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Payroll in Sweden

Payroll in Sweden

The process of calculating and disbursing employee salaries and wages, as well as any associated taxes and deductions is referred to as payroll. If you have a company, and looking for services related to payroll in Sweden, you can get in touch with our lawyers. Our skilled lawyers at our law firm in Sweden will not only offer you comprehensive guidance but also practically assist you. 

Which laws regulate payroll in Sweden?

If you are seeking services for carrying out tasks related to payroll, our attorneys can help you. In this country, payroll is regulated by several laws and regulations, including:

  • The Swedish Tax Agency (Skatteverket): The Swedish Tax Agency is responsible for collecting and administering taxes, including payroll taxes. Employers must register with the Tax Agency and report their employees’ income and taxes withheld;
  • The Swedish Social Insurance Agency (Försäkringskassan): The Swedish Social Insurance Agency is responsible for administering social insurance programs, such as sickness benefits, parental benefits, and pensions. Employers are required to make contributions to these programs on behalf of their employees;
  • The Swedish Working Hours Act (Arbetstidslagen): The Swedish Working Hours Act regulates the maximum number of working hours per day and week, overtime compensation, and rest periods for employees;
  • The Swedish Annual Leave Act (Semesterlagen): The Swedish Annual Leave Act requires employers to provide employees with a minimum of 25 days of paid annual leave per year;
  • The Swedish Discrimination Act (Diskrimineringslagen): The Swedish Discrimination Act prohibits discrimination based on factors such as gender, age, ethnicity, religion, and sexual orientation in all aspects of employment, including payroll.

It is essential to note that laws and regulations related to payroll in Sweden can change over time, so it is important to stay up to date with any updates or changes that may occur. For this purpose, you are welcome to get a consultation from our attorneys regarding Swedish payroll regulations. They can offer you comprehensive guidance in this matter. 

Social security contributions to be paid under the Swedish payroll

Sweden’s social security system consists of the following 6 components:

  • health insurance;
  • family coverage;
  • work accidents scheme;
  • unemployment insurance;
  • disability coverage;
  • pension insurance.

Compared to other countries, payroll taxes are also imposed on businesses that operate in Sweden. Employers are required to pay a 31.42% payroll tax. Additionally, in a sole proprietorship, the manager is required to pay a payroll tax of 28.97%. For individuals in different age groups, these rates vary.

When discussing payroll, it is advised to ask for the support of our accountants in Sweden who can offer proper information and solutions.

Setting up payroll for companies in Sweden

Employers must register with the Swedish Tax Agency in order to complete their reporting and withholding requirements before they can begin processing payroll. Companies that do not have a permanent establishment in Sweden may register online or through a specific form. Swedish employers who have a legal entity must first register with the Companies Registration Office before they can proceed with employer registration.

This step can be part of the business incorporation procedure and can be completed with the help of our lawyers in Sweden.

Payroll filing requirements in Sweden

The employer is required to withhold employment income taxes on a monthly basis. A few years ago, similar requirements have been set in place for foreign employers that do not have a permanent establishment in Sweden as well. With the exception of January and August, when the deadline is moved to the 17th, the withheld amount of income tax must be paid to the Swedish Tax Authority by the 12th of the following month.

Under the current regulations, employers are required to submit a monthly report for each employee, instead of completing an annual tax declaration for the income tax paid on their behalf.

A Swedish social security number is required for electronic filing through the Tax Authority’s e-service. Alternatively, the declaration can also be filed in paper forms.

Individuals must file a personal income tax return, which must be done by May 2nd of the following year. In Sweden, the tax year begins on January 1st and ends on December 31st.

Should you need advice on employment regulations, you can rely on our Swedish lawyers for legal guidance.

Employer and employment contributions under payroll in Sweden

Payroll in Sweden is divided between the contributions paid by the employer and the employee. The percentages are as follows for Swedish companies:

  • 3.55% for health insurance;
  • 2.60% for family benefits;
  • 10.21% for retirement (the contribution is established based on the age of the employee);
  • 0.60% for the survivor pension;
  • 2.65% as a labor market fee;
  • 0.20% under the work injury scheme;
  • 11.62% as a payroll tax.

Employees are subject to a 7.00% pension insurance, levied on income up to SEK 599,250 (approximately EUR 52,000) per year.

Payroll inconsistency penalties in Sweden

If you are a foreigner, it is advised to you to get in touch with our lawyers to learn about the requirements of payroll in Sweden. Here, employers are required to comply with the country’s tax and social security regulations when managing payroll for their employees. In case of failure to comply with these regulations, you can face penalties and fines. For example, if an employer fails to report or pay taxes on time, he/she may be subject to late payment penalties and interest charges. Additionally, if an employer is found to have withheld the wrong amount of taxes from an employee’s paycheck, he/she must pay back taxes and penalties.

It is important for employers to stay up-to-date with the latest payroll regulations and to ensure that they are accurately reporting and paying their taxes and social security contributions on time. In case of any doubt or uncertainty, it is recommended to seek professional advice from a tax or payroll expert. Our lawyers in Sweden can help you in this matter. With their legal and up-to-date information, you will be able to understand well the regulations of payroll in Sweden

Key factors about the Swedish payroll

Here are some important points about payroll in Sweden that you should be aware of. In Sweden, employers are required to pay several types of payroll taxes, including social security contributions and withholding taxes. These taxes are used to fund the country’s social welfare system and provide benefits and services to citizens. Social security contributions in Sweden are paid by both employers and employees. The contributions are based on the employee’s gross salary and are used to fund programs such as health care, pension benefits, and unemployment insurance. The employer is responsible for deducting the employee’s portion of the social security contribution from their salary and remitting it to the Swedish Tax Agency.

In addition to social security contributions, employers are also required to withhold income taxes from their employee’s salaries. The amount of tax withheld depends on the employee’s income, deductions, and other factors. Employers in Sweden are required to report and pay their payroll taxes to the Swedish Tax Agency on a monthly or quarterly basis, depending on the size of the company. Failure to comply with these regulations can result in penalties and fines. It is necessary for employers to stay up-to-date with the latest payroll tax regulations and to ensure that they are accurately reporting and paying their taxes on time. Seeking professional advice from a payroll expert can help ensure compliance with these regulations.

Besides payroll, if you are seeking the help of a CPA in Sweden, get in touch with our accountants.

You are welcome to contact our Swedish attorneys if you need any help with payroll in Sweden.