International Tax 2026 Comparisons

Sweden has a dualist legal system, whereby international law must be ratified in domestic legislation. Constitutional principles prohibit tax without law and retroactive taxation (with rare exceptions). There are several sources within which to find guidance on international tax law:

• The Income Tax Act is the primary domestic source for income taxation. Other legislation may be relevant in both domestic and cross-border situations (such as the Withholding Tax Act, the Special Income Tax Act on Employment for Non-Residents (SINK), Swedish tax treaties, etc).
• Preparatory works, including the background, discussions and analysis behind a certain piece of legislation, are always published by the government. They provide a more detailed walk-through of the legislative process and the reasons for and criticisms of the proposed law.
• Case law, primarily from the administrative courts, provides guidance on the interpretation of the law. Precedents from the Supreme Administrative Court are binding.
• OECD publications, such as the Transfer Pricing Guidelines, provide guidance on the interpretation of domestic law.
• Doctrinemay also provide guidance on the interpretation of Swedish law.
• The Swedish Tax Agency (STA) provides extensive legal guidance based on its opinion on the interpretation of law. However, the STA guidance is not legally binding upon either the taxpayer or the STA, meaning that taxpayers may challenge STA opinions by proposing a different interpretation, and also that the STA may change its opinion at any time, with or without developments in tax legislation and/or case law.

As mentioned in 1.1 Domestic Sources of International Tax Law, international tax legislation must be ratified in order to be legally binding in Sweden. Since Sweden joined the EU, EU law generally has precedence over Swedish legislation.

With that said, international tax law sources such as OECD guidance and other similar sources may be used as bases for interpretation of the relevant tax legislation. This has, to a certain extent, been confirmed in case law. In a few cases from the Supreme Administrative Court, the Court has stated that, even though the OECD Transfer Pricing Guidelines are not legally binding for Swedish authorities, they provide such a well-balanced view on the relevant issues that they may be used as a basis for interpretation. The STA agrees with this view of the OECD Transfer Pricing Guidelines.

Sweden’s tax treaties are incorporated into Swedish law. The tax treaties generally have precedence over other domestic legislation.

Sweden generally follows the OECD Model Tax Convention.

Sweden ratified the Multilateral Instrument (MLI) in 2018. The parts of the MLI that Sweden has chosen to apply are:

• Article 6 – Purpose of a Covered Tax Agreement;
• Article 7 – Prevention of Treaty Abuse;
• Article 16 – Mutual Agreement Procedure;
• Article 17 – Corresponding Adjustments;
• Articles 18–26 on Arbitration (Part VI); and

• the choice regarding the timing of application set out in Article 35(3) – Entry into Effect, as explained below.

Although the MLI was approved, it did not automatically modify Swedish tax treaties upon its entry into force internationally on 1 July 2018. Under Sweden’s dualist legal system, international agreements must be specifically incorporated into domestic law to be enforceable. This process requires legislative amendments to the individual acts that originally incorporated each bilateral tax treaty.

Sweden has specifically reserved the right regarding the “entry into effect” of the MLI (Article 35). As a result, modifications to a specific treaty only occur once Sweden’s domestic implementation act for that treaty has been updated.

While Sweden has designated 64 “Covered Tax Agreements” (see Prop. 2017/18:61), modifications remain contingent on reciprocity; that is to say, the treaty partner must also designate Sweden as a covered jurisdiction. Consequently, the MLI provisions selected by Sweden will only take effect on a treaty-by-treaty basis following both mutual notification to the OECD and the completion of Sweden’s internal legislative process.

The Swedish general principles for territorial taxation are residence and source taxation. Tax residents are subject to unlimited tax liability on worldwide income. Non-residents are subject to Swedish taxation on Swedish-sourced income, eg, income from immovable property, withholding tax on dividends or business income related to a permanent establishment in Sweden.

An individual may be considered a Swedish tax resident based on (i) residence, (ii) permanent/habitual residence or (iii) significant connection to Sweden.

