Did you just get a job offer that is looking real exciting? However, you would have to move to Sweden in order to take the job? Of course, one asks oneself a lot of question being in this position. Will I like Sweden? Is it going to be too cold? How about taxes - I've heard they are the highest in the world over there?
We at nomadtax can't deny that the winter is fairly cold over here. However, when it comes to taxes, we would like to give you a overview of the Swedish taxation of an expat living and working in Sweden. Let us begin.
Swedish tax residency rules
To begin with, according to Swedish law, one can become tax resident according to three separate grounds. Firstly, a person that is permanently residing in Sweden, is seen as tax resident. Normally, a person who intends to stay in Sweden for more than 12 months, is seen as permanently residing in Sweden, and therefore, also as tax resident.
However, unlike other states in the world, Sweden does not have a set day-limit (for example 183 days during a calendar year), that applies to persons who are not planning to permanently reside in Sweden, when determining their tax residency status. Instead, by reason of extensive case law from Swedish administrative courts, a very complex review is to be done by the person's pattern of stay in Sweden. Even though complex, the case law is fairly simple to apply for persons that move to Sweden and stays here continuously. Such persons generally become tax residents after six months of stay. The tax resident status is at hand from the first day of stay, i.e. not after six months. For persons commuting back and forth from Sweden, or persons with a irregular travel pattern, their tax residency status will require a thorough assessment in relation to principles stipulated of case law. Also for persons leaving Sweden, the law is very complex, and includes a overall assessment of the person's ties to Sweden, such as whether the person have kept economic and social ties to Sweden.
So, what does it mean if I become tax resident in Sweden? Well - Sweden will want to tax your global income. You will also be obligated to file an annual Swedish tax return. This can be quite tricky, since the forms are only available in Swedish. Also, an expat has to classify foreign sourced income under Swedish domestic tax regulations, which is sometimes not easy.
Swedish taxation of salary income
Sweden is notoriously famous for its high taxes on salary/employment income. This system is constructed as a progressive tax system, meaning that the tax rate increase the higher salary a person receives.
For 2025, the tax rates for employment income are the following:
30 % municipal tax on income from 0 SEK to 625 800 SEK
50 % state tax on income exceeding 625 800 SEK
All Swedish tax residents are entitled to a personal allowance, that differs somewhat depending on the person's age and income. In general, this allowance amounts to between 15 000 SEK to 40 000 SEK. Also, the municipal tax rate differs depending on the municipality the person is registered as resident in. Usually, the municipal tax rate is ranging between 29-33 %. Church tax is levied at 1 %, depending on whether the person is member of the Swedish church, or another registered church in Sweden.
In Sweden, the possibilities for deductions are quite limited. One can in very few situations be granted deductions for travel to work. Costs for business travel accomodation and transportation are generally deductible. An employee can receive set "per diems" that are tax free. However, expats do have some special deductions available for them. For example, an expat can, subject to limitations, be granted deductions for costs for home trips, if the person retains a home in another EU/EEA state. There are some limitations however. Also, an expat can in some cases deduct costs for keeping a house or an apartment in his/her home country, as well as deductions for increased living costs in some situations. This is a good way for expats to decrease their Swedish taxes.
Lastly, Sweden has a rather beneficial tax regime, that can apply to expats coming to Sweden. The regime is called the 'expert tax regime'. It enables one to receive 25 % of one's salary income totally tax free for seven years. However, there are certain requirements that need to be fulfilled in order to benefit from the regime. Also, the application for the regime has to be made by a tax lawyer in due time, or the individual will miss his/her opportunity without having a chance of applying again. Also the employer of a person subject to the expert tax regime will save a considerable sum of money, since the 25 % exemption also applies to the employer-paid Swedish Social Security Contributions. Hence, employers are often paying the costs for tax consultation for the expat. It's a win-win situation. Contact us if you would like to explore this option.
