How much tax is deducted in Sweden?

Sweden offers its citizens some of the finest social programs: universal health insurance, unlimited sick days, subsidized childcare, and free university tuition.

However, these luxuries do not come without a cost, and Sweden’s tax rates are among the highest in the world. In addition to Swedish taxes, Americans living abroad cannot forget their US expatriate income tax return obligation or other reporting requirements, like FBAR.

When contemplating relocating to Sweden, it’s essential to consider the impact it may have on your income tax return as a US expat, in addition to understanding the Swedish tax rates and deadlines. In other words, familiarizing yourself with the Swedish taxes for US expats is crucial before deciding to move.

Primary Tax Form for Residents: Swedish Tax Return (inkomstdeklaration)
Tax Year: January 1st to December 31st.
Tax Deadline: May 2nd (for online filing) or August 2nd (for paper filing)
Currency: Swedish krona (SEK)
Population: Approximately 10.4 million
Number of US Expats: Approximately 18,000
Capital City: Stockholm
Primary Language: Swedish
Tax Treaty: Yes
Totalization Agreement: Yes

Sweden is renowned for its comprehensive social programs. However, to support those social programs, Sweden also has some of the highest tax rates in the world. Swedish tax law is also known for its complexity, often making it difficult for expats to keep track of their obligations.

To help clear things up, here’s an overview of how Sweden’s tax law applies to US expats.

How can I reduce my income tax in Sweden?

Foreign experts and key personnel employed by a Swedish company or a non-Swedish company with a PE in Sweden may apply for 'expert tax relief'. The employment and stay in Sweden must be limited in time, and the employee must be a non-Swedish national and must not have been a Swedish tax resident at any point during the five calendar years prior to the year the employment in Sweden starts.

Under an alternative rule, the expert tax relief will be granted if the recurring income paid on a monthly basis exceeds two times the Swedish price base amount for the year the job in Sweden starts. For 2023, this corresponds to a monthly income exceeding SEK 105,001.

To qualify, the employee must apply for a ruling from the Taxation of Research Workers Board (Forskarskattenämnden). The application must be filed within three months of the day the employee started working in Sweden.

What is the 183 day rule in Sweden?

Individuals who work from Sweden during a continuous period of more than six months are normally fully taxable in Sweden. The reason for the stay in Sweden is not relevant for the assessment. Therefore, even if the stay in Sweden is due to the COVID-19 crisis, a person can become liable for tax if the stay exceeds six months. If the person is also a tax resident of another country, any double taxation is normally resolved through the applicable double tax treaty. People who work in Sweden but who are not tax residents of Sweden can be taxed under the regulation on special income tax for non-residents at a flat rate of 25%. However, the rules do not apply if the stay exceeds six months.

Employment income received by a Swedish tax resident on assignment abroad can be exempt from Swedish tax. The rule is applicable if the assignment abroad lasts for at least six months, the income is taxed in the country from which it is derived and the number of days spent in Sweden during the assignment period do not, for any reason, exceed 72 days during an assignment year abroad. To the extent that these employees are forced to reside in Sweden for longer periods due to COVID-19, the six-month rule can be jeopardised. However, even if all conditions are not formally met, the rule can still be applicable in the case of “force majeure”, provided that the employee, at the beginning of the assignment, had good reason to believe that the six-month rule would apply. However, if an employee cannot start the assignment abroad due to COVID-19 restrictions, the exception would most likely not be applicable.

Is 40000 SEK a good salary in Sweden?

Sweden might not have the highest salaries in Europe, but there’s a reason the country has one of the lowest poverty rates globally.

With an average salary of nearly 3,400 EUR (35,000 SEK), an employee takes home approximately 2,537 EUR if they live in a high-tax municipality. While this would be just enough to live on in a place like Stockholm, it’s a good income for many other cheaper cities in the country.

What is 25% tax rule in Sweden?

In Sweden, most people pay only local tax on their annual income. This tax varies depending on municipality and ranges from 28.98 per cent to 35.15 per cent. Sweden's average local tax rate is 32.34 per cent.

Earners above a certain income threshold set by the Tax Agency (link in Swedish) also pay 20 per cent state tax.

The Swedish tax system includes a so-called basic deduction, a sum that is exempt from the taxable income. The sum differs depending on whether a person is under or over 65, see link above.

Is it possible to lower tax?

Contributing to your employer's 401(k) or other qualified retirement plan reduces your taxable income and lowers your tax bill. Investments in a 401(k) grow tax-deferred until you withdraw the money in retirement. If your employer matches your retirement contributions, you'll come out even farther ahead. You can deduct up to $20,500 in 2022, or $27,000 if you're 50 or older. Additional options include:

Contribute to your own IRA. In 2022, you can contribute up to $6,000 ($7,000 if you're 50 or older) to a traditional IRA and deduct your contribution on your tax return. Be mindful of income limits if you're also covered by another retirement plan: Your deduction may begin to phase out starting at $109,000 in adjusted gross income if you're married filing jointly or $68,000 if you're single in 2022. If you contribute to a Roth IRA, your contribution is not deductible but your earnings and withdrawals will be tax-free going forward.
Set up your own SEP-IRA or SIMPLE plan. If you're self-employed or own your own business, SEP and SIMPLE IRAs make it easy for employers to set up tax-advantaged retirement plans for employees. With a SEP-IRA, contributions are limited to 25% of compensation up to $61,000. A SIMPLE plan's contributions are limited to $14,000 plus $3,000 if you're 50 or older.

You can pay for out-of-pocket health care or dependent care expenses with pretax dollars using a flexible spending account (FSA) or health savings account (HSA).