• Residence: Residence is primarily determined by registration in the Swedish population register but also includes individuals who normally spend their nightly rest in Sweden. In practice, people who are not registered are usually assessed under the rules on habitual stay, although exceptions may apply.
• Habitual residence: Under case law, a continuous stay of six months or more generally constitutes habitual stay in Sweden. The assessment considers the extent, regularity and duration of the stay, and recurring or regular visits may also qualify depending on the circumstances. For example, a stay for four months combined with additional shorter visits has been considered habitual residence, whereas a continuous stay of three months combined with up to 30 days or irregular visits has not.
• Significant connection: Significant connection is assessed based on the overall circumstances, including, for example, citizenship, previous residence in Sweden, housing, family, business activities, or ownership of or influence on Swedish companies. After leaving Sweden, substantial ties are presumed for five years, and the burden of proof to demonstrate otherwise lies with the individual.

An individual who does not qualify for Swedish tax residence is considered to be a limited taxable person.

Swedish individual tax residents are taxed based on worldwide income unless exceptions may be found in, for example, domestic legislation or an applicable tax treaty.

An individual who is tax resident in Sweden may in some cases be relieved from employment taxation if the individual is employed abroad and:

• the employment and habitual residence abroad last more than six months and the income is taxed in the jurisdiction where the work takes place (“the six-month rule”); or
• the employment and habitual residence abroad last more than a whole year and the income is not subject to tax in the jurisdiction where the work takes place based on local law/practice or an agreement other than a double taxation agreement (“the one-year rule”).

For an exemption to apply, the habitual residence abroad must be due to the employment. The employment must be of such a kind that the individual’s presence is required in the jurisdiction where the work takes place.

Non-resident individuals are generally only taxed on Swedish-sourced income.

• Special Income Tax on Employment for Non-Residents (SINK): Non-residents are subject to a 22.5% tax on Swedish-sourced employment income (including, for example, pension, board remuneration, etc) unless a reduction applies. Reductions may vary based on the type of income and employment.
• Income from immovable property: Non-residents are subject to tax on rental income and/or capital gains for private and commercial properties (including apartments).
• Property tax: All owners of taxable real estate properties in Sweden are subject to property taxation in Sweden.
• Withholding tax: Sweden levies a withholding tax of 30% on dividends unless the tax rate is reduced under domestic legislation or an applicable tax treaty.
• Ten-year rule for previous tax residents: Non-residents who, during the current calendar year or ten previous calendar years, have been tax residents based on residence or habitual residence may be subject to tax in Sweden on capital gains from the divestment of shares. The current provisions cover capital gains from the sale of both Swedish and foreign shares, as well as shares acquired while residing in Sweden. They also apply to the sale of Swedish shares acquired after emigration but disposed of within ten years of leaving Sweden. The ten-year rule may be limited by provisions in tax treaties concluded between Sweden and other countries.

Registered Companies

Swedish companies are considered Swedish tax residents upon registration. No specific income tax registration is required. It should, however, be noted that many businesses elect to apply for a specific Swedish tax registration (“F-tax” (“F-skatt”)) to assume responsibility to pay taxes on their own behalf; otherwise, the business’s customers may be required to make tax payments on the business’s behalf. It should also be noted that the mandatory withholding of taxes for EU entities with no permanent establishment in Sweden has been criticised on an EU level as a limitation upon the freedom to provide services, with a European Court of Justice ruling pending.

Companies not Registered in Sweden

If a company is not registered in Sweden, it can be deemed a tax resident if its highest company organ is operating in Sweden or in another relevant circumstance, such as Sweden being the place for the company’s everyday business.

Under the main rule, a permanent establishment is defined as a fixed place of business from which the business is wholly or partly carried on. Unless all three requirements (place, permanence, where business activities are carried out) are fulfilled, there is no permanent establishment in Sweden.

The definition is based on the OECD Model Tax Convention, but the Swedish definition also includes, for example, real estate that constitutes a current asset and shares in foreign subsidiaries.

General

Immovable properties are subject to tax in Sweden regardless of whether the owner is a Swedish tax resident or not. The owners are subject to tax on rental income (business profit) and/or capital gains for private and commercial properties (including apartments).

Individual Property Owners

To assess whether rental income should be taxed as capital income or business income for individual property owners, it must be determined whether the rental income should be attributed to business activity or capital. “Business activity” means an income-generating activity that is conducted professionally (durably and with a profit motive) and independently. Holdings of business real estate and business co-operative apartments, as well as forest harvesting rights, are always considered business activity. If these requirements are not met, the income should be classified as capital income, ie, income based on the ownership of an asset rather than a business.

