Country facts
The Kingdom of Sweden is a member of the EU, and the Schengen Area, but not of the Eurozone. It is also a member of the UN, the Nordic Council, the Council of Europe, the WTO and the OECD.
With a nominal GDP of USD 529 billion in 2020, it is the 23rd largest economy in the world. Its Human Development Ranking is at 0.945, which is classified as very high, with a global ranking of 7th.
Capital
Stockholm
Currency
Swedish Krona (SEK)
Languages spoken
Swedish
Population size (2020)
10,35 million
Ease of doing business (world bank ranking)
10
Cost of living index(2021)
79,17
Payroll frequency
Monthly
VAT – standard rate
25%
GDP – real growth rate(2020)
-2,8%
Employing in Sweden
Employee salary taxation in Sweden is paid to three levels of government: the municipality, the county council, and the central government and social security contributions are paid for the social security system financing.
It is the employer that deducts the income tax on salaries, following a PAYE system. This is paid directly from the employer to the Swedish Tax Agency (Skatteverket).
Thus the employer’s total salary cost is the employee’s gross salary plus social security contributions. The income tax is contingent on the employee being taxable in Sweden, and the social security contributions are contingent on the employee being registered with the Swedish social insurance plan.
Employers deduct a basic allowance of between SEK 10 004 and SEK 30 252 on taxable earned income. After this, the following taxes on taxable earned income are paid: municipal tax depending on what municipality the business resides in (between 29-34%), church tax and burial charges (ca 1-2%), and the state progressive income tax. State income tax is 20% of the part of the taxable earned income that exceeds SEK 523 200.
Social security is dominantly handled by the National Agency for Social Insurance (Försäkringskassan). Employers pay a percentage contribution consisting of:
- Retirement pension contributions
- Survivor contribution
- Health insurance
- Parental benefits
- Work injury compensation
- Labour fee
- Payroll charges
The rates depend on the year of birth and are adjusted annually:
- Employees born in 1937 or earlier are not subject to contributions
- Employees born between 1938 and 1955 are subject to contribution at the rate of 10.21%
- Employees born in 1956 or later are subject to contributions at the rate of 31.42%
- Employees born between 2003 and 2005 are subject to contribution at the rate of 10.21% up to SEK 25 000 per month. Beyond this, the rate is 31.42%.
Employers deducting tax and calculating employer contributions make monthly declarations. This is ideally made electronically by the employer. If the employers is not registered for VAT in Sweden, or if the company’s VAT basis does not exceed SEK 40 million annually, the VAT and PAYE return shouod be in the Tax Agency’s account at the latest on the 12th of the month after salary payments have been made. For January and August this date is the 17th.
Employers with an annual turnover exceeding SEK 40 million, employer’s contributions, deducted tax and debited preliminary income tax payments must be recorded by the 12th day of each month (except January which is the 17th). The VAT and PAYE return must be filed and VAT paid by the 26th of the month.
As of 2021, new rules were introduced for foreign employers without permanent residence in Sweden. These are now obliged to withhold Swedish tax on income related to work performed in Sweden. Their tax rate for such withholding is 30 %, although if valid SINK decision (Special income tax for foreign residents) applies, this is reduced by – 25 %. If an employer is obliged to withhold Swedish tax, it should register as an employer in Sweden with the Swedish Tax Agency.
Start and leave dates for employees are to be confirmed to the Tax Authorities using the monthly individual tax declaration. Employers are to acquire employee E-ID details, which are used to submit a CSR request to the Central Tax Register. This will yield the correct tax table for payroll tax deduction for this employee.
Annual leave in Sweden is covered by the “Annual Leave Act” (Semesterlagen). Employees are entitled to 25 vacation days per vacation year, which is April 1st – March 31st. This act is discretionary, and can be replaced by the regulations of a Collective Agreement. Employees can save accrued vacation days up to five years. Employers are obliged to pay a daily Vacation pay which amounts to 12% of the gross salary.
Sick leave is regulated by a number of factors, and is generally compensated at 75% – 80% of the employee’s regular pay. The rate changes depending on the length of the sick leave.
When it comes to parental leave, mothers and fathers are expected to equally share 480 days of leave. One parent can to take up to 420 days of the total, but the remaining 60 days must be used by the other parent.
List of Public Holidays - 2024
| Date | Holiday Name |
|---|---|
| 1 January | New Years Day |
| 6 Januray | Epiphany |
| 29 Mars | Good Friday |
| 31 Mars | Easter Sunday |
| 1 April | Easter Monday |
| 1 May | Labour Day |
| 9 May | Ascension day |
| 19 May | Whit Sunday |
| 6 June | National Day of Sweden |
| 22 June | Midsummer Day |
| 4 November | All Saints Day |
| 25 December | Christmas Day |
| 26 December | 2nd Day of Christmas |
Minimum wage
There is no minimum wage in Sweden. It is instead set by annual collective bargaining contracts. As a reference, the salary for a cashier can be in the area of SEK 101 to 125 / hour.
Salary payouts
In Sweden, the payroll frequency is most commonly on a monthly basis. Employers must pay salaries on the 25th of each month. A 13th Salary is not legally mandatory, nor common. Employers often pay bonuses of other kinds instead.
Taxes in Sweden
Learn how employment taxes and statutory fees affect your payroll and your employees’ paychecks in Sweden.
Employer
Corporate income tax rate: 20,6%
Health insurance: 3.55%
Parental insurance: 2.60%
Retirement Pension : 10.21%
Survivors Pension : 0.60%
Labor Market Fee : 2.65%
Occupational Injury : 0.20%
General Payroll Tax (see above for different age groups’ deviations) : 11.62%
Total Employment cost : 31.42%
Employee
Pension Insurance : 7.00%
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