Swedish employers and foreign employers with a permanent establishment in Sweden are required to report and pay withholding taxes in Sweden on a monthly basis.
Irrespective of the activities performed and the legal status in Sweden, an employer has to report and pay Swedish social security contributions for any employee belonging to the Swedish social security system. The reporting and payments are made on a monthly basis.
An employer is also obliged to file annual income statements with the Swedish Tax Agency for each employee. The annual income statement should summarize the salary paid (and preliminary taxes withheld, if applicable) during the income year.
Corporate tax compliance includes, for instance, preliminary tax returns, tax computations at year end and yearly income tax returns to be filed with the Swedish Tax Agency.
There are four different filing dates in respect of the yearly income tax returns, depending on the tax year in question (financial year). If the tax year corresponds to the calendar year, the income tax return is due on 1 July in the following year.
VAT compliance can include preparing and filing of VAT returns, EC sales lists and Intrastat declarations. VAT paid on purchases can be offset against VAT collected on sales and the net is payable through VAT returns. The VAT return must, as a main rule, be filed every month. However, if the tax base for VAT does not exceed 40 million SEK per year, the VAT return is usually to be filed every quarter.
According to Swedish tax law, transfer pricing documentation is to be maintained for all intra-group transactions. According to the documentation requirements in force since 1 January 2007, transfer pricing documentation is to contain the following information:
Companies entering into transactions of limited value can benefit from simplified documentation requirements.
Transactions of limited value are defined as intra-group transactions of goods for a value of less than approximately SEK 27.9 million per company within a multinational enterprise, and for other transactions, a value of less than approximately SEK 5.5 million. The concept of other transactions does not include the transfer of an intangible asset. If a transfer of intangible property takes place, no simplified documentation requirement applies.
The EU Code of Conduct and the EU TPD are explicitly accepted in Swedish legislation. Transfer pricing documentation may be submitted in Swedish, Danish, Norwegian or English. The documentation requirements do not cover dealings between a foreign company’s headquarters and its Swedish branch. The arm’s length principle should, however, nevertheless, be observed. Although no formal documentation requirement exists between a headquarters and its branch, the Swedish Tax Agency has, in recent tax audits, requested written documentation on how allocations are made between the headquarters and the branch. The current rules regarding small and medium-sized companies are about to change.
The following companies will be obliged to maintain transfer pricing documentation:
A Swedish company or branch is obliged to keep its own accounting records, in compliance with the Swedish Bookkeeping Act or the Foreign Branches Act. Depending on the legal form, an annual report or annual accounts are to be prepared at year end. What operational matters do we need to consider going forward?
Depending on the size of the business carried out in Sweden, it could be a requirement to appoint an auditor according to Swedish law. There are certain thresholds to consider in this respect. If a company or a branch has exceeded at least two of the following criteria in the last two financial years, it is required to appoint an auditor:
For certain financial activities, an auditor is always required.
Director, PwC Sweden