How do taxes work?
Sweden is known as a high-tax country. There are several levels of taxes connected to your income, and it varies based on where you stay. Add to that Swedes pay one of the highest Value Added Tax (VAT).
Income Tax
Just like in India, in Sweden too the higher you earn, the more taxes you would pay. It is divided in two parts – municipality taxes which everyone pays and state taxes which starts when your income crosses a certain threshold. If you are below 65, you can earn up to 554,900 SEK (540,700 + 14,200) annually before your state taxes start. Till that amount your taxes will be based on where you stay. For example, if you are in Stockholm limits, you will pay 29.82% of your income as taxes. People over 65 get an additional rebate. If you earn over 554,900 SEK per year, state taxes of 20% will start getting deducted for the excess amount.
Sweden uses a principle called marginal tax. If your income is below the national income tax, you pay about 300 SEK in tax for every earning of 1,000 SEK. When your income exceeds the national income tax level, you will pay about 500 SEK for every 1,000 SEK you earn.
Example: If your salary before tax is 60,000 SEK, you will get about 39,000 after tax.
Example:
- Salary: 60,000
- Tax: 21,000 (Includes municipal and state tax)
- You get in hand: 39,000
- Payroll tax employer pays: 21,000
- CTC: 81,000
Municipal tax
This tax is dependent on which municipality you stay in and is the main component of your income tax. While coming in if you have heard about many Indians choosing Solna as their residence, it’s because it has one of the lowest tax rates of 29.4%. On the flip side, rents are high and you might be paying more for a small accomodation.
Lowest taxes by municipality:
28.98 Österåkers
29.45 Solna
29.63 Täby
29.68 Vellinge
29.69 Kävlinge
29.82 Stockholm
29.92 Lidingö
30.06 Nacka
30.20 Sollentuna
30.24 Örkelljunga
Highest taxes by municipality:
Dorotea 35.15
Bräcke 35.09
Vindelns 34.95
Sorsele 34.95
Åsele 34.95
Ragunda 34.92
Strömsunds 34.92
Munkedals 34.86
Arjeplogs 34.84
Vilhelmina 34.75
VAT
VAT (Value Added Tax) is usually 25% for most goods and services. There are lesser amounts — 12% and 6% — levied on some such as restaurant services, artworks, newspapers, and books.
Capital tax
Capital income is generally taxed at a flat rate of 30%. On rental income from private property, tax is calculated on income after deducting a standard amount of 40,000 SEK and/or 20% of annual rental income. For selling properties, you would have to pay 22% as tax on gains.
Tax Relief
Some top executives earning at least 96,600 SEK per month get a tax relief where 25% of the income is reduced from taxable income. So only 75% of the income will be taxable. If a person gets this relief, they are not expected to stay in Sweden for more than five years.
Deductions
You can deduct the following: Journeys to and from work – deduct anything exceeding 11,000 SEK, including for using a car subject to certain limits. Business trips, if your company didn’t pay for them. Temporary work, dual residence, and journeys home with several conditions. Other expenses – deduct the part exceeding 5,000 SEK. Check with Skatterverket for details.
RUT/ROT deduction
Under Swedish tax laws, you can get a 50% discount on labor costs for certain services (house cleaning, maintenance, etc.), under ROT (Repairs, Conversion, Extension) or RUT (Cleaning, Maintenance and Laundry) work. The maximum for the RUT deduction is 75,000 SEK per person, per year.
Filing annual tax return
There are several ways to file your tax return. Here is one (from Skatterverket):
- Log on to Skatterverket’s e-service using Bank-id
- If you need to add or change any details, you can do so via the e-service
- When you are ready to file your tax return, go to the menu and select “Submit” (“Skicka in”).
- When you have checked all the details, click “Next” (“Nästa”).
- Sign your tax return using your Swedish e-identification or signature code (“kod för underskrift”).
- You will then receive confirmation that your tax return has been filed.
Tax statement
Get tax return in digital mailbox if you have created one before Feb. 24
March 2 - 7
File return
You can start filing your tax return online
March 15
Last date of filing
This is the last date of filing tax return if you don’t have any changes to make. You would get your refund in April.
March 30
Get refund
Get your refund amount in your registered bank account.
April 5 - 8
Tax Refund
To get a quick refund, file your tax details digitally by March 30 without changing or adding anything, and you will get it within the first week of April. Usually, the tax statement includes all of your income details as they collect data from your employer, banks, and other agencies. You will get to know from your tax statement how much refund you will get or if you would have to pay additional tax. You need to have a personal number and bank account to get a refund.
Tax refund for the first year in Sweden
You are likely to get a hefty refund in the first year you are here. The reason is that your taxes get deducted based on your monthly salary and if you have started in the middle of the year, your annual salary might fall below the national tax level, resulting in a refund. For some, the refund could be more than a month’s salary. You can also get a part of the rent paid as refund, and also on your home rent paid in India.
