Sweden stands out for its innovative capacity and becomes attractive to foreign investment involved in technology and green energies. Regarding accounting obligations, companies are required to maintain records according to the Swedish Accounting Act (Bokföringslagen) and submit annual financial statements before Bolagsverket within 7 months after the end of the financial year. Failure to submit financial statements on time results in penalties.
In terms of tax matters, the corporate tax, compared to international standards, can be considered as low. The current rate is 20.6%, and companies have the option to make annual allocations to a fiscal reserve, which are considered deductible, reducing even further the effective tax rate.
New tax deductions in Sweden
New tax deductions introduced in the budget proposal target foreign experts, researchers, and key foreign personnel. This measure enhances talent acquisition and extends the period for tax deductions from 5 to 7 years, effective from 2024.
The proposed reforms in legislation include a change related to buybacks of shares and similar assets, which will be taxed as dividends at the time of disposal. This change, applicable to both limited and unlimited liability companies, would take effect in 2025 and focuses on shares issued for the purpose of capital reduction through reimbursements or repurchases.
In addition to the above, the tax modification includes a change in the calculation of the R&D deduction, applicable to companies engaged in qualified research and development activities, effective from January 1, 2024.
VAT rates and VAT return threshold change
As for VAT, the current general rate is 25%, and the reduced rate of 12% applies to food, hotel accommodations, sports events, and cultural events.
Finally, an additional change will raise the threshold for VAT returns from 80,000 SEK to 120,000 SEK (calendar year), effective from January 1, 2025, reducing the tax burden for smaller companies, while giving them the option to continue declaring if they prefer.