Corporate Taxation in Sweden in 2026: Complete Guide for Business Entities
Everything you need to know about Swedish corporate taxes: 20.6% CIT rate, business structure comparison (AB, enskild firma, filial), 25% VAT with reductions, 31.42% employer contributions, and 2026 updates.
Corporate Income Tax System
Flat 20.6% Corporate Tax Rate
Sweden applies a flat corporate income tax rate of 20.6% on all corporate profits since January 1, 2021. This represents a significant reduction from 28% in 2009, achieved through gradual cuts by successive governments. The rate applies equally to resident companies (on worldwide income) and non-resident companies with permanent establishments (on Swedish-source income).
Proposed Further Reduction:The Ministry of Finance proposed reducing CIT from 20.6% to 20% effective January 1, 2026, to boost competitiveness and investment. However, this proposal was not included in the final 2026 budget, so the rate remains 20.6% for 2026.
Territorial vs. Worldwide Taxation
Swedish tax residency determines the scope of taxation. Resident companies are taxed on their worldwide income, while non-residents are taxed only on Swedish-source income. The participation exemption regime provides significant relief on qualifying dividends and capital gains.
Resident companies: taxed on worldwide income at 20.6%
Non-resident companies: taxed on Swedish-source income only
Permanent establishment creates tax presence in Sweden
Participation exemption for qualifying shareholdings (10%+ voting rights)
Capital gains on business-purpose shares generally exempt
Double taxation relief through treaties with 70+ countries
Business Structures and Tax Treatment
Aktiebolag (AB) - Limited Liability Company
Corporate Tax Rate
20.6%
flat rate on profits
Minimum Capital
SEK 25,000
private AB requirement
Most common business structure in Sweden for domestic and foreign investors
Limited liability protection - shareholders liable only to capital contributed
Separate legal entity from shareholders with own rights and obligations
Can be formed by single individual or multiple shareholders (natural or legal persons)
Requires registration with Bolagsverket (Swedish Companies Registration Office)
100% foreign ownership permitted with no residency restrictions on shareholders
Publikt Aktiebolag (AB publ.) - Public Limited Company
Corporate Tax Rate
20.6%
same as private AB
Minimum Capital
SEK 500,000
public company requirement
Suitable for large companies seeking to raise capital publicly
Can issue shares to public and be listed on stock exchanges (Nasdaq Stockholm)
Minimum three board members required (private AB needs only one)
Must appoint managing director and auditor (mandatory for public AB)
Subject to higher transparency and governance requirements
Name must include '(publ.)' designation to indicate public status
Enskild Firma (Enskild Näringsverksamhet) - Sole Proprietorship
Tax Rate
~32-55%
taxed as personal income
Capital
None
no minimum requirement
Simplest and least expensive business structure in Sweden
No minimum capital requirement or separate legal entity status
Income taxed through personal income tax system (municipal ~32% + state 20%)
No limited liability - owner personally liable for all business debts and obligations
Suitable for freelancers, consultants, and very small service providers
Owner can deduct business expenses but not salaries to themselves
Filial - Branch of Foreign Company
Tax Rate
20.6%
on Swedish-source income
Capital
None
no minimum requirement
Extension of foreign parent company - not separate legal entity in Sweden
Taxed only on profits from Swedish-source income at 20.6% CIT
Foreign parent company fully liable for all branch obligations
Quicker setup than subsidiary since no new share capital required
Must register with Bolagsverket and appoint authorized representative in Sweden
Profit repatriation subject to withholding tax rules (generally 30%, may be reduced by treaty)
Handelsbolag (HB) - Trading Partnership
Tax Treatment
Pass-through
taxed at partner level
Liability
Unlimited
partners jointly liable
Partnership structure requiring minimum two partners (natural or legal persons)
Tax-transparent entity - profits taxed at individual partner level as personal income
Partners jointly and severally liable for all partnership obligations
Each partner taxed on their share of profits at personal income tax rates (~32-55%)
Suitable for professional partnerships and small collaborative businesses
Less common than AB due to unlimited liability exposure for partners
VAT and Indirect Taxes
VAT Rates (Moms) in Sweden for 2026
| Category | VAT Rate | Application |
|---|---|---|
| Standard rate | 25% | Most goods and services, professional services, electronics, clothing |
| Reduced rate | 12% | Food, hotel accommodation, restaurant services, camping |
| Super-reduced rate | 6% | Books, newspapers, magazines, passenger transport, cultural events |
| Temporary food reduction (Apr 2026-Dec 2027) | 6% | Food items temporarily reduced from 12% to combat inflation |
| Dance events (from Jul 2026) | 6% | Reduced from 25% to match other cultural events |
| Zero rate | 0% | Exports outside EU, intra-EU supplies to VAT-registered businesses |
Important: VAT registration mandatory when annual turnover exceeds SEK 120,000 (increased from SEK 80,000 in 2025). Non-resident businesses must register regardless of turnover for Swedish supplies.
