Legislative changes approved by the Swedish parliament are most often set to take effect at the start of a new year or during the summer vacation season. These periods are traditionally characterized by a slower tempo in Swedish society at large, which gives individuals and business more time to adapt. Said tradition, and the lengthy negotiation which followed the Swedish general election of 2018, has meant that more legislative changes than usual are scheduled for the summer of 2019. Below we have compiled a list of the most noteworthy.

Smoking Banned in a Number Public Outdoor Spaces  

Effective from July 1st

From July 1st, 2019, all kinds of smoking and so-called “vaping” will be banned in outdoor serving establishments, playgrounds, public transportation platforms, and fenced off sporting areas. The ban will also be extended to the areas immediately surrounding the entry to designated no-smoking establishments (including restaurants).

Smoking in a non-smoking area is in itself not a criminal act under Swedish law, unless the behaviour is in itself likely to cause a substantial fire hazard or immediate risk to other people’s health, as might be the case at a petrol station or hospital. The owners of a legally designated no-smoking area can, however, be penalized if they do not uphold the ban, and any smoking individual who refuses to stop smoking or to leave a non-smoking area if asked by the staff can be found guilty of criminal trespass.

Lowered Social Fees for Working Seniors

Effective from July 1st

To promote the employment of senior citizens, Sweden has for a number of years applied a different and more advantageous system of employer social fees for the employment of individuals who were 65 years of age or older at the start of the fiscal year. To further encourage the employment of such individuals, Sweden will from July 1st, 2019 discontinue the tax component, which was previously included in the social fees of this group.

The employer social fees for employing anyone who had turned 65 years of age before the start of the fiscal year, but who was born 1938 or later, will henceforth be 10.21% of the gross salary (lowered from 16.36%). For individuals born in the year 1937 or earlier, the employer social fees are lowered to 0% (from 6.15%), and the birth year required to benefit from this change is expected to be continually move forward to benefit working seniors 82 years of age or older through the annual tax revisions included in Sweden’s future national budgets.  

The new lowered social fees for the elderly will also apply to individuals in the same age groups who work in an active capacity as self-employed. As a comparison, the default social fees under Swedish law remains 31.42% for employees and 28.97% for the self-employed.
 

Tax Reduction for Charitable Gifts

Effective from July 1st

Sweden reintroduces limited tax reductions for charitable cash gifts given by individuals, which were discontinued in 2016. From July 1st, 2019 and onwards, individuals who give documented monetary gifts of between SEK 2,000 and SEK 6,000 per person and year to government-approved charities will be entitled to a tax reduction corresponding with 25% of the donated amount. Approved gifts of SEK 6,000 donated during a given year will decrease an individual’s taxes up to a maximum of SEK 1,500. Donations which total under SEK 2,000 per year, or any portion of a donation which exceeds SEK 6,000 per year, will not qualify for a tax deduction.

A tax subject can divide their gifts between many different charities, but individual donations of less than SEK 200 will not be counted towards their potential tax reduction. The tax reduction will also only be available to individuals that are 18 years of age or older and Sweden must be their main tax residency. An individual’s total tax reduction from this and similar programs can never exceed the total taxes they have paid for that year. Any tax reductions gained through this program will be added to the Swedish individual’s tax account after the end  of the relevant fiscal year, and thereby either increase their tax refund or decrease their back taxes during the next year, depending on their overall tax situation.

Gifts will be reported to the Swedish Tax Authority by the charitable organizations that receive them unless the donor requests to be anonymous, and the donor will therefore not need to take any further action beyond ensuring that the charity has their Swedish person number. Charitable gifts given in an employee’s name by their employer, which itself under Swedish law is classified as a taxable benefit, must, on the other hand, be reported by the individual in their personal income tax declaration if it is to generate a tax reduction.
 

Increased Tax Reductions for Domestic Services

Effective from July 1st

Since 2007, the Swedish government has subsidized the cost of privately bought domestic services through the so-called RUT-subsidy, which in effect allows the service provider to receive 50% their pay from the government based on the income tax paid by the individual who bought the service for the qualifying year. The purpose of the subsidy is to encourage job growth.

The maximum size of the RUT-subsidy has, since its introduction, undergone several modifications. On July 1st, the ceiling for each consumer’s RUT-subsidy is increased from SEK 25,000 to SEK 50,000, a rate previously only enjoyed by individuals 65 years of age or older. The new rate can, upon application by the service provider, also be applied retroactively on any domestic services performed during the first half of 2019.  

The RUT-subsidy is only available for individuals who pay taxes on at least 90% of their global annual income in Sweden. If an individual uses both the RUT-subsidy deduction and the related ROT-subsidy, which can be applied to personnel costs from home improvement projects, the total amount of the ROT and RUT-subsidies granted to that individual cannot exceed of SEK 50,000 per year.

