Annual accounts of the company in Sweden
Annual accounting for a company in Sweden
Both the entrepreneur who runs his/her own business in Sweden and every employee of Swedish companies are obliged to submit an annual tax return to Skatteverket, the Swedish tax office. A Pole who runs his own business in Sweden is subject to tax in Sweden, not in Poland. He or she is also entitled to a daily deduction of 30 per cent - in Sweden, this is 459 Swedish kronor. An exception to the Swedish tax return is for non-Swedish tax residents (temporary employees who have stayed in Sweden for up to 183 days per year), as they are subject to the 25 per cent SINK tax. There is a financial penalty (SEK 1150 or more) for not settling with Skatteverket.
Foreign entrepreneurs who choose to operate a company in Sweden without a permanent establishment in the country are required to settle with the Skatteverket office using form SKV 4632 (in Swedish). After filing, the Swedish tax office sends an F-skattesedel tax card and a certificate of registration as an F-taxpayer within 2-6 weeks. In addition to this, foreign business owners in Sweden are required to submit a VAT return once a month, and they must enter special tax on pension costs (SLP - särskild inkomst skatt på pensionskostnader) on their tax return, but they are not required to pay allmän löneavgift, the general wage contribution, (employees pay this themselves).
Swedish entrepreneurs can do their company's annual accounting online via www.skatteverket.se
. You will need a Personnummer (or Samordningsnummer) from the Swedish tax authorities. It is also worth remembering that those who run their own business in Sweden, in addition to the annual settlement, are required to register with Försäkringskassan (Swedish health insurance fund).
Importantly, any Swedish entrepreneur may include tax allowances in the annual company return if 90 per cent of the company's income is earned in Sweden. These reliefs include an allowance for rent and utility expenses for rented premises for an office, shop or Swedish company headquarters, an allowance for business travel expenses, an allowance for the purchase of instruments or tools needed to run a Swedish company, expenses for business phone calls, an allowance for the purchase of protective clothing, an allowance for transport from the place of residence to the place of work, an allowance for dual household and personal protective equipment, etc.
Types of annual accounts in Sweden
The type of annual company settlement in Sweden depends on the type of business the entrepreneur chooses. The taxation of a Swedish sole proprietorship (Enskildnäringsidkare) follows different rules than the taxation of a Swedish civil law partnership (Enkeltbolag), limited partnership (Kommanditbolag - KB), limited liability company (Aktiebolag - AB), trading company (Handelsbolag - HB), a Swedish public limited company (publiktaktiebolag), a private limited company (privataktiebolag), a Swedish branch of a foreign company (Filial), a foundation (stiftelse), a business association (ekonomiskförening) or a European limited company (Europabolag).
The owner of a Swedish company, irrespective of the type of business chosen, is obliged in the first year of operation to report to the tax office the estimated amount of the annual profit and to pay advance income tax (Preliminärskatt). To this end, he submits the Preliminär Inkomstdeklar, or preliminary tax declaration. This can be done via www.skatteverket.se
. The e-service that can be found there - E-tjänst - also makes it possible to reduce or increase the advance income tax payment during the tax year if the company's generated profit differs from that declared at the beginning. In subsequent years, the amount of income tax already depends on the specific profit of the company. The calculated tax to the Swedish tax office must be paid by the entrepreneur by the 12th of the month (exception: 17 January and 17 August).
Accounting for a Swedish sole proprietorship (Enskildnäringsidkare)
The Swedish Tax Agency (Skatteverke) considers the income from a Swedish sole proprietorship (Enskildnäringsidkare) to be the income of the business owner (tax is declared on a single tax return). This type of Swedish sole proprietorship is unincorporated and is accounted for in the same way as an individual account. If the owner of a sole proprietorship settles his/her taxes and pays all contributions on time, he/she can benefit from health or pension benefits exactly as an employed person.
Importantly, a Swedish sole proprietorship selling goods or services that are subject to VAT (moms) is required to add the appropriate VAT rate (25%, 12% or 6%) to each transaction. This tax is settled by means of a tax return, which may be submitted monthly, quarterly or annually (depending on the size of the company).
Settlement of Swedish companies
A Swedish company has a legal personality, and therefore its profit is subject to corporation tax at a rate of 28%. It is paid in the form of advance payments calculated on the basis of the company's estimated income at the beginning of the year. The law requires payment by the 12th of each month (exceptions: 17 January and 17 August).
As in the case of a sole proprietorship, a Swedish company selling services or goods subject to moms tax (VAT) should be entered in the VAT register and also account for this tax. As a reminder: the rates of VAT in Sweden are 25%, 12% and 6%, and it is settled using a tax return either monthly, quarterly or annually.
- Civil partnership (Enkeltbolag) - income from this type of business is considered to be the income of the owner and partners of the company. Accordingly, business tax is declared by the owners in an annex to the annual tax return, which must be submitted by 2 May.