Temporary VAT Reduction on Food
VAT Registration and Compliance
Registration Threshold
Mandatory VAT registration required when annual turnover exceeds SEK 120,000 (increased from SEK 80,000 in 2025). Non-resident businesses selling goods or services in Sweden must register immediately regardless of turnover. Voluntary registration available below threshold to claim input VAT deductions.
Filing Frequency
Monthly filing for businesses with intra-EU trade or high turnover. Quarterly filing for annual turnover SEK 120,000-1,000,000. Annual filing for turnover below SEK 120,000 (if voluntarily registered). Returns filed electronically through Skatteverket portal. Payment due by 12th of month following reporting period.
IOSS for E-Commerce
Import One-Stop Shop (IOSS) simplifies VAT for B2C sales of imported goods valued up to €150. Provides single VAT collection and declaration, faster customs clearance, transparent pricing for customers. Applicable to EU and third-country businesses selling to EU consumers. Register in one EU member state to cover all eligible sales.
Recapitulative Statements
Companies selling to VAT-registered customers in other EU countries must file periodic recapitulative statements (periodisk sammanställning). Reports intra-EU supplies of goods and services. Filed through Skatteverket alongside VAT returns. Ensures proper EU-wide VAT tracking and compliance.
Employer Social Contributions
Arbetsgivaravgifter (Employer Contributions)
Standard Rate
31.42%
of gross salary
Youth Rate (2026-2027)
20.81%
for ages 19-23
Swedish employers must pay arbetsgivaravgifter (employer social security contributions) on top of employee gross salaries to fund pensions, healthcare, unemployment insurance, parental benefits, and other social programs. These contributions are paid by employers, not deducted from employee salaries.
Standard rate 31.42% of gross salary paid on top (not deducted from employee)
Covers state pension, survivor's pension, parental insurance, health insurance, labor market fees
Temporary reduction to 20.81% for employees aged 19-23 (April 1, 2026-September 30, 2027)
Youth reduction applies to monthly salary up to SEK 25,000; standard rate on excess
Total employer cost approximately 131.42% of gross salary before youth reductions
Monthly reporting and payment through employer tax return (Arbetsgivardeklaration)
Tax Deductions and Incentives
Corporate Tax Deductions
Operating Expenses
All ordinary and necessary business expenses fully deductible including salaries and wages, rent and utilities, office supplies and equipment, marketing and advertising costs, professional services (legal, accounting, consulting), business insurance premiums, and travel expenses. Expenses must be incurred for business purposes and properly documented.
Depreciation of Assets
Fixed assets depreciated over useful life using straight-line or declining balance methods. Buildings typically depreciated over 25-50 years. Machinery and equipment using declining balance (20-30% annually for most assets). Intangible assets (patents, licenses) depreciated over legal or economic life. Small assets below certain thresholds can be immediately expensed.
Research and Development (R&D)
R&D expenses generally fully deductible in year incurred. Sweden offers government grants and subsidies for qualifying R&D projects through Vinnova (Sweden's innovation agency). Enhanced deductions or credits may be available for innovative activities. Strong government support for technology and life sciences sectors.
