcharge equal to 40% of the tax due is levied if the taxpayer has omitted information or provided false information on the return. If filing is incomplete or no return is submitted, the tax authorities may estimate the tax payable. Interest penalties are levied on outstanding taxes.
Rulings
Advance rulings may be issued by the Council for Advance Tax Rulings to a resident or nonresident company on corporate income tax, VAT, real estate tax and the application of the general anti-avoidance rule.
Tax year
Corporations normally use a financial year consisting of a 12-month period ending on 31 December, 30 April, 30 June or 31 August, but can use a 12-month period ending on the last day of any month of the year.
Other taxation in Gothenburg
Value added tax
Filing and payment
VAT returns must be filed and tax must be paid on a monthly, quarterly or annual basis.
Rates
The standard rate is 25%, with reduced rates of 12% (e.g. for foodstuffs and certain tourism services) and 6% (e.g. for newspapers, periodicals and domestic passenger transport). Certain medicine and financial and insurance/reinsurance services to persons outside the EU may be zero-rated.
Taxable transactions
VAT is levied on the supply of goods and the provision of services in Sweden, the intra-Community (EU) acquisition of goods, the acquisition of services from a foreign company and any importation of goods into Sweden.
Registration
A company that is liable to VAT in Sweden must register for VAT purposes.
Anti-avoidance rules
Controlled foreign companies
A Swedish resident company (or individual) or a nonresident with a PE in Sweden that holds an interest in certain foreign legal entities is subject to immediate taxation on its proportionate share of the foreign legal entity’s profits if the foreign entity is not taxed or if it is subject to taxation at a rate lower than 12.1% (i.e. 55% of the Swedish tax rate of 22%). The CFC regime stipulates a participating interest threshold, and a "white list" applies. A Swedish shareholder of a foreign legal person within the European Economic Area that is treated as a CFC is exempt from CFC taxation on income derived from the CFC if the shareholder (taxpayer) can demonstrate that the foreign legal person actually is established in its home state and carries on genuine economic activities.
Transfer pricing
Sweden adheres to the OECD guidelines and allows the following transfer pricing methods: comparable uncontrolled price, resale price, cost plus, profit split and transactional net margin method. Documentation requirements apply. Sweden allows bilateral and multilateral advance pricing agreements.
Thin capitalization
There are no formal thin capitalization rules for tax purposes, although substantial interest deduction restrictions apply on loans from affiliated persons. The main rule is that Swedish companies may not deduct interest expense on debts owed to affiliated persons, regardless of the purpose or origin of the loan. An exception applies if the corresponding interest income is taxed at a rate of at least 10% in the hands of the beneficial owner, provided the main reason for the loan is not for the group to obtain a substantial tax benefit. If the corresponding interest income is not taxed at a rate of at least 10%, an exception to the application of the thin capitalization rules will apply if the debt is based on predominantly sound business reasons.
Investment basics
Accounting principles/financial statements
Principles applied are in accordance with the Annual Accounts Act, the Swedish Accounting Standards Board, the Swedish Financial Accounting Standards Council and the Swedish Institute of Authorized Public Accountants.
Principal business entities
These are the private/public limited liability company (AB), partnership (KB and HB), sole proprietorship and branch of a foreign company.
Withholding tax
Dividends
Dividends paid to a nonresident company are subject to a 30% withholding tax unless the rate is reduced or an exemption applies under a tax treaty, Swedish domestic legislation or the EU parent-subsidiary directive.
Technical service fees
There is no withholding tax on technical service fees.
Interest
Sweden does not levy withholding tax on interest payments.
Royalties
There is no withholding tax on royalty payments. However, a foreign recipient of Swedish-source royalties is deemed to have a Swedish PE and is subject to Swedish income tax on the royalties received.
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