As an individual, it is mainly tax on your salary and VAT that you encounter on a daily basis. When you start a business, there are suddenly many more taxes to keep track of. What kinds of taxes are there, and how high are they?
- VAT – Value Added Tax is a tax that companies liable for VAT add to the sale of goods or services subject to VAT. It is 25% in the normal case, but is 12% on e.g. food and camping, and 6% on e.g. books, travel and entrance tickets to various performances. Companies subject to VAT may deduct VAT on their purchases and then get it back from the Swedish Tax Agency. For VAT for international trade you can read our article: “How does VAT on sales to other countries work?”
- Income tax – You pay income tax as an individual on your taxable income. It can e.g. be income from work, pension or compensation from the Swedish Social Insurance Agency. The tax rate varies depending on which municipality you live in, but it is normally between 29 and 35 percent. If your total income from all sources of income exceeds the threshold for state tax, you also pay 20 percent in state tax on the part of the income that exceeds the threshold. The threshold changes every year and also depends on whether you turned 65 at the beginning of the year or not. For 2022, state income tax will begin to be levied on total income of SEK 554,900 when you have not turned 65 at the beginning of the year, and SEK 618,700 if you have reached 65.
- Employer contributions – Employers who pay salaries to employees pay employer contributions for the paid salaries and benefits. The fee is normally 31.42% of the gross salary. There are lower employer contributions for benefits to pensioners (10.21%), benefits up to and including SEK 25,000 / month for those who were 15-18 years old at the beginning of the year (10.21%), benefits up to and including SEK 25,000 / month for those who were 19-23 years old at the beginning of the year (19.73%), and for those who had turned 85 at the beginning of the year, no employer contributions are paid for compensation for work.
- Self-employed contributions – Self-employed contributions are the equivalent of employer contributions, for you who run a sole trader business, trading partnership or limited partnership. The contribution is currently 28.97%.
- Corporate tax – For taxable profits in your limited company, you pay 20.6 percent in tax.
- Excise tax – Excise taxes are taxes for specific goods for which the state for various reasons have chosen to try to control the consumption of. Examples of this are alcohol tax, tobacco tax, energy tax and chemicals tax. If you sell these types of goods, you declare them in the excise tax return and then pay that tax separately.
- Preliminary tax – Preliminary tax is not a separate type of tax, it is an advance payment for future taxes. You can read more in our article “How does preliminary tax work?“.
If you want to read more details about taxes, go to the Swedish Tax Agency’s (Skatteverket) website. There you also always get the most up-to-date information.