Taxation in Sweden
[1] 27% of taxpayer money in Sweden goes towards education and healthcare, whereas 5% goes to the police and military, and 42% to social security.
[3] VAT was introduced in Sweden in 1969, replacing the previous retail sales tax (omsättningskatt).
The reform supporting indirect taxation was implemented due to the need for an additional source of revenue to meet the social responsibilities of affluence.
With Sweden´s flourishing economy, public consumption through education, welfare, national defense, healthcare etc.
Improvement of the public sector, in addition to a growing population resulted in the costs rising.
Sweden has various types of local authority with 290 municipalities (kommuner) and 18 country councils (landsting).
The ones exclusive to the municipalities are town planning, all primary and secondary education, water and sewage, parks and open spaces, most welfare functions and refuse collection.
While the ones shared with country councils and the central government are some culture and leisure activities, regional/spatial planning and environmental and consumer protection.
Therefore, Sweden has implemented constitutional laws that give the local authorities the right to raise necessary taxes to fulfill these duties.
Equalization is achieved by evening out differences in tax bases and structural conditions (age, geographical distance etc.).
However, the system has been criticized for putting high burdens on a small number of municipalities (especially Stockholm) and has undergone many revisions due to this.
[14] In 2018, the Swedish social security contribution paid by the employer is 31.42%, calculated on top of the employee's salary before taxes.
[16] In addition, the employee pays 7% in pension contributions to the public system, with a cap at an annual income of 420,447 kr.
[20] The Swedish tax authorities defines capital gains as incomes that can not be attributed to business operations or service.
A foreign company conducting business in Sweden, whether a natural or a legal person, may become taxable for VAT, employer's contributions and/or income tax.
