Paying Taxes in Sweden

1. What is the corporate tax in Sweden?
Companies and individual entrepreneurs in Sweden pay a corporate tax based on their annual income of 28%. However there is the possibility to defer taxation of profit by allocation of 25% of the profit to tax allocation reserves.

2. What is the VAT in Sweden?
The basic VAT applied in Sweden is 25%. However a reduced rate of 12% applies in certain conditions. Foodstuffs, hotels etc. benefit from this reduced rate. An even lower VAT rate of 6% applies for transportations, newspapers and magazines, cultural events etc. Social services, banking, financial services and few others are exempt from VAT.

3. How can the VAT be refunded in Sweden?
Companies in Sweden pay VAT on goods and services, affecting their annual profits. However any company and entrepreneur, foreign or local can recover its VAT covering the expenses of his or her company. In order to do that, there are some criteria that need to be accomplished. First of all the services or goods on which the VAT is to be recovered, should be subject to VAT taxation. The entrepreneur needs to file a claim application to the Swedish Tax Authorities in order to obtain the VAT refund. The application should contain original invoices, as copies are not accepted. Also a certificate of the company status and the VAT form obtained from the Swedish Tax Authorities are needed. The time period required for an entrepreneur to receive the refund is no longer then 6 months.

4. What is the dividend tax in Sweden?
Companies pay a 30% withholding tax on dividends in Sweden. However the rate may be reduced where double tax treaties apply.

5. Are there any incentives for foreign investors in Sweden?
The country of Sweden encourages foreign investors offering a welcoming and non-discriminatorily environment for foreign entrepreneurs. Besides the welcoming and positive attitude towards foreign investment, the government of Sweden offers some incentives. There are grants available for training, educational personnel and creating workplaces. Also tax deductions apply form foreign key personnel. However Sweden does not offer free trade zones or other low tax obligations for certain business domains.

6. Why do I need a local accountant for my Swedish business?
Establishing a company or deciding to invest in Sweden may be a wise decision, keeping in mind the advantages offered. However, there are many complex procedures that need to be taken care of, such as annual tax returns, accounts etc. For this purpose an accountant is recommended, and the best choice of an entrepreneur is to work with a local accountant. The advantages offered by a local accountant include a better understanding of the financial environment and experience in working with the state institutions.

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