Divestment

The main rule is that a Swedish immovable property is a capital asset and that divestment is subject to capital gains taxation. If the property constitutes stock/inventory assets for accounting/tax purposes, the income may be recategorised as business profit.

Corporate Non-Residents

Corporate entities are only taxed for business income, regardless of the categorisation of the income for tax purposes. Hence, rental income is taxed as business income. Swedish immovable property generally constitutes a permanent establishment in Sweden and is taxed as such.

Business profits in Sweden are taxed in following ways:

• General: In general, the taxable result follows the commercial accounts, with a few exceptions, such as, for example, capital gains or dividends covered by the participation exemption (which are tax exempt), certain non-deductible expenses, and differences between accounting and tax depreciation for, for example, machinery and equipment.
• Corporations: A Swedish Aktiebolag (limited liability company) is only subject to business taxation. The business tax rate is 20.6%.
• Individual business activity: Business profits for an individual are allocated between employment income and capital gains taxation based on the amount of capital within the business.
• Business income related to a permanent establishment in Sweden: A foreign company with a permanent establishment in Sweden is taxed on income attributable to that permanent establishment and must pay income tax in Sweden. Whether a permanent establishment exists is determined under Swedish domestic law, with application of any relevant tax treaty with the state in which the company is resident. If the foreign company has a permanent establishment in Sweden which also qualifies as a Swedish branch, it is also required to fulfil accounting requirements.

Dividends and/or Interest to Tax Residents

Individuals

Dividends to individuals are generally taxed at 30%. However, the applicable tax rate may vary in several cases, such as:

• Shares held on an investment account (Sw: Investeringssparkonto, or ISK) or endowment insurance policy (Sw: kapitalförsäkring), which are taxed annually based on their total value rather than taxable events such as dividends or capital gains.
• Closely held companies (or founder-led companies), where distributions and/or capital gains are taxed in three categories: (i) low taxed amount – taxed at 20%; (ii) employment(maximum between SEK7 million and SEK8 million) – taxed between approx. 30% and 55%; and (iii) capital income – taxed at 30%. The low taxed amount is based on, for example, invested capital and paid salaries. The amount taxed as employment income is capped, meaning that any dividend exceeding the SEK7–8 million cap is taxed as regular capital income at 30%.
• Unlisted shares that are not in closely held companies or holdings/during the current year or previous four years have held more than 10% of the shares (votes or capital) in a market-traded company. Dividends (or capital gains) from such unlisted shares are subject to a 25% tax.

Corporations

Interest and dividends not covered by the participation exemption are taxed at 20.6%, unless held within an endowment insurance policy.

Dividends and/or capital gains may be tax exempt for a corporate shareholder if the shares are covered by the participation exemption. Shares held for business purposes are generally covered by the participation exemption if they are capital assets (ie, not current assets) and one of the following requirements is met:

• the shares are unlisted;
• the shares are listed and the recipient of the dividends owns at least 10% of the voting power of the payer for more than one year; or
• the shares are listed and the holding of the share is conditioned by the business conducted by the owning company, or by a company that, with regard to ownership structure or organisational circumstances, can be considered closely related to the owning company.

Withholding Tax

Dividends and interest

Sweden only levies withholding tax on dividends. The general withholding tax rate is 30%, which may be reduced or eliminated by domestic legislation or an applicable tax treaty. No withholding tax is levied on market-rate interest or repayment of principal. Interest exceeding fair market terms may be deemed a dividend and subject to withholding tax.

The main domestic exemptions for withholding tax are:

• if the dividend would be covered by the participation exemption if the receiving shareholder were Swedish; or
• if the recipient is covered by the Parent-Subsidiary Directive.

A recent development of the Withholding Tax Act will extend the exemption of withholding tax to include dividends to foreign states (within the EEA or a jurisdiction with which Sweden has entered a tax treaty or other agreement to exchange information on tax matters), and their equivalent to Swedish regions, municipalities and associations of municipalities, and other government authorities such as public pension institutions. Sovereign wealth funds owned by the state and state-controlled investment funds should also be covered.

