Corporate income tax
Corporation tax is charged at the standard rate of 28% and is payable by residents and non-residents operating in Sweden through a branch or permanent establishment or directly owning real estate.
25% of pre-tax profit can be allocated to an un-taxed reserve for a period of up to 6 years. Interest is deemed to accrue at a market rate (2.8% in 2005) on the value of the un-taxed reserve at the beginning of the year. This interest is then taxed at the standard rate.
Capital gains
Capital gains realised on the disposal of Swedish real estate are generally subject to corporation tax at the standard rate irrespective of the residence of the vendor. However treaty provisions will be observed.
Property tax
Annual property tax is charged at rates varying between 0.5% and 1% on the tax assessed value (as determined by the tax authorities) of most real estate. If the real estate is only held for part of the year, the tax is reduced on a pro rata basis. Certain types of property are exempt, e.g. hospitals or communication buildings.
Property transfer tax
Property tax is charged on the purchase of Swedish real estate at 3% on the higher of the acquisition price and the tax assessed value determined by the tax authorities. A reduced rate of 1.5% applies to purchases by individuals.
VAT
VAT is charged at the standard rate of 25% and VAT registration is voluntary.
With respect to the lease or rent of property, registration will only be accepted by the tax authorities if the tenant is a taxable person performing VATable activities, irrespective of the tenant’s tax residence.
Registration is also possible on the construction of a building provided that the owner intends to register the property for VAT on completion. Registration during a construction requires an application to the tax authorities. Input VAT from the construction period can be claimed retrospectively if the building is VAT registered on completion.
The sale of buildings is VAT exempt.
The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice.