Annual settlement of a business in Sweden

It is the responsibility of all Swedish business owners to submit an annual tax return to the Skatteverket (Tax Office). The tax return is submitted by both entrepreneurs and employees (except for taxpayers subject to the SINK tax). In Sweden, the annual tax return can be done through the website www.skatteverket.se. When settling VAT and income tax, it will be necessary for Swedish companies to have a Personnummer (or Samordningsnummer) - this is issued by the Swedish tax authorities. All entrepreneurs and employees in Sweden are required to submit a tax return to the Skatteverket every year. Exceptions are taxpayers who are not Swedish residents, who are subject to the SINK tax of 25 per cent (temporary employees staying up to 183 days in Sweden). They are not required to file an annual tax return.

Important information about the annual return of a business in Sweden:

1. in the first year of operation, the business owner in Sweden is required to report to Skatteverket the amount of the company's profit and pay advance income tax (Preliminärskatt). In subsequent years, the entrepreneur pays income tax to the Swedish tax authorities on the company's specific profit. The Skatteverket calculates the amount of tax to be paid and collects 1/12 of this amount each month. The calculated tax should be paid by the entrepreneur to the tax office on the 12th of each month (if the 12th falls on a weekend, then the payment should be made on Monday);
2. the convention concluded between the Government of the Kingdom of Sweden and the Government of the Republic of Poland dated 15.10.2005 (ratified on 1.07.2018 by Poland - one of two taxation options: the method of exclusion with progression - interest rate and the method of proportional deduction) aims to protect Polish and Swedish companies from double taxation and tax avoidance by Polish and Swedish entrepreneurs;
3. it is advantageous for a Swedish entrepreneur, who will be obliged to settle the annual business in Sweden, to set up a digital mailbox to which he or she logs in via BankID;
4. all owners of Swedish businesses are obliged to submit a tax return for the previous year to the Skatteverket in Sweden. The consequences for failing to file a return with the tax authority can be a fine of SEK 1 150 and more;
5. in Sweden, a VAT return must be submitted monthly by foreign business owners;
6. the tax-free amount in Sweden is deducted from the income tax base and is:
   • SEK 18 900 - SEK 34 300 - for low earnings,
   • SEK 13 100 - for earnings higher than SEK 350 660;
7. an entrepreneur running his/her own business in Sweden should register as an excise taxpayer with Skatteverket. After registration, he/she will receive a form with the date when the excise tax income will be refunded (usually up to 1 month). Excise taxpayers in Sweden are required to submit a return to the Swedish tax authorities, even if the excise tax is 0;
8. foreign entrepreneurs with an establishment in Sweden are required under the Income Tax Act to declare special tax on pension costs (SLP - särskild inkomstskatt på pensionskostnader);
9. the bokföringslagen, the Bookkeeping Act, applies to all entrepreneurs running a business in Sweden, even if they live outside the country. All are obliged to keep accounts according to the Commercial Branches Act;
10. owners of foreign companies that do not have a place of business in Sweden are not obliged to pay the general wage contribution (allmänlöneavgift). Employees pay their own SA tax each month;
11. swedish tax legislation defines a tax resident as a person who is permanently resident in Sweden, residing more than six months continuously in the country.

What you should know about taxes in Sweden:

1. taxpayers working in Sweden for less than six months pay SINK tax (25%), while taxpayers and entrepreneurs who work in Sweden for more than six months pay municipal tax of 31%ł
2. a self-employed entrepreneur in Sweden who also employs employees pays social contributions of 33% for them. These include, among other things, pension contributions and health care. Employees of a company in Sweden pay contributions of 7%;
3. the annual settlement of a business in Sweden should include municipal tax (29-34%) and state tax (20% for annual income exceeding SEK 468,700 or 25% for annual income exceeding SEK 675,700);
4. corporate entities are taxed in Sweden according to international accounting standards and the rules set by the European Union. They are obliged to pay income tax at a rate of 28% (a reduction to 26% is possible for corporate rotations of reserves and deposits);
5. entrepreneurs in Sweden are required to pay dividend tax of 30% - a double tax treaty allows for a reduction of this tax;
6. the entrepreneur is required to include VAT (moms) on goods and services in the annual tax return;
7. a company does not have to register as a VAT payer in Sweden if its customers are all VAT payers;
8. the obligation to pay VAT is incumbent on foreign business owners if they sell services or goods to persons who are not registered for VAT;
9. social security contribution in Sweden is 31% for business owners. Tax for business owners in Sweden is calculated on the basis of net income, after deducting the costs of running one's own business;
10. when taxpayers in Sweden have an income of more than SEK 290,000 per year, then they are required to pay state tax of between 20% and 25%;
11. entrepreneurs in Sweden are required to pay personal income tax - CIT of 22%;
12. the entrepreneur has the possibility to use a calculator that will calculate the income tax contribution and social contributions for the company's employees. The website skatteverket.se makes this possible.

Key information about Swedish documents:

1. employees in Sweden should receive tax cards KU-10, KU-13 or KU-14 from their employer, which they will need in order to settle in Sweden;
2. when running a business in Sweden, in addition to the annual settlement with the tax office, the entrepreneur is required to register with Försäkringskassansna on the basis of the Uppgifterförregistrering form, a document with a Personnummer or Samordningsnummer and a document that confirms the registration of the business in Sweden;
3. foreign business owners who intend to operate in Sweden without a permanent establishment should send a tax declaration in Swedish to the Skatteverket on form SKV 4632. To send the tax card (F-skattesedel) and a certificate of registration as an F-taxpayer, the office has two to six weeks.

Important deadlines for the annual settlement of a business in Sweden:

1. the Skatteverket sends between 19 March and 15 April the document Inkomstdeklaration 1 needed for the Swedish annual business return. The other documents needed are a photocopy of an identity document and documented tax credits;
2. the tax return for the previous tax year must be submitted by business owners in Sweden between March and 2 May;
3. the Skatteverket should issue a tax decision within six months;
4. in order to make a surcharge to the Swedish tax authorities, business owners in Sweden have 90 days from receipt of the summons to pay, while they have one year to appeal a tax decision sent by the Skatteverket between August and December;
5. foreign entrepreneurs are required to submit reassessment reports every three months if:
   • they transport goods to other EU countries from Sweden,
   • the buyer is a VAT payer in another EU country and the turnover is exempt from Swedish VAT,
   • the purchaser has its own VAT identification number.

Tax allowances, deductions and refunds in Sweden:

1. if an entrepreneur from Poland runs his/her own business in Sweden, the income from the business in Sweden is taxed there and not in Poland. The Polish entrepreneur is also entitled to deduct 30% of the subsistence allowance of SEK 459 per day in Sweden;
2. the tax refund is transferred by the Skatteverket to the bank account number provided by the Swedish entrepreneur;
3. if the entrepreneur has earned 90 per cent of his/her income in Sweden, he/she then has the possibility to include the tax credits in the company's annual return;
4. in the tax return, the entrepreneur in Sweden has the possibility to take into account, among others, such reliefs as:
   • relief for transport from the place of residence to the place of work,
   • relief for a double household, relief for the purchase of protective clothing and personal protective equipment,
   • relief for the purchase of instruments or tools needed to run a Swedish company,
   • costs of telephone and business calls,
   • relief for expenses on rent and utilities for rented premises for an office, shop or Swedish company headquarters,
   • relief for other work-related expenses, up to SEK 5,000;
5. the owner of a Swedish company has the option to include the Traktamente allowance for business travel expenses in the annual tax return;
6. depreciation of machinery, buildings, equipment, reserves, patents and trademarks, losses, royalties and rental expenses are deductible in the tax return for company owners in Sweden.

The type of annual business tax return in Sweden depends on the type of business the entrepreneur runs. A Swedish sole proprietorship (Enskildnäringsidkare) is taxed differently from a trading company (Handelsbolag - HB), a limited liability company (Aktiebolag - AB), a Swedish civil law company (Enkeltbolag), a limited partnership (Kommanditbolag - KB), private joint stock company (privataktiebolag), Swedish public limited company (publiktaktiebolag), European limited company (Europabolag) Swedish branch (Filial), foundation (stiftelse) or business association (ekonomiskförening). Before starting your own business, it is advisable to familiarize yourself with the forms of taxation and annual accounting in Sweden in order to choose the type of business that suits your possibilities. How does the Swedish annual accounting work for different types of companies?

1. Sole proprietorship (Enskildnäringsidkare) - Sole proprietors in Sweden are required to submit a tax return for the previous tax year by 2 May. The form INKOMSTDEKLARATION 1, which is sent out by the Swedish tax authorities, is used for this purpose. The tax authorities recognize the business income as that of the business owner. Tax is declared on a single tax return, and the business owner, who pays contributions and taxes, is entitled to pension and health benefits in the same way as those who are employed in Sweden.
2. Partnership under civil law (Enkeltbolag) - The tax office considers the income of this type of company to be that of the owner as well as the partners, so tax is declared by the owners and submitted by 2 May in an annex to the annual tax return.
3. General partnership - The legislation that governs general partnerships and the tax system in Sweden is contained in the General Partnership and Civil Partnership Act (Lag om handelsbolag och enklabolag, SFS 1980:1102).
4. Commercial company (Handelsbolag - HB) - Tax to the Tax Office, in the case of a Swedish commercial company, is not paid by the legal entity on the company's profit, but on the value of each of the company's shareholders' share of its profit. This type of company is required to submit a formal financial report for the previous year each year. On the tax return of the companies forming the commercial company or on the personal annual tax returns of the owners and shareholders, the annual income of the company is included.
5. A limited liability company (Aktiebolag - AB), a private joint-stock company (privataktiebolag) and a public joint-stock company (publiktaktiebolag) are subject to the provisions of the Joint-Stock Companies Act (Aktiebolagslagen, SFS 2005:551) and the implementing regulations (Aktiebolagsförordningen, SFS 2005:559), as well as to other financial bookkeeping and accounting regulations. The financial year, for these companies, does not necessarily coincide with the calendar year. The start and end dates of the financial year are contained in the companies' articles of association (Stiftelseurkund).
6. Limited partnerships (Kommanditbolag - KB), branches of companies (Filial), business association (ekonomiskförening), foundations (stiftelse) and Europeans public limited companies (Europabolag) - For these types of activities, business owners are required to submit their financial report and tax return for the previous year by 2 May via form INKOMSTDEKLARATION 1, which the tax office sends out in March/April.

Preliminary tax return in Sweden
The preliminary tax return (Preliminärinkomst-deklarationto) should be submitted by the entrepreneur via the e-service at www.skatteverket.se to reduce or increase the advance income tax payment in case the profit for the year is better or worse than that anticipated in the first year of business in Sweden. The predicted value of the company's profit must be reported to the Skatteverket by the business owner in the 1st year of operation. He or she must also pay advance income tax (Preliminärskatt). In subsequent years, the entrepreneur pays income tax to the Swedish tax authorities on the company's actual profit. The Skatteverket calculates the amount of tax to be paid and then collects 1/12 of this amount each month. Payment of the calculated tax to the tax office should be made on the 12th of each month (if the 12th falls on a weekend, then payment should be made on Monday).

Social contributions in Sweden
An entrepreneur with employees should pay Arbetsgivaravgifter for them - 31.42% for employees born in 1954 and later and 16.36% for those born between 193 and 1953. The amount of social security contributions that the business owner pays for himself (self-employed contributions) is 28.97% for those born in 1954 and later and 16.36% for those born between 1938 and 1953. Business owners in Sweden are required to submit an annual tax return to the Swedish Tax Agency (Skatteverket), and when they have employees, they must make sure that they receive all the documents that are necessary for their annual tax return.

The following documents are needed for the annual tax return in Sweden:

1. application by the business owner via the website for the issuance of an income tax decision for persons living abroad (form SKV4350) together with a photocopy of an identity document;
2. INKOMSTDEKLARATION 1 document, needed for the Swedish company's tax return, which the office sends between 19 March and 15 April, documentation on tax allowances and a photocopy of identity document;
3. A1 form and evidence of premiums paid - if the entrepreneur pays insurance outside Sweden;
4. statistical number and VAT number, which are needed for the annual tax return of a sole proprietorship in Sweden, which you receive after sending SKV 4632 to the Swedish tax office, a tax application for entrepreneurs (from skatteverket.se), a copy of your passport, a certificate of no arrears in social security payments from the Social Insurance Institution (ZUS) and a certificate of payment of taxes from the Polish tax office. All these documents must be translated into Swedish by a sworn translator;
5. tax cards KU-10, KU-13 or KU-14, issued to the employees by the Swedish employer, needed for the company's annual tax return in Sweden for the previous tax year;
6. annual PIT-36 declaration and attachment ZG, when an entrepreneur runs a company in Sweden and at the same time is a Polish tax resident (he/she is then obliged to settle with the Polish tax authorities, including income earned in Sweden);
7. PIT/O declaration, allowing to take advantage of the abolition relief, which is available to Polish tax residents who run their own business in Sweden and only derive income from it.

Between 1 March and 2 May, entrepreneurs running their own business in Sweden should each year settle the previous tax year with the Swedish tax authorities. In most cases, the tax year coincides with the company's calendar year (January to December).

In the settlement in Sweden, you will need the INKOMSTDEKLARATION 1 document, which Skatteverket sends between 19 March and 15 April, documentation of tax allowances and a photocopy of an identity document.

At the beginning of the year, the Swedish entrepreneur should issue his/her employees with KU-10, KU-13 or KU-14 tax cards, which are needed for the company's employees' annual tax return in Sweden for the previous year.

The Swedish Tax Agency sends a tax decision to entrepreneurs in Sweden between 15 August and 15 September. They have 90 days from receipt of the decision to pay any surcharge.

If an entrepreneur has not received INKOMSTDEKLARATION 1 from the Swedish tax office by 15 April, he or she should then download a new form from www.skatteverket.se and contact the Swedish tax office about it. Business owners in Sweden are entitled to a number of tax reliefs when making their annual tax return to the Skatteverket (the Swedish Tax Agency).

In Sweden, we can distinguish between allowances for:

1. income (Jobbskattereduktion);
2. commuting to work from the place of permanent residence - one journey per week by the cheapest means of transport can be deducted, except travel by air or train, in which case the lowest ticket price is not taken into account;
3. accommodation - this can be used by temporary workers if they provide a tenancy agreement for the premises and accommodation receipts or bank statements that confirm rent and utility payments;
4. rent of premises - for example, for a business;
5. costs of commuting to work from the place of accommodation - you can get this if you live in Sweden and deduct SEK 18.5 per 10 km if it is not possible to travel by public transport;
6. business travel expenses (traktamente) - consists of a deduction of per diets, which amount to SEK 230 for the first 90 days and SEK 69 for subsequent days;
7. purchase of apparatus and tools necessary for work - exceptions are mobile phones and computers;
8. education costs - when this is necessary to maintain the job;
9. costs related to working in Sweden - up to SEK 5,000, receipts, invoices and bills must be provided to benefit from this;
10. costs of purchasing protective clothing needed for the job (not applicable to work clothing);
11. interest expenses on consumer loans and mortgages - for Swedish employees who have credit;
12. food - can be used by Swedish temporary workers;
13. time worked in Sweden - you can qualify for this relief if you have worked in Sweden for one year or if a minimum of 90% of your income comes from working in Sweden;
14. contributions paid to social insurance in Poland;
15. double residence - all entrepreneurs and employees in Sweden who prove that they have a household in their place of residence may benefit from this relief. The relief can be used for one year in the case of a single person if their family wants to move to Sweden, and 3 years for formal and informal unions.

1. Where do I submit my annual tax return?
   To the Skatteverket (Swedish Tax Agency), this can be done via www.skatteverket.se.
2. Who is obliged to submit an annual tax return to the Swedish Tax Agency?
   All employees of Swedish companies and entrepreneurs are obliged to do so, except for taxpayers who are subject to the 25 per cent SINK tax (statlig inkomstskatt för utomlands bosatta), i.e. Swedish residents - temporary employees staying up to 183 days in Sweden. They are exempt from filing an annual tax return.
3. What is Bolagsverket?
   Bolagsverket is the Swedish Companies Registration Office. All companies in Sweden wishing to protect their name should register with it.
4. What is SINK?
   Statlig inkomstskatt för utomlands bosatta, or SINK, is a 25% tax that applies to non-Swedish tax residents (those working in Sweden for less than 183 days). These taxpayers have limited tax liability and are not required to submit a tax return to the Swedish tax authorities.
5. How long is the tax year in Sweden?
   The tax year is the same as the calendar year in Sweden - it lasts 12 months, from January to December. For some Swedish companies, the tax year does not have to be the same as the calendar year.
6. Who pays municipality tax in Sweden, and how of its amount?
   The municipality tax is paid by all tax residents in Sweden. It ranges from 29% to 34%.
7. What is the cost of council tax in Sweden?
   For annual incomes greater than SEK 490 700, it is 20%, while for incomes greater than SEK 689 300, it is 25%.
8. Who is entitled to tax relief in Sweden?
   All residents - taxpayers who have lived in Sweden for more than 183 days when their income is 90% from Sweden - are entitled to tax reliefs in Sweden.
9. What documentation is needed for the Swedish annual tax return?
   
   • document INKOMSTDEKLARATION 1 - annual tax return sent by Skatteverket;
   • KU-10 or KU-13 document from your employer listing your income for the previous year;
   • KU-14, for those who have received a Swedish pension;
   • document E101/A1 - proving where the insurance premiums have been paid;
   • a photocopy of your identity card;
   • a photocopy of your employment contract;
   • photocopy of payslips;
   • documents confirming the costs to be deducted in the annual return.
10. What is the arbetslöshetskassor (a-kasssor)?
    This is the unemployment fund in Sweden.
11. How do I get my tax refund from the tax office?
    The tax refund will be transferred to your bank account in SWIFT or IBAN format.
12. How long do you wait for the tax decision in Sweden?
    It takes up to six months to receive a tax decision in Sweden.