 

VAT Legislation Enforced for Consultants Working in the Health Care Sector

Effective from July 1st

The purchase of health care is, under Swedish law, not subject to value-added tax (VAT), but in 2018 the Swedish Supreme Court found that this legislation should not be interpreted as covering the business of providing medical professionals through commercial staffing agencies. Following this legal precedence, the Swedish Tax Authority has declared that they will enforce the default 25% VAT-rate on such staffing arrangements from July 1st, 2019 and onwards. This reinterpretation of existing legislation has created worries for increased expenditures within the Swedish public healthcare sector, which by law can neither charge their patients VAT, nor claim VAT refunds from the Swedish Tax Authorities. Further legislation might, therefore, be forthcoming.

 

Lower VAT on E-Publications

Effective from July 1st

On October 2nd, 2018, the Council of the European Union agreed to allow the EU member states the option of lowering their national value-added tax (VAT) on electronic publications below the previous minimum level of 15%. The decision also allows the member states an option of removing the VAT on electronic publications entirely, on the condition that they also remove the VAT on printed publications.

Following the introduction of the EU policy mentioned above, the Swedish parliament has decided that the Swedish VAT on electronic publications will be decreased from 25% to 6% effective July 1st, 2019 resulting in the Swedish VAT rate on electronic publications being the same as the pre-existing VAT rate for printed publications and audiobooks published on CD.  

The lowering of the VAT rate extends to the electronic counterparts of traditional publications, including books, digitally transmitted audiobooks, brochures, newspapers, sheet music, and maps. It will not, however, extend to computer programs, audible music, moving pictures, or any publication whose primary purpose and/or contents consists of advertisements.

 

Extended Support for Small Business Recruitment

Effective from August 1st

Since 2017, Sweden has operated a temporary program allowing Sweden registered limited companies, sole traders and partnerships with two partners to decrease the employer social fees payable on the gross salary of their first employee, as long as the employee’s monthly gross salary does not exceed SEK 25,000. If applied for and granted, this subsidy decreases the social fees from the default rate of 31.42% to 10.21%.

Originally,  this reduction only applied for the first 12 months of employment. From August 1st, this period will be extended to 24 months. The extension of the subsidy period will also apply retroactively to any employments for which the subsidy has previously been granted as long as the employment began after February 28th, 2018. The subsidy program is intended to be temporary, and the current plan is only to process subsidy applications until the end of 2021.

Raised Tax on Chemicals in Consumer Appliances  and Electronics

Effective from August 1st

To encourage the continued decrease of toxic chemicals in technical appliances intended for use in private homes, the Swedish government will on August 1st, 2019, raise the chemical tax on home electronics. This tax is calculated by the weight of each device when sold, with tax reductions of 50% or 90% available for manufacturers and/or importers who can guarantee their product’s compliance with some or all of the criteria for environmentally friendly technical products which have been established by the Swedish government.

The default chemical tax will now be raised from SEK 8 to SEK 11 per kilo for home appliances, such as stoves and refrigerators, and from SEK 122 to SEK 160 for all other home electronics. The maximum amount of chemical tax taken out for a given item will, in turn, be raised from SEK 327 to SEK 440 per item. Since this cost is regarded as part of the manufacturing cost, it is subject to 25% VAT, which means that the cost to the consumer can be up to SEK 550 per device. Large television sets are, and will continue to be, among the devices most commonly taxed at the maximum level due to their chemical contents.

 

Lowered Social Fees for Employing Teenagers

Effective from August 1st

To encourage the employment of young people, the Swedish employer social fees will from August 1st, 2019 be lowered for all individuals aged 15-18 who have salaries of SEK 25,000 or less. For this group, the employer social fees are reduced to 10.21% (from the default rate of 31.42 %), calculated on the individual’s official gross salary.

 

The Mining Industry’s Fuel Tax Subsidies are Diminished

Effective from August 1st

To encourage the mining industry to minimize its environmental impact, the Swedish government will diminish the tax discounts available for companies active within the mining sector. Previously, mining companies in good legal and financial standing have upon application been able to have their mines and processing facilities exempt from 89% of the Swedish energy and carbon dioxide tax, and 40% of the diesel fuel tax. Both these tax discounts will be discontinued on August 1st, 2019, but the mining industry will continue to receive a 70% tax refund on energy tax paid on dyed heating oil.
 

Raised Vehicle Taxes for Heavy Transport Vehicles with High Emissions

Effective from August 1st

The Swedish parliament has approved a series of increases in the vehicle tax on lorries and similar vehicles with  a weight of 12 metric tons or more whose primary purpose is the transportation of goods. The intention is to push the transportation sector toward more environmentally friendly transport options and to encourage the purchase of new vehicles with lower carbon dioxide emissions. Taxation will continue to be based on the EU classifications regarding vehicle type and classification. The European Union classification system “Euro-class”, currently rates heavy vehicles from zero to six. Euro class six is the most environmentally friendly of these vehicles types, and is currently the only type of mass-produced lorry of which new vehicles can be sold within the European Union.

On July 1st, the tax will increase on vehicles without a EURO classification and on vehicles with a EURO-class lower than five which were typically manufactured or imported before 2008. On January 1st, 2020, the tax on lorries with a Euro-class below six will also be increased, while the taxes of vehicles of Euro class six will remain unchanged for the time being. The exact tax rate for a vehicle will continue to be determined by its particular technical specifications, in a manner intended to penalize high levels of fuel consumption and road surface wear.