Expat in Sweden? Here’s how to file your Swedish income tax return
The process of filing tax returns often evokes considerable unease among expatriates, primarily due to the complexity associated with income earned across multiple jurisdictions. However, BDO Sweden has assembled a few guidelines to aid expatriates during this year's income tax return season.
If you have been employed in Sweden throughout the calendar year 2023, it is likely that you will be required to submit a Swedish income tax return to the Swedish Tax Agency (Skatteverket).
Note that the last day to submit your income tax return to the Swedish Tax Agency is 2 May 2024. However, if you wish to engage BDO to assist you with your income tax return, we can apply for an extension of the deadline until 17 June 2024. Failing to file your Swedish Income Tax Return before deadline, the Swedish Tax Agency may charge a penalty fee of SEK 1,250 due to late filing.
If you have been living and working in Sweden for a longer period than six months, you are most likely considered to be tax resident in Sweden. This entails that your worldwide income is subject to tax in Sweden and is therefore to be declared in your Swedish income tax return. Important to bear in mind is that you may be considered as tax resident in more than one country. Any tax treaty with Sweden and the other country may limit Sweden’s right to taxation of your income, but this is something that must be claimed in your Swedish income tax return.
Employment Income
Based on where you are considered to have your so-called tax treaty residency, it might be possible to exclude a part of your income from taxation in Sweden if it has been earned while working abroad. Moreover, income that you have received after your move to Sweden, may under certain circumstances also be excluded from taxation if the income can be attributed to work carried out in another country.Furthermore, foreign pension insurance must be classified from a Swedish perspective to ensure if any offsetting to the insurance is taxable or tax free from a Swedish perspective.
Foreign life insurance
If you have a foreign (non-Swedish) life insurance, it might not be taxed in the same way in Sweden as in your home country. In Sweden, such insurance must be classified from a Swedish perspective to ensure they are reported correctly in your Swedish income tax return. If they qualify as a foreign endowment insurance (Sw. kapitalförsäkring), you are obliged to pay an annual yield tax as the owner of the insurance. The yield tax is 30% on a standardised amount which is calculated from the annual value 1 January of the relevant tax year. As you pay annual yield tax on the holding of the insurance, any payment from the insurance to you as an individual is in return tax exempt from a Swedish perspective.Owning funds
Additionally, if you held funds by 1 January 2023, you are obliged to report the funds as subject to tax. Owning funds is annually taxed by calculating a standardised amount of 0.4% of the fund’s total value 1 January of the relevant tax year.Possible Tax Deductions in the Income Tax Return
It is worth to review the possibility for tax deductions possible to claim to optimize your tax situation. BDO has listed a few that could be applicable in your situation:- If you have paid interest costs abroad, or in Sweden, you can be entitled to deduct the costs and receive up to 30 % of the paid interest as a tax refund.
- Temporary stays and assignments in Sweden could mean that you have double households, one in Sweden and one in your home country. You could qualify for a deduction for double housing in your Swedish income tax return, depending on your situation.
- If you hold an A1 certificate, entailing that you belong to the social security system of your home country, mandatory social security charges paid by you as employee in your home country could be deductible in your Swedish tax return.
- Being assigned to Sweden could also make you qualify for a deduction for increased living costs. There are different standardized daily rates, which can be deducted, depending on your specific situation.
- Your costs for travel to your home country could also be deductible if you have kept a home in your home country.