Interest Deductions
Interest on business loans generally deductible. Swedish EBITDA-based interest limitation rules apply: interest deductions limited to 30% of EBITDA with SEK 5 million threshold. Anti-avoidance rules target aggressive debt financing. EU ATAD (Anti-Tax Avoidance Directive) compliance ensures alignment with international standards.
Loss Carry-Forward
Tax losses can be carried forward indefinitely to offset future profits. No time limit on loss utilization in Sweden. Ownership change rules may restrict loss usage if significant change in control occurs (simplified rules implemented 2025-2026). No loss carry-back permitted. Important for startups and cyclical businesses.
New Corporate Donation Tax Relief (2026)
Tax Reduction for Corporate Donations
Starting 2026, Sweden introduces a new tax reduction system for legal entities making donations to approved charitable organizations. Companies receive a tax reduction equal to donation value multiplied by the corporate tax rate (20.6%). This incentivizes corporate philanthropy and strengthens collaboration between private sector and civil society.
Key Requirements:Minimum donation: SEK 2,000. Maximum basis for reduction: SEK 800,000 annually. Donations must be monetary (cash). Recipient must be approved organization for social aid or scientific research. Donations cannot be taxed to shareholders or related parties.
Participation Exemption and Dividend Relief
Tax-Exempt Dividends and Capital Gains
Sweden operates a participation exemption regime that provides significant tax relief on qualifying dividend income and capital gains from shares held for business purposes. This makes Sweden attractive for holding company structures.
Dividends from shares held for business reasons: exempt from taxation
Unquoted/unlisted shares: always considered held for business reasons
Quoted/listed shares: must hold 10%+ voting rights or be business-related
Capital gains on qualifying shares: generally tax-exempt
Applies to both Swedish and foreign subsidiaries
Exception: 'shell company' sales subject to harsh taxation of gross consideration
Capital losses on qualifying shares: not deductible (consequence of exemption)
Withholding Taxes
Withholding Tax Rates
| Payment Type | Standard Rate | Notes |
|---|---|---|
| Dividends to non-residents | 30% | May be reduced under double taxation treaties |
| Dividends to EU/EEA residents | 0-15% | Reduced under EU Parent-Subsidiary Directive or treaties |
| Interest to non-residents | 0% | Generally no withholding tax on interest payments |
| Royalties to non-residents | 0% | Generally no withholding tax on royalty payments |
| Branch profit repatriation | Varies | Subject to treaty provisions, typically reduced or eliminated |
Important: Sweden has double taxation treaties with over 70 countries. Treaty provisions often significantly reduce or eliminate withholding taxes. EU Parent-Subsidiary Directive provides relief for qualifying EU shareholdings.
Tax Filing and Compliance
Corporate Tax Return (Inkomstdeklaration)
Filing Deadline
6 months
after fiscal year-end
Late Filing Fee
SEK 1,250-6,250
depends on company type
All Swedish companies must file annual corporate income tax returns with Skatteverket. Returns report income and expenses from financial statements prepared according to Swedish GAAP or IFRS. Electronic filing mandatory through Skatteverket portal.
Annual CIT return due within 6 months after fiscal year-end
For calendar year companies: deadline typically July 1 following year
Must file even with zero revenue or losses
Electronic filing through Skatteverket's e-services portal mandatory
Late filing fee SEK 1,250-6,250 depending on company type
Incorrect/insufficient information may result in 40% penalty on underpaid tax
Record-Keeping Requirements
Swedish companies must maintain comprehensive accounting records and financial statements in accordance with Swedish accounting regulations (Bokföringslagen). Proper documentation essential for tax compliance and audits.
Financial statements required: balance sheet, income statement, cash flow, notes
Accounting records must be kept for 7 years
Records can be in Swedish or English
Annual report submitted to Bolagsverket (Companies Registration Office)
Audit required for companies exceeding thresholds (>3 employees, >SEK 1.5M balance sheet, >SEK 3M turnover)
Skatteverket conducts regular compliance checks - accurate records essential
Company Registration Process
Registering an Aktiebolag (AB)
The process to register a limited liability company (AB) in Sweden is straightforward and can be completed in approximately 3 weeks. Registration can be done online through Verksamt.se portal.