- Commercial companies (Handelsbolag - HB) - they are obliged to submit formal annual financial statements for the previous year. The accounting year equals the calendar year if at least one of the partners is an individual (important condition!). The income from the company's activities is accounted for during the annual return of the natural persons or companies that are partners in the company. Importantly, tax to the Skatteverke is only paid on the value of the profit share of each shareholder of the company (not on the company's profit).
- Limited liability companies (Aktiebolag - AB), public joint stock companies (publiktaktiebolag) and private joint stock companies (privataktiebolag) - the accounting year does not have to be a calendar year, but the duration of the year must be recorded already when the company is established. All of these companies are required to submit formal annual accounts for the previous year.
- Limited partnerships (Kommanditbolag - KB), business associations (ekonomiskförening), company branches (Filial), foundations (stiftelse) or European joint-stock companies (Europabolag) - owners are required to submit formal accounts and tax returns for the previous tax year must be submitted by 2 May.
Infographic "Foreign entrepreneurs have to file summary reports every three months in Sweden if:"
Documents needed for a Swedish company's annual return
Every business owner in Sweden is obliged to settle with the Swedish Tax Agency (Skatteverket) by means of an annual tax return, and if the company has employees, the employer
must provide them with all the necessary documents needed for the tax return.
Documents related to the Swedish company's annual tax return include:
- Income tax decision - foreign owners of Swedish companies are required to submit an application (form SKV4350) via www.skatteverket.se for the issuance of this document (a photocopy of an identity document must be attached to the application).
- INKOMSTDEKLARATION 1 - a document necessary for the tax return. It is sent by the Skatteverket from 19 March to 15 April. For the tax return, you will also need documentation of your tax allowances (if you are entitled to any) and a photocopy of your identity document.
- A1 form - a document that must be presented to prove that you are insured outside Sweden (you must also document the amount of premiums paid).
- KU-10, KU-13 or KU-14 - tax cards that every Swedish employer is obliged to issue to its employees.
An entrepreneur who runs a business in Sweden and is at the same time a tax resident in Poland must settle with the Polish tax authorities on the annual PIT-36 return (taking into account the Swedish income on attachment ZG). If the Polish entrepreneur derives income only from the activity he/she carries out in Sweden, he/she is entitled to the abolition relief. In order to benefit from it, it is necessary to submit a PIT/O declaration to the Polish tax office. In the case of settlement of a sole proprietorship conducted in Sweden by a Pole, he/she needs a statistical number and a VAT number (issued by Skatteverket after the entrepreneur sends form SKV 4632), a tax application for entrepreneurs (it can be found at www.skatteverket.se
), a photocopy of a passport or other identity document, a certificate from the Polish tax office about no arrears in tax payments and a certificate from the Polish Social Insurance Institution about no arrears in social payments are required. Please note that a sworn translation of these documents into Swedish is necessary.
Deadlines for annual accounting in Sweden
The time between 1 March and 2 May is the period in which Swedish business owners are required to submit their tax return for the previous tax year. The Skatteverket has six months to issue a tax decision.
Entrepreneurs in Sweden have 90 days (from receipt of the summons to pay) to make a surcharge to the Swedish tax authorities, while they have one year to appeal the tax decision. The Skatteverket sends the tax decision between 15 August and 15 September.
It is also worth remembering that if an entrepreneur does not receive a tax return (INKOMSTDEKLARATION 1) from the Skatteverket by 15 April, he or she must download a new form from www.skatteverket.se
as soon as possible and contact the Swedish tax authorities to clarify the problem.
Costs for companies in Sweden
The costs that a company incurs in Sweden are documented on the basis of cost invoices that confirm expenses and income. The entrepreneur, either personally or through an accountant, is obliged to check the accuracy of the invoices and all documents related to the accounts. The most important data that must be recorded correctly are the company data (address, number, owners' data) and the amounts (value of goods or services and rates of VAT added). An incorrect invoice is invalid.
The most significant costs associated with a company in Sweden are:
- 28 per cent corporation tax (if company reserves and deposits are rotated, this tax can be reduced to 26 per cent). It is worth remembering that the tax is calculated on net income, after deducting the costs associated with running your own business;
- VAT applies to virtually all businesses that offer the sale of goods or services. Its basic rate, i.e. 25%, applies to most goods, for which reduced rates of 12% and 6% do not apply;
- taxpayers who work in Sweden for less than 183 days in a tax year are required to pay SINK tax (25%);
- taxpayers and Swedish entrepreneurs who work in Sweden for more than six months pay municipality tax, which is 29-34%, and state tax, which is 20% (annual income above SEK 468,700) or 25% (annual income above SEK 675,700);
- also, compulsory for entrepreneurs in Sweden are a 30 per cent tax on dividends (this can be reduced through a double taxation agreement);
- anyone who runs their own business in Sweden should register with the Skatteverket as an excise taxpayer. After registration, the office sends a form with a tax refund date (the waiting time in Sweden is usually one month). Importantly, Swedish entrepreneurs must also submit an excise tax return to the Swedish tax authorities, even if the tax is 0;
- if you are self-employed in Sweden and have employees, you pay 33 per cent social contributions (which include healthcare and pension contributions). These contributions amount to 31.42 per cent (for those born 1954 and later) and 16.36 per cent (for those born between 1938 and 1953). There are also compulsory social contributions for business owners, which the employer pays for itself (Egenavgifter, the so-called self-employed contributions) and these amount to 28.97% (for those born in 1954 and later) and 16.36% (for those born between 1938 and 1953).
