Last updated: 21 9 2018
The Swedish tax system is the basis of the Swedish welfare state. Thanks to tax revenues, the State is able to give everyone the same opportunities to education and a good life in Sweden. A large proportion of the Swedish welfare system is paid for through taxes. For example, taxes pay for healthcare, childcare, social services and care of the elderly. In addition, roads, public transport, the reception of refugees and collective environmental efforts are all paid for through taxes.
Image: The Swedish Tax Agency
The majority of people living in Sweden have confidence that the money they pay in taxes is used to build the collective society.
When you work, you pay tax on your wages. This is called income tax. The wage you receive before tax has been paid is called the gross wage. The wage after you have paid tax is called the net wage. The net wage is the money you have left to live on. The Swedish tax system is set up so that those who earn more pay more tax. Those who do not have enough money to survive can get help from society.
Income tax rates are different in each municipality. It is usually 29–35 per cent of your gross wage. If you earn a lot, you also pay a tax to the State.
Income tax you pay
|Over SEK 662,300||29–35% municipal income tax
+ 20% state income tax
+ 5% state income tax on income over this level
Between SEK 455,300 and 662,300
|29–35% municipal income tax
+ 20% state income tax
on income over this level
Under SEK 455,300
|29–35% municipal income tax|
Under SEK 19,247
You pay no tax
Table showing the different tax levels for income tax. (Figures from 2018)
Those who are receiving sickness benefit or pensions also pay income tax. You also pay tax on the benefits you receive from your work. A benefit may be that you are allowed to use a work car privately or receive food coupons to buy lunch or dinner at a restaurant.
You can also print your income tax return form and send it by post to the Tax Agency. The income tax return must be submitted by the beginning of May. Photo: Marcus Lundstedt, Johnér
Income tax return
Every year, everyone who earns an income and is liable for tax has to submit an income tax return to the Swedish Tax Agency. The Tax Agency will send your income tax return form to you. The form already contains information about how much you have earned and how much tax you have paid over the course of the year. This information comes from your employer, your insurance company and your bank. You have to check that the information is correct. Use the provided codes or your electronic ID (e.g. BankID) to identify yourself and to sign for your approval of your tax return. You can choose between phoning, sending a text message, suing the Tax Agency's app or e-service. The codes to use are at the top of the income tax return form.
Value added tax, commonly called VAT, is a tax on goods and services. Everyone pays VAT on the majority of goods and services they buy. VAT is included in the price we pay. There are three different tax rates depending on what you are buying: 25, 12 or 6 per cent. There are also goods and services which are VAT exempt, including medical care and education. The government uses VAT as a political instrument, charging lower rates of VAT on goods and services it wants people to buy or thinks are beneficial for them.
Excise duty is an additional tax on specially selected goods or services. Among goods subject to excise duty are alcohol, petrol, electricity and tobacco. Excise duty can be used to influence consumption. The government and the Riksdag determine which goods and services should be subject to excise duty, and their justification is usually that they are harmful to the environment or to health.
Social security contributions
Employers pay social security contributions for their employees. These employers' contributions help pay for employees' pensions, parental allowances and sickness benefits. In addition to employers' contributions, the employer must pay preliminary income tax for his/her employees. These payments are made monthly to the Tax Agency. If you run your own company you also have to pay social security contributions, usually referred to as owners' personal social security contributions.
Undeclared or unofficial work means that you don't pay tax on what you earn. One of the fundamental principles in society is that everyone who works must pay tax. The tax you pay is used to fund medical care, roads, care for the elderly and other welfare provided to all citizens.
If you do undeclared work you may find it difficult to get a lease on an apartment or to pay for things in instalments (on credit). Landlords and companies often require you to show them an employment contract before entering into any agreement with you.
If you do undeclared work:
- you will not get an employment contract, which means you can be cheated out of your wages.
- you will not get any unemployment insurance payments if you become unemployed.
- you will not get any sickness compensation or holiday pay.
- you will not get any sickness benefit or parental allowance.
- you will receive a lower pension.
- you are not insured against injuries you might cause to yourself or others, or for damage you might cause to something while working.