Royalties

Sweden does not levy withholding tax on royalties paid by a Swedish resident company to a non-resident. However, royalties paid to a non-resident are considered as deriving from a Swedish business and are taxed as income from a permanent place of business in Sweden.

General

Under Swedish rules, divestment/disposal of, for example, shares determines the taxable event regardless of when the seller is paid. This means that the taxable event generally occurs when a binding agreement has been signed by the parties, unless there are provisions creating a high level of uncertainty over the completion of the agreement. Consequently, a selling party may be subject to and liable to pay tax without receiving payment from the buyer.

Individuals

Capital gains are categorised (in some cases reduced based on a favourable tax rule) and added to the capital tax calculation. Capital losses are categorised (often reduced) and offset against the annual capital gains. Any difference exceeding zero is subject to a 30% capital gains tax. Losses up to SEK100,000 entitle the individual to a tax deduction. Losses exceeding SEK100,000 are only deductible up to 70% of the loss.

It should be noted that the specific tax rules for closely held companies also apply to capital gains.

Corporations

Capital gains on assets not covered by any exemption (such as the participation exemption) are taxed as business income, ie, at 20.6%.

For the Employer

The general rule is that employers pay “social security contributions” of up to 31.42% of their employees’ total gross remuneration. Reduced rates may apply based on, for example, age, assignment (R&D), type of remuneration, etc. Gross remuneration and social security contributions are generally income tax deductible for the employer.

R&D

Reduced social security contributions may apply for employees working in qualifying areas of research and development. When calculating employer social security contributions and the general payroll tax on contribution-liable remuneration, a deduction shall be made of 20% of the contribution base for a person engaged in research or development. The deduction may not result in the contributions being reduced below the old-age pension contribution (10.21%).

A Swedish employer hiring local employees abroad would generally not be subject to Swedish social security contributions. However, the Swedish employer may be liable to pay similar taxes in the employee’s residence state.

Foreign employers (ie, those with no permanent establishment in Sweden) engaged to provide foreign workers for a project in Sweden are required to register for F-tax in Sweden to avoid the Swedish contractor being required to withhold 30% of the invoiced amount to cover taxes on the foreign employer’s behalf.

For the Employee

Sweden applies a progressive tax rate on employment income. To simplify somewhat, employment income up to SEK660,400 (for 2026) is subject to municipal tax of approx. 30–35%. Employment income exceeding this threshold will also be subject to a 20% state tax.

It should be noted that there are variations based on age and type of income.

Foreign non-resident employees hired to do work in Sweden are required to pay the Swedish special income tax for non-residents.

Expert tax

Employees who are not Swedish tax residents, have not resided or had habitual residence in Sweden during the five previous calendar years and have the intention to move to Sweden for a maximum of seven years to work for a Swedish employer (or a foreign employer with a permanent establishment in Sweden) may have the possibility to apply for expert tax, provided that their competence, assignment in Sweden and remuneration fulfil certain requirements.

No additional information has been provided.

Sweden has not yet implemented Amount B. As the Amount B framework has been incorporated into the OECD Transfer Pricing Guidelines as an appendix, and Swedish case law has confirmed these Guidelines as a basis for the interpretation of relevant domestic tax rules, the Amount B framework still has influence over Swedish tax law, although it is not legally binding from ratification.

Sweden usually welcomes OECD-based solutions to global tax issues. However, it could be argued that the reallocation under Amount A would negatively impact the Swedish tax base. This is because Sweden has a small population in relation to companies operating in the global market. By being forced to allocate profits to customers’ jurisdictions, large Swedish companies will have to allocate less profits to Sweden.

Sweden has implemented Pillar Two through domestic legislation, namely the Supplementary Tax Act. The law entered into force on 1 January 2024, although the Undertaxed Profits Rule does not apply to any tax year initiated before 31 December 2024.

The implementation of Pillar Two is ongoing, and additional administrative guidelines from the OECD were implemented in 2024 and 2025.

