Taxes and pension
Swedish taxes are high from an international standpoint. But you get your money’s worth. The taxation system in Sweden is straightforward, as is reporting your taxes. If you work and pay tax in Sweden, you earn a pension. Here’s how it works.
Paying taxes in Sweden is straightforward: employers pay payroll taxes on top of your salary every month, income taxes are deducted directly from your salary and value-added taxes are included in the price of food, goods and services. If everything appears correct on your yearly tax statement, reporting your taxes can be as simple as sending a text message from your cell phone to the Swedish Tax Agency to confirm this.
You can apply for an income tax notice of assessment (skattsedel), at the local tax authority. If you stay in Sweden for less than six months, your employer will deduct a withholding tax of 25%. If you stay for more than six months, you will normally pay tax on your income according to the tax rate in the municipality (kommun) where you live – usually around 30%. If your income is high you probably have to pay government tax.
If you have stayed in Sweden for more than six months, an income tax notice that specifies your earned, taxable income for the previous year will be sent to you. This is the information you need to complete the income tax return (Självdeklaration) that you must hand in, on a paper form or electronically, to the Tax Agency at the beginning of May each year. If you are staying for less than six months you need to get in touch with the Tax Agency to adjust the tax deduction from your wages. There is an instruction leaflet in English to help you. Phone: 0771-567 567.
Tax relief for foreign key personel
Foreign key personnel – executives, experts, researchers, and others – may qualify for special tax relief when working in Sweden.
The main feature of Sweden's tax relief legislation will provide a 25 % reduction of taxable income of a foreign key person. This means that your income tax, as a foreign key individual, will be based on only 75 % of your income.
You or your employer must submit application for tax relief within three months of the start of your employment. If you are granted the tax relief, you are not expected to reside in Sweden for more than five years.
More information can be found at Forskarskattenämnden’s webpage.
Good to know:
If you’re staying for less than six months you need to get in touch with the Tax Agency to adjust the tax deduction from your wages.
What you get for your tax money
Everyone in Sweden is entitled to extensive tax-funded services and benefits. This explains why Swedish taxes are known to be relatively high. Sweden also has a 25% value added tax or consumption tax which is high from an international standpoint. But high taxes are not necessarily high if you’re getting your money’s worth:
There is universal health care in Sweden. You don’t pay anything unless you have to go to the doctor. In that case, you pay a small amount per visit.
Day care is heavily subsidised. The fee you pay is based on your combined household income. There is a maximum fee of 1260 SEK/month for the youngest child, 840 SEK for the second youngest child and 420 SEK for the third youngest child. You receive a monthly child benefit from the government, which covers the cost. So day care is basically free.
University studies are free if you have a temporary Swedish residence permit that was granted on the basis of something other than studies.
For those who lose their jobs, unemployment insurance is available, and many continuing education and retraining programmes are entirely tax-financed.
On top of this, many workers enjoy other advantages based on their salary, sector or workplace. Certain white-collar workers or management-level employees, for example, can earn significantly higher pensions due to the nature of their work. To support these social services, all levels of government receive their share of tax revenues. This includes the municipality (kommunen), the county (landstinget) and the national government (staten). All taxes are collected by the Swedish Tax Agency.
Pension in Sweden often comes from different sources: retirement pension, occupational pension and private pension. Together they make up your total pension.
If you have worked and lived in Sweden, you will get a national retirement pension based on the income you paid tax on. The national retirement pension consists of income pension, premium pension and guarantee pension. Persons who have low pension or no earnings-related pension get guaranteed pension. Guaranteed pension can be paid to persons who are EU/EEA residents.
The majority of those who work in Stockholm (about 90%) also get occupational pension from their employer. An occupational pension is also referred to as a company or employer´s pension scheme if your employer has signed a collective agreement. Contact the company administering your occupational pension scheme when you wish to start collecting your pension payments. Your employer can provide information about who you should turn to.
Many Stockholmers (and Swedes in general) also chose to supplement their retirement and occupational pensions with a private pension scheme.
The websites below provide more information on pensions:
Applying for a Swedish pension if you live in another country
If you have worked and paid tax in Sweden, you have earned a Swedish pension. You are entitled to the pension even if you now live in another country. If you live abroad, the way that you apply to receive a Swedish pension depends on the country. Click this link and follow the instructions in order to receive your pension as fast as possible.