Draft Articles of Association (bolagsordning) defining company structure and rules
Prepare Memorandum of Association (stiftelseurkund) detailing formation and founders
Open Swedish bank account and deposit minimum share capital (SEK 25,000 for private AB)
Obtain bank certificate confirming capital deposit
Appoint board of directors (minimum one member) and optionally managing director
Submit registration application to Bolagsverket online via Verksamt.se
Pay registration fee (SEK 1,900 for online registration)
Register with Skatteverket for corporate tax ID (F-skattsedel) and VAT if applicable
Registration Requirements and Costs
Minimum Share Capital
Private AB requires SEK 25,000 minimum capital (~USD $2,400). Public AB requires SEK 500,000. Capital must be deposited in Swedish bank account before registration. Bank issues certificate of deposit required for incorporation. Capital can be contributed in cash or in-kind assets.
Registration Fees
Bolagsverket registration fee: SEK 1,900 for online registration through Verksamt.se. Additional fees for secondary business names (SEK 1,600 per name), board changes, auditor registration. VAT and corporate tax registration with Skatteverket is free.
Board and Management Requirements
Minimum one board member for private AB (three for public AB). Board members must be 18+, not bankrupt, not prohibited from business. At least 50% of board members must reside within EEA. Managing director optional for private AB (mandatory for public AB). Foreign ownership 100% permitted.
Professional Services
Legal and accounting setup fees typically SEK 10,000-30,000 depending on complexity. Ongoing accounting services from SEK 2,000-5,000/month. Auditor required if company exceeds thresholds: >3 employees OR >SEK 1.5M balance sheet OR >SEK 3M turnover. Total setup costs typically SEK 40,000-60,000 including capital.
2026 Updates and Changes
CIT Rate Remains 20.6%
The Ministry of Finance proposed reducing corporate income tax from 20.6% to 20% effective January 1, 2026, to enhance competitiveness. However, this proposal was not included in the final 2026 budget. The corporate tax rate remains at 20.6% for 2026. Sweden continues to rank competitively below OECD average.
Temporary Food VAT Reduction
From April 1, 2026 until December 31, 2027, VAT on food items reduced from 12% to 6%. Major consumer-facing change designed to combat high food inflation and reduce household costs. Government expects direct impact on food prices at checkout, particularly benefiting families with children.
Corporate Donation Tax Relief
New tax reduction system introduced for 2026: Companies can claim tax reduction equal to donation value × 20.6% (CIT rate). Minimum donation SEK 2,000, maximum basis SEK 800,000 annually (max reduction SEK 164,800). Donations must be monetary to approved organizations for social aid or scientific research. Strengthens private-civil society collaboration.
Youth Employment Tax Incentive
April 1, 2026 to September 30, 2027: Employer contributions temporarily reduced from 31.42% to 20.81% for employees aged 19-23. Applies to monthly salary up to SEK 25,000 (standard rate on excess). Aims to boost youth employment by reducing hiring costs. Expected to benefit approximately 200,000 young workers.
VAT Registration Threshold Increase
Mandatory VAT registration threshold increased from SEK 80,000 to SEK 120,000 annual turnover effective January 1, 2025 (continuing into 2026). Reduces administrative burden for smallest businesses. Voluntary registration remains available below threshold for businesses wanting to claim input VAT deductions.
Simplified Loss Deduction Rules
Implemented 2025-2026: Simplified rules for deductibility of losses in case of ownership changes. Makes it easier for companies to utilize tax losses when undergoing restructuring or acquisition. Removes some restrictive conditions while maintaining anti-abuse provisions. Benefits startups and companies in transition.
Frequently Asked Questions
What is the corporate income tax rate in Sweden for 2026?
Sweden applies a flat corporate income tax rate of 20.6% on all corporate profits. This rate has been in effect since January 1, 2021 (reduced from 21.4% in 2020). A proposal to reduce the rate to 20% from January 1, 2026 was not included in the final budget, so the rate remains 20.6% for 2026. Sweden's rate is competitive, ranking below the OECD average of approximately 23.8%.