FSAs are offered through your employer. Depending on the type of FSA, you can use funds to pay for qualified medical expenses, dependent care or specified vision or dental care costs.
HSAs are for people with qualifying high-deductible health insurance plans. You can open and fund your own HSA with pretax contributions. Your money grows tax-free and you won't pay taxes on qualified withdrawals.

What is the 6 month rule in Sweden?

have reached the age of 18
be able to verify your identity (read more about identity verification)
have met the requirements for habitual residence, which means that you must have lived in Sweden a certain amount of time (read more about the requirements for habitual residence)
have lived an orderly life in Sweden (read more about an orderly life)
have a permanent residence permit (a temporary residence permit does not apply), or have the right of residence or a residence card (for those who are EU citizens or a close relative of an EU citizen) (read more about the right of residence and residence cards), or have residence status (read more about residence status).

Please note that all requirements must be met before you apply, otherwise your application may be rejected.

What happens if you stay longer than 90 days in Sweden?

A Sweden D visa is required for anyone who wants to stay longer than three months (90 days) in Sweden to live, work, or study.

EU/EEA and Switzerland citizens do not need a long-stay visa for Sweden. They can visit, work, and study in Sweden without any restrictions.

To be eligible for a Sweden D visa, you must meet the following requirements:

You must be able to support yourself financially during the time you will be staying in Sweden.
You must have a valid passport.
You must have a return ticket or money to buy a ticket.

What is the top 1% salary in Sweden?

The official minimum wage in Sweden is not set. In most sectors of the economy rates are fixed in special collective agreements between unions and employers. The minimum wage for Swedish workers largely depends on the region, profession, education, skill level, experience and many other factors.

Sweden's Central Bureau of Statistics tracks the national average wage in major occupations, and unions collect statistics from their members. These figures and some other indicators are then used as benchmarks during individual negotiations and collective bargaining.

Nominally, Swedes work about 38 to 40 hours a week (225 working days a year). Paid annual leave is five to six weeks. Temporary sick leave is partly paid at up to 80% of salary. Overall, the minimum wage in Sweden in 2023 is about 1,500-2,000 U.S. dollars per month. This is one of the highest in the European Union.

Is 80K a good salary in Sweden?

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What is the top 10% income in Sweden?

World Bank, Poverty and Inequality Platform. Data are based on primary household survey data obtained from government statistical agencies and World Bank country departments. Data for high-income economies are mostly from the Luxembourg Income Study database. For more information and methodology, please see pip.worldbank.org.

What is the top 10 percent salary in Sweden?

The highest-paying jobs in Sweden are surgeons and doctors. Working as a surgeon requires high risk and significant responsibility, in exchange for significant financial compensation. No matter what an individual's education or experience level may be, it's important to have acquired the requisite knowledge and experience of surgical procedures to consider oneself a successful surgeon.

The number one highest-paying job in Sweden includes working as a surgeon. While salaries can vary depending on location and experience, the average salary for a surgeon is around £120,000 per year and for a doctor, it is around £98,000. Despite the high pay, these positions are still in high demand in Sweden, which is likely due to the country's excellent healthcare system.

How many times can you take 25% tax-free?

If you're not sure how your income needs will change in the future, you have the option to take money from your defined contribution pension pots as and when you need it. There are a few ways to take income from your pension, each with different tax implications. Here's an overview.

You may have the option to take cash lump sums from your pension pot whenever you need to. 25% of whatever you take will be tax free, while the remaining 75% will be taxable. Whatever you don't take as cash stays invested in your pension pot.

What is a personal deduction in Sweden?

Beyond an income level of SEK 20,000, the personal deduction supersedes the exemption rule. The personal deduction is subject to proration if people are part-year residents. Non-residents who perform work in Sweden are taxed at a flat rate of 25%, and no deductions are allowed. This tax is imposed as a final withholding tax.

What is the Sweden income tax calculator?

The Sweden Income Tax Calculator, part of our suite of Sweden Payroll, Salary and Tax calculators, is updated for the 2023 tax year using the latest tax tables published by the Government in Sweden. Let's look at some of the key features of this tax calculator:

What is the tax rate for a property sale in Sweden?

The Swedish tax system includes a so-called basic deduction, a sum that is exempt from the taxable income. The sum differs depending on whether a person is under or over 65, see link above. For capital gains, the tax rate is generally around 30 per cent. If you make a profit on your property sale, the profit is taxed 22 per cent.

How do I calculate Dependents Allowance in Sweden?

Number of Children and Number of Children who qualify for Dependents Allowance The number of children you have and their status is used to calculate specific dependents related tax credits and allowances in Sweden.

What is a personal deduction in Sweden?

Beyond an income level of SEK 20,000, the personal deduction supersedes the exemption rule. The personal deduction is subject to proration if people are part-year residents. Non-residents who perform work in Sweden are taxed at a flat rate of 25%, and no deductions are allowed. This tax is imposed as a final withholding tax.

How does income tax work in Sweden?

This means that your income is split into multiple brackets where lower brackets are taxed at lower rates and higher brackets are taxed at higher rates. Tax rates range from 0% to 20%. Each of the 290 municipalities in Sweden also have their own municipal income tax that residents are subject to.

Are pension plans taxable in Sweden?

Specific rules apply for incentives that are subject to restrictions. Premiums to employer pension plans, which do not qualify as tax favourable pension plans under Swedish law, may be considered taxable income for the employee. Loans from an employer to an employee at low or no interest are deemed to generate a taxable benefit.

Are capital gains taxable in Sweden?

Individuals resident in Sweden are taxed on capital gains realised during the period of residence. All current income from bank savings, financial instruments, claims of different kinds, dividends, and gains received by a resident person is taxable as investment income.