Tax relief for Swedish companies
Any Swedish entrepreneur can include tax deductions in the company's annual return to the Skatteverket (if 90 per cent of the company's income has been earned in Sweden). However, it is important to note that each of the tax deductions must be substantiated by relevant documents. What are these reliefs? A list of these is provided below:
- commuting allowance (one trip per week by the cheapest means of transport can be deducted);
- tax relief for commuting costs from your residence in Sweden if it is not possible to travel by public transport (the rate is SEK 18.5 per 10 km);
- allowance for accommodation - for Swedish temporary workers; you need to present a housing rental contract and any related receipts;
- business travel allowance (traktamente) - SEK 230 deduction for the first 90 days and SEK 69 for subsequent days (must be confirmed with tickets, hotel invoices, etc.);
- allowance for costs of purchasing apparatus and tools necessary for work (except telephones and computers) and for costs related to the purchase of protective clothing (except work clothing);
- allowance for the costs of training necessary to maintain a job (does not include training for a new job);
- allowance for the rental of premises for a business or shop (evidenced by a rental agreement);
- allowance for meals - for Swedish temporary workers who present receipts, invoices, etc.;
- dual household tax credit (Dubbelbosättning) - can be used by all Swedish entrepreneurs and employees of Swedish companies if they can prove that they also have a household at their place of residence (e.g. in Poland). This relief can only be used for one year (for a single person whose family wants to move to Sweden) or for three years (for informal and formal unions);
- relief for interest costs on consumer loans and mortgages - this is for employees of Swedish companies who have loans, it must be confirmed by receipts for repayment of instalments;
- relief for social insurance paid in Poland (confirmed by documents translated by a sworn translator into Swedish);
- grundavdrag, i.e. relief for time worked in Sweden - the right to full relief is granted to persons who have worked in Sweden for a full year or to persons whose minimum 90% of their income comes from Sweden.
Tax reliefs that an entrepreneur can include in the company's annual return if 90% of the company's income was earned in Sweden:
relief for rent and utility expenses for rented premises for an office, shop or Swedish company headquarters;
relief on business travel expenses;
relief for the purchase of instruments or tools needed to run a Swedish company;
relief for business telephone expenses;
relief for the purchase of protective clothing;
relief for transport from home to the place of work;
relief for dual household and for personal protective equipment, etc.]
1. Who is subject to the SINK tax in Sweden?
The 25 per cent SINK tax (statlig inkomst skatt för utomlands bosatta) applies to Swedish residents (temporary employees who have stayed in Sweden for up to 183 days per year). Such persons have limited tax liability and are exempt from filing an annual tax return.
2. Where should Swedish entrepreneurs file their annual tax return?
Swedish entrepreneurs must submit a tax return to the Swedish tax authority, the Skatteverket. This is usually done electronically, via www.skatteverket.se
3. What is Bolagsverket?
Bolagsverket is the Swedish Companies Registration Office, where Swedish companies that want to make sure their name is registered should register.
4. What is Skatteverket?
Skatteverket is the Swedish tax authority.
5. How long is the tax year in Sweden?
In Sweden, the tax year is a calendar year, i.e. it runs from January to December. However, it is worth remembering that for some Swedish companies the tax year is not necessarily the same as the calendar year.
6. Who is entitled to tax deductions in Sweden?
In Sweden, all Swedish residents, i.e. taxpayers who live in Sweden for more than 183 days per year and 90% of their income comes from Sweden, are entitled to tax reliefs.
7. What is the waiting time for a tax decision in Sweden?
The waiting time for a tax decision in Sweden is approximately 6 months.
8. How much VAT will I pay in Sweden?
There are four rates of VAT in Sweden. The standard rate is 25 per cent, but there are also reduced rates - 0, 6 and 12 per cent. To pay Swedish moms tax, you have to file a dedicated tax return. It depends on the size of the company how often this document is filed. Possible options are once a month, once a quarter and once a year.
9. What documents are needed for the annual Swedish tax return?
10. Is there a double taxation convention in force between Poland and Sweden?
- INKOMSTDEKLARATION 1, which is the annual return sent by Skatteverket.
- Document E101/A1, which confirms where the insurance premiums have been paid.
- Documents from your employer listing your income for the previous year - KU-10 or KU-13.
- Photocopies of payslips, employment contract and identity card.
- Documents confirming the tax benefits the person wishes to take advantage of.
Persons who earn income in both Poland and Sweden should familiarize themselves with the Convention between the Government of the Republic of Poland and the Government of the Kingdom of Sweden on Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income of 19 November 2004. This document regulates issues related to the tax obligation towards both countries, thanks to which the income obtained is not subject to double taxation and the tax obligation in Sweden is met in accordance with the provisions of the law.