The Swedish implementation of Pillar Two is remarkably faithful to the OECD Model Rules. This is largely because the Swedish law is based on the EU Minimum Tax Directive, which mandated a uniform transposition across EU member states. While the Directive aligns closely with the OECD Model Rules, it introduces a key deviation to ensure compliance with EU primary law – specifically, the freedom of establishment. Unlike the OECD framework, which targets cross-border groups, the Directive extends its scope to include large purely domestic groups. By treating domestic and cross-border structures identically, the Directive neutralises the risk of reverse discrimination, ensuring the regime withstands scrutiny under EU legal principles.

Sweden has not implemented a specific tax on digital products, but there is a proposal to introduce a “streaming tax”. The Swedish government is considering a series of proposals to revitalise the nation’s film and TV production industry. The plans include a streaming levy programme whereby streamers must contribute annually to the development and production of films and TV series in Sweden. The financial contribution is proposed to be a fee of 1.5% of the turnover, with some exemptions, such as media providers with an annual revenue of less than SEK20 million.

The Swedish Tax Avoidance Act is applicable to the majority of taxes in Sweden. Tax avoidance is generally defined as any arrangement whereby a taxpayer carries out one or more transactions primarily to obtain or avoid a particular tax effect.

The Tax Avoidance Act is applied by an administrative court upon the STA’s request.

CFC Rules

Under Swedish controlled foreign corporation (CFC) rules, a domestic company is taxed on its pro-rata share of a foreign entity’s profits if it controls at least 25% of the capital or voting rights at fiscal year-end. An entity is “low-taxed” if its effective tax rate, calculated by Swedish standards, falls below 11.33%. This charge is waived for entities on the “approved list” of jurisdictions, provided that they are treaty-eligible where applicable.

Interest Deduction Limitation Rules

Sweden has implemented several interest deduction limitations.

Targeted interest deduction limitation

The targeted interest deduction limitation rules restrict the possibility to deduct interest expenses paid to an affiliated company unless the true recipient is tax resident within the EEA,in a jurisdiction covered by a double taxation agreement, or if the interest income is taxed at a rate of at least 10%. Deduction may, however, be denied if the debt structure has been created exclusively in order to achieve a substantial tax benefit. In order to obtain deductibility, interest derived from an internal transfer of shares or share-based instruments must be business-related.

Under the targeted interest deduction limitation rules, corporate limited partners of a limited partnership in a GP structure may collectively be viewed as companies affiliated with the debtor, which may lead to the denial of interest deductibility. Individuals may not be viewed as an affiliated party under the targeted interest deduction rules.

Deduction limitation in an intragroup transaction

If a debt to an affiliated company relates to the acquisition of a shareholding from another affiliated entity, a deduction may only be granted if the acquisition is essentially commercially justified.

Deduction limitation for net interest expenses

Net interest expenses surviving the targeted interest deduction regime are also limited to certain amounts. There are two applicable rules:

• Safe harbour rule: Under which net interest expenses up to SEK5 million on a group level are deductible.
• Earnings stripping rules: Under which a company’s net interest expenses are deductible up to 30% of the tax EBITDA.

Under the earnings stripping rules, net interest expenses exceeding the maximum deduction may be carried forward for six years. However, any interest expenses carried forward are lost in the event of a change of control.

Shell Company Rules

The divestment of a shell company (Sw: Skalbolag), that is to say, a company that has no business operations and consists primarily of liquid assets, may be subject to capital gains tax in Sweden even if the shares in it qualify for participation exemption. There are exceptions for minority shareholders and internal transactions. The rules only apply to the transfer of Swedish tax residents (including, for example, companies with registered branches or that own shares in Swedish subsidiaries).

The rules regarding shell company taxation are mechanical, and although there are exceptions to shell company taxation, it is generally advisable to submit a specific shell company tax return (Skalbolagsdeklaration) within 60 days of the transfer to avoid the risk of capital gains taxation on the transferred shares.

Sweden generally uses the European Council’s list of non-cooperative jurisdictions for tax purposes.

Transactions involving entities located in blacklisted jurisdictions may lead to, for example, denial of interest deduction, DAC6 reporting, withholding tax being imposed or the CFC rules applying.

Sweden has implemented the DAC6 Directive. This requires tax intermediaries (lawyers, accountants, banks) to report “cross-border arrangements” to the STA if the transaction exhibits certain “hallmarks” of aggressive tax planning. Failure to report can lead to significant administrative fines.

