Sweden Income Tax Withholding Examples
Select Salary Levels 2007

Individual income tax in Sweden is comprised of two major parts: A municipal tax rate between 29% and 35% and a national tax rate between 20% and 25%. In 2007 the national tax rate applies only to individuals earning more than SEK 327,600. There is a basic deduction allowance of between SEK 11,900 and SEK 31,100 on taxable earned income (employment and business activity) if the individual had unlimited tax liability for the whole year. Sweden has a progressive tax rate that increases in steps. The tax rates on individual taxable earned income break down as follows: Municipal tax in the municipality of residence (approximately 30% to 33%), church tax and burial charges (approximately 1% to 2%), state progressive income tax and a general pension charge of 7 per cent, at most 25,900 SEK. State income tax is 20 per cent of that part of the taxable earned income that exceeds SEK 316,700 (2007). If the taxable earned income exceeds SEK 476,700 (2007), an additional 5% state income tax is paid on that part that exceeds SEK 476,700 (2007).

Income withholding tax is based on the average monthly salary for the year and is deducted from an individual's gross salary. The amount withheld is based on the Tax Table (Skattsedel) number for the community that the individual resides in. The amount of tax that an individual is subjected to increases with the value of the Tax Table Number (TTN). For instance, a monthly gross salary of SEK 37,000 with a TTN of 30 pays SEK 991 less tax than a TTN of 33 would pay as illustrated in the table below:

Swedish social benefits cap at a salary of around SEK 37,000 per month - this means that any additional income does not result in higher social benefits. Despite this cap, social taxes must be paid by the employer (or self employed individual) regardless of the income level. The following table illustrates the income tax withholding and social tax contributions (28.02% for representative companies) by the employer for monthly salaries ranging from SEK 32,000 to SEK 38,000 for the 2007 tax year (Based on Tax Table 30):

Gross Salary is the average monthly salary that an employee earns over the course of the tax year.

Withholding is the amount that an employer is required to withhold from the employee's gross salary and pay to the tax authority each month.
The withholding amounts indicated in the table take into account the recent income tax reduction that Sweden implemented in 2007.

Net Salary is the amount after income tax withholding that the employee receives each month (before any other deductions might be applied).

Social Tax in this table (above) reflects the tax rate that a Representation Office company must pay to the Swedish tax authority each month. The table below illustrates the impact on the two different social tax rates on employer costs (resident/established company compared with representation company social tax rates).
Social Tax Rate for Permanent Established companies is 32.42%
Social Tax Rate for Representation Office companies is 28.02%

Employer Cost is the combined salary and social tax that an employer must pay each month for each respective salary amount. For a self employed person, this cost is the amount required in order to receive the respective gross monthly salary.

Non-salary payments such as bonuses and taxable benefits that an employee receives in addition to a monthly salary of SEK 35,000 or more are typically subject to an income tax withholding rate of around 55%. Tax refunds for the following tax year are typically processed around the months of May and June for early electronic income tax filers and around December for self employed individuals.

The following tax table illustrates income tax withholding rates for different monthly salary amounts (based on an average for the year).

2007 Tax Rate Table

All amounts in Swedish Kronor (SEK)
Income Tax Withholding based on monthly salary indicated
Income Tax Withholding amount based on Tax Table 30

Note: Salaries in Sweden are typically described as a monthly amount as opposed to an annual amount. This usage is reflected in the Tax Rate Table above.

Salaries in Sweden are traditionally paid once a month usually on or just before the 25th. Bonuses are usually an annual event paid towards the end of the tax year and are subject to a special withholding tax rate. Bonuses that are paid more frequently are subject to a higher tax withholding rate (for individuals earning around SEK 35,000 or more this rate is typically 55%).

Note that all of the examples on this web page are based only on the monthly salary component and do not take into account any other earnings. The examples are based on the salary income tax withholding amounts that have been established by the Swedish Tax Authority. The actual amount of income tax due is determined when an individual files their annual income tax return.