Swedish taxation of capital income
Sweden's taxation of capital income is not as high as for employment income. As a main rule, all capital income (dividends, interest etc.) is subject to a 30 % capital tax. Same applies for capital gains made from selling publicly traded securities (listed securities). Capital gains and dividends made from selling unlisted shares, are generally subject to 25 % tax, with somewhat reduced deductibility for losses. A very important thing to keep in mind, however, is the special Swedish tax regime, applying to so-called "closely held companies". In short, this tax regime implies that a owner of a company that the owner is active in, will be taxed as if he/she received employment income from the company, even though he/she received dividends or made a capital gain. The reasons for this regime's existence, is to prevent people from distributing lower taxed dividend to themselves, instead of salary. Despite these rules, one can distribute dividend that is taxed with 20 % tax, up to a certain annual threshold, that is depending on multiple factors. The 20 % threshold can be rolled forwars to upcoming years, if not used. These rules are very complex, and there is currently a political debate on whether they should be simplified. Therefore, having assistance from a tax expert is a must if one is active in one's own company. Almost all Swedes that are subject to this regime take help with this. The regime also applies in relation to non-Swedish companies, which have lead to unpleasant surprises for expats coming to Sweden. Failing to declare ownership in such companies, in the annual Swedish Tax Return, can lead to severe tax penalties.
Another very important tax regime, is the so-called "ISK" regime. This regime is very beneficial, even though the tax rate has been significantly raised the last two years (the rate depends on the Swedish yield rate).
In short, one can open a ISK investment savings account, and use this account for trading securities (stocks, mutual funds, ETFs, bonds etc.). The nice thing about the ISK account, is that capital gains and ongoing capital income is not subject to tax. Instead, 0,888 % (rate of 2025) of the account's value is taxed with an annual ISK tax. The account value is calculated on an ongoing basis over the year. ISK investment savings accounts are not taxed on value up to SEK 150 000, since of 2025. It is important to note that the ISK holdings could be taxed by another country, however, if the person is tax resident in another state. In many cases, however, opting for a so called endowment insurance can have tax benefits for expats. This saving/trading form is taxes similarly to an ISK account. It is also important to plan one's move from Sweden, from a tax perspective, by for example transferring assets at the proper timing, disposing assets before or after becoming tax resident, and restructuring ownership in a company to optimize one's Swedish tax situation.
Swedish Tax Return for Expats
As concluded above, all tax residents of Sweden are obligated to file an annual tax return. The deadline for filing is in early May, the year after the tax year has finished. A person will receive a tax return form by mail from the Tax Agency, that includes income that has been reported (from banks, employers etc.) to the Tax Agency.
If one has received foreign-sourced income, it shall be disclosed and included in the Swedish Tax Return. This can be a hassle, and normally it takes a professional tax consultant to properly assess a foreign income's classification under Swedish rules. Often, a so called "open disclosure" should be made to limit the risk of the Swedish Tax Agency having a different view on the income classification. It it also common that foreign sourced income is subject to provisions of a tax treaty, which requires professional advice. Let us know if you are an expat with foreign income living in Sweden, that is seeking help with your tax situation. All our clients are entitled to an extension of the Tax Return filing deadline, which in many cases becomes handy if you are in need of specific documentation from your home state's authorities, financial institutions, and similar.
Double taxation issues for expats
Double taxation is a rather unpleasant experience for expats. However, it is unfortunately quite common that it occurs. In order to prevent this, Sweden has entered into bilateral tax agreements with a vast amount of countries. In order to establish which of the two states that is allowed to tax the income of an expat, the tax treaty residency must be established. This is quite complex, but has great impact on taxes. In some cases, the Swedish internal foreign tax credit law can be utilized.
Tax treaties can also be used for tax planning purposes. For example, there are many tax treaties that overrides Sweden's right of taxation, which can be used to achieve great results. This is especially the case, for example, when an expat living in Sweden is selling real estate property located in his/her home state.
Other aspects and conclusions
Actually, Sweden is not that bad when it comes to taxes. The wealth tax is abolished, as well as the inheritance and the gift tax. Together with the ISK (investment savings account) regime, or an Endowment Insurance, this can create interesting possibilities for persons with big wealth and considerable capital income. However, employment income is taxed with high rates. In conclusion, one can say that it is easy to be rich in Sweden, but hard to get rich in Sweden (at least through salary income).
Our most important advice to anyone moving to Sweden, is to consult a Swedish tax lawyer before coming here. There are loads of aspects to consider, from a tax perspective, if one intends to move to Sweden in a tax optimal manner. For example, assets should be moved at the right stage to different account types, or sold at the right timing, or applications should be made in advance. By receiving Swedish tax advice in due time before the move, we guarantee you that you will save a lot of money in unnecessary taxes. Please contact us if you would like to know more.
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