Investigations into possible tax fraud may be led by the STA or the Swedish Economic Crime Authority (ECA), whereby the STA performs administrative audits and the ECA pursues criminal investigations. Both the STA and the ECA have extensive authority to access records, both from the taxpayer within the scope of the investigation and from third parties. Audits may be general or targeted.

Unannounced Visits

The STA often shows up unannounced in order to investigate, for example, cash registers and whether all staff members are properly registered.

Raids

Depending on whether the investigation is being conducted by the STA or ECA (criminal procedure), different rules granting different levels of authority apply. Under the Tax Procedure Act, the STA may apply to an administrative court for permission to search business premises to seize documents or digital data if there is a risk that a taxpayer will hide or destroy evidence. If the investigation is led by the ECA, raids may be performed in co-operation with prosecutors and police officers. There is no limitation as to what may count as business premises – a raid can be made at, for example, a private home.

The STA may impose tax penalties of up to 40% of the unpaid taxes if an error is based on incorrect declaration of income or if no tax return has been submitted.

There are three main levels of tax crime in Sweden: minor misdemeanour (Sw: ringa skattebrott), regular tax crime (Sw: skattebrott) and aggravated tax crime (Sw: grovt skattebrott). The penalty for a minor misdemeanour never exceeds a fine. A regular tax crime may lead to a prison sentence of up to two years. For an aggravated offence – for instance, if the accused submitted fake evidence or if the amount exceeds approx. SEK0.6 million – the maximum penalty is six years in prison.

No tax penalties may be levied if criminal procedures are considered. Hence, the STA would not make any claim for tax penalties if a criminal prosecutor plans to pursue criminal charges. If the STA were to impose tax penalties, that would be regarded as a punishment blocking a criminal prosecutor from pursuing criminal charges under the principle of ne bis in idem (double jeopardy).

Sweden is a member of the EU, which comes with certain obligations to comply with EU legislation. Binding EU law supersedes Swedish internal law based on these obligations.

All tax treaties are passed as domestic law.

OECD ModelTax Conventions may be used as a basis for interpretation of relevant domestic law.

All tax treaties entered into by Sweden, with the exception of the Nordic Tax Treaty where a specific agreement has been entered into that covers the exchange of information, include an article regarding the exchange of information. The majority of their articles are based on previous versions of the OECD Model Tax Convention.

Sweden does not have any tax treaties supporting the automatic exchange of information. However, it should be noted that automatic exchange of information has been agreed with the United States in the Sweden–US FATCA agreement. The automatic exchange of information covers financial accounts and country-by-country reporting.

No additional information has been provided.

A taxpayer may request a mutual agreement procedure (MAP) from the STA if they believe they are being taxed incorrectly under a tax treaty or taxed twice on the same income in different countries. The STA is the competent authority and negotiates with the foreign tax authority to resolve the issue based on Article 25 of the OECD Model Tax Convention. The purpose of the MAP is to eliminate double taxation, but tax authorities are not obligated to reach an agreement, unless specific treaty provisions require arbitration.

According to most tax treaties, an application for a MAP must be filed within three years from the time the taxpayer became aware of the action causing taxationcontrary to the treaty. Similar time limits apply under the EU Arbitration Convention and EU dispute resolution rules. Applying early is often recommended to avoid limitation periods in the other country.

The STA promotes the use of so-called “preliminary discussions” for the clients of the Large Taxpayers’ Office, ie, mainly companies belonging to a larger group. With respect to the tax treatment of the transaction, the taxpayer is normally, in the preliminary discussions, advised to apply for an advance tax ruling from the Council for Advance Tax Rulings (Sw: Skatterättsnämnden).

Bilateral or multilateral advance pricing agreements (APAs) can applied for from the STA for a fee between SEK100,000 and SEK150,000. Sweden does not provide unilateral APAs. It is generally required that Sweden has a tax treaty with the other relevant jurisdictions.

Businesses may apply for an APA regarding future intragroup transactions for income tax purposes. The application must include sufficient information, and the transactions must be significant and capable of being assessed independently. A pre-filing meeting with the competent authority is possible.

An APA is binding for the STA in relation to the transactions covered if its conditions are met, but it may be amended or revoked in certain circumstances.

No additional information has been provided.