Sweden – Corporate Tax

Sweden – Corporate Tax

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Residence: A corporation is resident in Sweden if it is incorporated in accordance with the Swedish Companies Act (incorporation principle).

Basis: Resident companies are taxed on worldwide income, nonresidents are taxed only on Swedish-source income

Taxable income: Taxable income is based on accounting profit, adjusted for tax purposes by nondeductible expenses, nontaxable income, tax depreciation, etc.

Taxation of dividends: Dividends paid by a Swedish company to a nonresident (corporate or individual) shareholder are subject to a 30% withholding tax unless the rate is reduced under a tax treaty. No withholding tax is imposed on dividend distributions to a legal entity resident in another EU member state that holds 10% or more of the capital of the Swedish company, provided the company fulfills the requirements for the application of the EU parent-subsidiary directive.

Furthermore, no withholding tax is imposed where the dividends are paid to a shareholding qualifying for the benefits of the Swedish participation exemption.
Dividends paid to a Swedish resident generally are not subject to withholding tax, although they are subject to income tax if paid to individuals.

 

Capital gains: Capital gains derived by companies are included in taxable income and taxed at the normal corporate rate of 22%.

Losses: Swedish companies can carry forward their business losses for and indefinite period of time.

Foreign tax credit: The foreign tax credit for any year may not exceed the amount of Swedish income tax attributable to the recipient’s total foreign-source income.

Participation exemption: Sweden has a participation exemption for dividends and capital gains and an extensive tax treaty network

Taxable income: 21.45%
Taxation of dividends: 0%/30%
VAT registration:
Companies and individuals whose businesses involve the supply of taxable goods or services must charge VAT and be registered for VAT purposes
– VAT Rates: The standard rate of VAT is 25%. 
Surtax:
Alternative minimum tax: Yes
Withholding tax (general): 30%
– From Dividends 0%/30%
– From Royalties 0%
– From Interests 0%
Transfer tax: No
Capital gains tax: 0%/22%
Real property tax: 0,2%-2,8%
Social security: The employer social security contribution is 31.42% of salary and taxable benefits.
Payroll tax: Sweden has a progressive income tax, the general rates for 2018 are as follows (based on yearly incomes):

  • 0% from 0 kronor to 18,800 kronor
  • Circa 32% (ca. 11% county and 20% municipality tax which is the Swedish average): from 18,800 kronor to 468,700 kronor
  • 32% + 20%: from 468,700 kronor to 675,700 kronor
  • 32% + 25%: above 675,700 kronor
Stamp duty:
Varies; 1.5%/4.25% for real estate
Capital duty: No
Tax treaties:
Sweden has abroad tax treaty network, with most treaties following the OECD model treaty. Treaties generally provide for relief from double taxation on all types of income, limit the taxation by one country of companies resident in the other and protect companies resident in one country from discriminatory taxation in the other.
Anti-avoidance rules:
– Transfer pricing Transactions between related parties (as defined) must be at arm’s length. The comparable uncontrolled price method may be used, but in the absence of any direct comparables, the taxpayer may use the cost-plus or the resale price method.
– Thin capitalization rule There are no specific thin capitalization rules, but interest paid to a nonresident (whether or not related) must be on arm’s length terms.
– Disclosure requirements No

Compliance for corporation:

Tax year: Calendar year.

Consolidated returns: Consolidated returns are not permitted; each company must file separate return.

Filling requirements: The tax return must be filed within three months after the year-end.

Penalties: Penalties range from SEK 6,250 to SEK 18,750 for the late filing of a return

Rulings: No.

Tax authorities: The Swedish Tax Agency is responsible for all tax administration and compliance for both corporations and individuals.

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