Payroll & Tax in Sweden

The official Swedish currency in the Swedish Krona (SEK), equivalent to approximately USD$0.11.

Personal/corporate identity number of payee/employee is obliged, either a Swedish TIN (Tax Identification Number) or co-ordination number supplied by the Tax Agency.

Contracts do not have to be in writing, but the Employee Protection Act stipulates that the employer must provide the employee with extensive written information about the conditions of employment within one month.
Information routines are set by the employer and sometimes in Local Agreements with the union.

The corporate income tax rate is 22%, a fall from the previous rate of over 26%.

Payroll tax is taxed at a rate of 31.42% for employers, or 28.97% for the self-employed, although this may differ to individuals under 26 or above 66 to encourage greater labour force participation.

Sales tax is 25%. Swedish VAT is in accordance with EU VAT directives, at a rate of 25%. 12% or 6% rates may apply for some goods and services such as restaurant services, artworks, books and newspapers and public transport.

Dividends paid to Swedish individuals or corporations are generally not subject to any withholding, however, non-residents are subject to 30% withholding tax of dividend payments.  Sweden does not withhold tax on interest, royalties or branch profits. Withholding tax on dividends by a Swedish company to its foreign parent company is reduced or waived under most double tax treaties. Withholding tax on dividends made to a foreign company is, however, also waived according to domestic legislation if made on shares held for business reasons. Unquoted shares are always considered held for business purposes. Quoted shares are considered held for business purposes provided at least 10 per cent of the shares are held for at least one year.

Other than stamp duty, no transfer taxes exist. Stamp duty rates are 4.25% for the transfer or real property and site leaseholds for corporations, and 1.5% for individuals. If it is an intragroup transaction, stamp duty can be deferred. Sweden does not impose taxes upon capital duty.

The corporate income tax rate is 22%, a fall from the previous rate of over 26%.

Payroll tax is taxed at a rate of 31.42% for employers, or 28.97% for the self-employed, although this may differ to individuals under 26 or above 66 to encourage greater labour force participation.

Sales tax is 25%. Swedish VAT is in accordance with EU VAT directives, at a rate of 25%. 12% or 6% rates may apply for some goods and services such as restaurant services, artworks, books and newspapers and public transport.

Dividends paid to Swedish individuals or corporations are generally not subject to any withholding, however, non-residents are subject to 30% withholding tax of dividend payments.  Sweden does not withhold tax on interest, royalties or branch profits. Withholding tax on dividends by a Swedish company to its foreign parent company is reduced or waived under most double tax treaties. Withholding tax on dividends made to a foreign company is, however, also waived according to domestic legislation if made on shares held for business reasons. Unquoted shares are always considered held for business purposes. Quoted shares are considered held for business purposes provided at least 10 per cent of the shares are held for at least one year.

Employees must make a 7% contribution towards the public social security system.

The social security system in Sweden is comprised of several elements:

• Health insurance
• Benefits for work-related accidents and occupational diseases
• Benefits for invalidity
• Pensions for the elderly and survivors
• Unemployment insurance
• Parental and family benefits

The system can be complex at times, but essentially to be eligible to receive any social benefits, a Swedish personal identity number must be acquired from the Swedish Tax Agency, in addition to registration with the Swedish Social Insurance Agency often being a requirement. To ensure eligibility, registration should be undertaken as soon as possible after arriving in Sweden.

Employers are required to make a contribution of 31.42% in addition to an employee’s base salary.

The employee needs a bank account as the standard procedure is to pay salaries via electronic transfer, very rarely with cash. If bank account is unknown, the payment is settled with a money order from the bank. This would usually cost an extra fee to cash for the employee.

The pay frequencies which can be processed in additional to usual monthly payrolls are two-week salary and special regulations for sailors.
The most common pay date is the 25th on monthly basis, but it can differ between companies and Collective and tie-in agreements.

There is no statutory right to a payslip, but it is customary to issue one. Collective and tie-in agreements may be established that require that payslips be issued

Swedish minimum wages are not regulated by law, but subject to bargaining between employers
and trade unions and form part of collective agreements

Working days and hours are regulated by The Working Hours Act, with Collective and tie-in agreements

Protected disclosures – Disclosures of information in relation to legal obligations, health, safety etc.

Protection from suffering detriment in employment – An employee has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer on various grounds.

The employee’s right to have time off work depends on the reason for absence. Due to several different laws with Collective and tie-in agreements regulates, the time is paid or not paid. All employees have a statutory right to take time off work for the following:

• to carry out duties as a trade union official
• to carry out duties as a safety delegate
• to look for work faced with redundancy
• to under certain circumstances have leave of absence or permission
• for various kinds of parental leave
• for annual leave

All employees are qualified to get Statutory Sick Pay, from the first day of employment, with special regulations if the period of employment is less than a month. The first day of illness is a waiting day and the employee does not receive any sick pay. The employer is responsible for the cost for the two first weeks. After the fourteenth day, the employee receives sickness benefit from the Swedish Social Insurance Agency, but the employers often have additional obligations due to Collective and tie-in agreements regulates.

There is a right to offer alternative work if suspension from work is because of medical grounds.

This is regulated in several employment related laws and is a complex matter. The basic right is that an employment is indefinite, so to employ temporarily must be clear from a written agreement in order to apply. Notice is required to be given to an employer to terminate the contract of employment of a person who has been continuously employed more than 12 months during a tre-year-long period. Contracts can only be terminated by the employer when there is a reasonable cause for dismissal.
Employers must give notice corresponding to the amount of time the employee has been working for during the notice period; the employee is entitled to receive all employment benefits due during his or her regular period of employment. Fixed-term contracts end on a specific date or on completion of a task. These contracts can last a maximum of two years within a five-year period, after that the employment becomes indefinite.

Probation periods may be included at the start of an employment contract, and, if either the employee or the employer wishes to terminate the employment, notice must be given before or upon the expiry of the probation period.