What is the minimum capital required to start an AB in Sweden?
A private Aktiebolag (AB) requires minimum share capital of SEK 25,000 (approximately $2,400 USD). This capital must be deposited in a Swedish bank account before registration, and the bank issues a certificate confirming the deposit. Public AB companies require SEK 500,000 minimum capital. Capital can be contributed in cash or in-kind assets. There is no minimum capital requirement for enskild firma or branch offices.
What are the VAT rates in Sweden for 2026?
Sweden has multiple VAT rates: 25% standard rate for most goods and services, 12% reduced rate for food, hotels, and restaurants (temporarily reduced to 6% on food from April 2026-December 2027), and 6% super-reduced rate for books, newspapers, passenger transport, and cultural events. Dance events receive 6% rate from July 2026 (down from 25%). Exports and intra-EU supplies are zero-rated.
What employer social contributions do Swedish companies pay?
Swedish employers pay arbetsgivaravgifter (employer social security contributions) at 31.42% of gross salary, paid on top of salary (not deducted from employee). This covers state pension, health insurance, parental insurance, unemployment insurance, and other benefits. Temporary reduction to 20.81% applies from April 1, 2026 to September 30, 2027 for employees aged 19-23 on monthly salary up to SEK 25,000.
What is the difference between AB and enskild firma in Sweden?
AB (Aktiebolag) is a limited liability company requiring SEK 25,000 minimum capital, providing limited liability protection, taxed at 20.6% corporate rate on profits, and is a separate legal entity. Enskild firma is a sole proprietorship requiring no capital, providing no liability protection (owner personally liable), income taxed as personal income (~32-55% combining municipal and state tax), and is not a separate legal entity. AB preferred for serious businesses; enskild firma suits small freelancers.
What is the new corporate donation tax relief in 2026?
From 2026, Swedish companies can claim a tax reduction for monetary donations to approved charitable organizations. The reduction equals the donation amount multiplied by the corporate tax rate (20.6%). Minimum donation is SEK 2,000, and the basis for reduction cannot exceed SEK 800,000 annually (maximum reduction SEK 164,800). Donations must be to approved organizations for social aid activities or scientific research. This incentivizes corporate philanthropy.
What is the participation exemption in Sweden?
Sweden's participation exemption provides tax relief on dividends and capital gains from shares held for business purposes. Dividends from qualifying shareholdings (10%+ voting rights for quoted shares; all unquoted shares qualify) are tax-exempt. Capital gains on such shares are also generally exempt. This applies to both Swedish and foreign subsidiaries. However, capital losses on qualifying shares are not deductible. Exception: shell company sales face harsh taxation.
How long does it take to register a company in Sweden?
Registering an Aktiebolag (AB) in Sweden typically takes approximately 3 weeks from submitting complete documentation to Bolagsverket (Companies Registration Office). Registration can be done online through Verksamt.se portal. Key steps include depositing share capital (SEK 25,000), obtaining bank certificate, preparing Articles and Memorandum of Association, submitting application, paying registration fee (SEK 1,900), and registering with Skatteverket for tax purposes.
What is the VAT registration threshold in Sweden?
Mandatory VAT registration is required when annual turnover exceeds SEK 120,000 (increased from SEK 80,000 effective January 1, 2025). This threshold applies to turnover from taxable supplies of goods and services. Non-resident businesses supplying goods or services in Sweden must register for VAT immediately regardless of turnover level. Voluntary registration is available below the threshold for businesses wanting to claim input VAT deductions.
Can foreign companies own 100% of a Swedish AB?
Yes, 100% foreign ownership of Swedish Aktiebolag is permitted with no restrictions. Sweden imposes no nationality or residency requirements on shareholders. However, at least 50% of board members (and any managing director) must reside within the European Economic Area (EEA). Non-EEA companies can apply for dispensation (exemption) from Bolagsverket and appoint an authorized local contact person if all directors live outside EEA.
Calculate Your Corporate Tax in Sweden
Use our comprehensive calculator to estimate your Swedish corporate income tax, VAT obligations, and employer contributions. Compare AB vs enskild firma structures and optimize your tax position.