Tax Guide for Expats in Sweden
There’s no getting around it — Sweden’s expensive. According to Expatistan’s cost of living index, it’ll cost you one-quarter more to live in Stockholm than in Rome, and almost a full third more than Madrid.
It’s more than just sticker shock, too. According to Trading Economics, a reference source for economic data, Sweden’s got one of the highest personal income tax rates in the world, clocking in at 56.9%, second only to Aruba. Of course, Swedes enjoy free education, subsidised healthcare and public transportation.
For an individual, taxes in Sweden are so high, in fact, that the financial group Santander Trade cites it as a “weak point” of an otherwise investor-attractive country. The overall high costs of living and doing business in Sweden are, however, tempered by that country’s bilingual and qualified workforce.
Other benefits, the Santander team writes, include:
- a very high per-capita purchasing power
- an economy at the forefront of new technologies and innovation
- an advantageous corporate tax regime (it’s 22%)
How Foreigners in Sweden are Taxed
Foreigners living in Sweden are taxed, according to Expat Arrivals, based on how long they’ve lived in the country. “To be considered a Swedish resident for tax purposes, an expat must either have a permanent home in Sweden or have stayed in the country for more than six months in a year.”
Further, non-residents who are working in Sweden on a temporary basis are usually taxed only on that income earned while in the country, while residents are taxed on their income, including capital gains and pensions, regardless of the country of origin.
If you have a skill deemed scarce in Sweden, usually in the science and technology sector, you may get a tax break. The Forskarskattenämnden, an agency of the Swedish Ministry of Finance, decides on individual cases on tax relief for foreign experts and researchers. They confirm that the first 25% of the salary is tax-free and that the reduction applies to the first three years of the temporary stay in Sweden, although key foreign personnel may reside in in the country for up to five years.
Before accepting that new job in Sweden, you may wish to confer with a local tax professional there. And you should remember that just because you’ve moved abroad, you’re not necessarily exempt from paying taxes back home.
Tax Advisors, Agencies and Resources
The first point of contact if you need answers about your income tax return or obtain an identification card is the Swedish Tax Agency. When moving to Sweden with the intent of living there for at least a year, you must notify Skatteverket. This allows you to be registered in the Swedish Population Register (folkbokförd), and in turn be provided with a Swedish personal identity number.
This service has been developed to assist individuals with Nordic tax matters, including those related to working in another country. If you live in Sweden, for instance, and have income or assets in Denmark, Iceland, Norway or Finland, you can get general information about taxation.
A financial advisor, Richard Malpass concentrates on helping British expatriates “building their dream retirement plans through smart tax reduction,” including transferring their pensions into recognised overseas pension schemes in Sweden. He confirmed to us that he is also able to provide tax advice to foreign residents living in Sweden.
Grant Thornton Sweden
While Grant Thornton Sweden works mainly with entrepreneurs, their companies and businesses, the company confirmed to us directly that it provides tax advice to individual expatriates living in Sweden. The contact person for their expat team is Caroline Fransson.
The accountants and business advisors at BDO International in the UK provide global assistance with respect to international assignments. The expatriate tax services head is Andrew Bailey, who has more than 30 years experience in the field of expatriate taxation. He says he is able to “assist companies and individuals moving to or from the UK and internationally, with all aspects relating to international assignees, including tax, social security/NIC and policy development.”
This audit, tax and advisory firm has offices throughout Sweden. While KPMG works mainly with companies, it does offer a comprehensive information page on taxation of international executives in Sweden, and is a good resource to bookmark.
The team of tax advisors at Skattepunkten AB has offices in Stockholm, Göteborg, Halmstad, Orust and Sundsvall. They also advise clients over the internet and have a separate website called Skatter, offering tax news and expert tips.
Each of the company’s four tax consultants — Clas Ramert, Hans Larsson, Ronnie Peterson and Kaj Rask — has between 30 and 40 years of experience in the industry, and offer advice on Swedish and international tax planning as well as relocation issues.
Headed by CEO Alison Sellar, who launched ActivPayroll in 2001, the company provides global payroll solutions, online HR management tools and expatriate taxation services. It has an online guide to doing business in Sweden, which provides a good overview in the event you wish to register a company there.
Founded in 1990, Capital Consulting is another company that provides payroll solutions and expat services. Its free online guide, Swedish Income Tax, provides a summary of Swedish income tax and social security rules, which may apply to expatriate freelancers, contractors and independent consultants working or living in Sweden.
The pertinent section of this expat site is Aussies in Sweden, which contains information and advice about living and working there. While it’s written for Australians, the information is certainly of use to any foreigner in Sweden. Its employment page will be of particular interest.