Do you know the new laws and rules for 2021? Here’s a summary of some of the most important changes that will affect tax and finances this year. You can always find more information on the Swedish government’s website, and don’t hesitate to contact us at Azets if you have any questions or concerns.
Corporation tax reduced
Corporation tax is reduced to 20.6 percent for tax years starting on 1 January 2021 or later. This tax cut is a decision made by parliament in 2018 that has taken place in two stages. The first stage was a tax cut to 21.4 percent between 2019 and 2020, and this is the second stage, which applies from 2021.
Amendment to the expansion fund tax
The expansion fund tax follows the level of corporation tax. Unlike corporation tax, which has been gradually reduced, the expansion fund tax will be reduced in one go in 2021. This change means that the expansion fund may not exceed the capital base multiplied by 125.94%.
Amendment to the rules for the reversal of tax allocation reserves
Due to the reduction in state income tax for legal entities, previously made provisions for tax allocation reserves must be multiplied by a certain factor upon their reversal. The size of the factor varies depending on when the sale and return take place. See the table below:
|Provision – tax years beginning||Reversal – tax years beginning||Reversal multiplied by|
|Before 1 January 2019||After 31 December 2020||106%|
|In 2019 and 2020||After 31 December 2020||104%|
For tax years beginning after 31 December 2018, legal entities must calculate the standard income on the provision for the tax allocation reserve based on 100% of the government borrowing rate (instead of 72%, which applied previously).
Extension of deduction on domestic services
From 1 January 2021, the total ceiling for tax deductions for domestic services and building repairs and extensions increases from SEK 50,000 to SEK 75,000 per person per year. The maximum amount for tax deductions for building repairs and extensions remains at SEK 50,000, however. At the same time, tax deductions for domestic services now include more services:
- Furnishing of a home, including the assembly of furniture. This does not include interior design services.
- Transport of household goods to second-hand shops, flea markets and the like where the goods can be reused, and to and from storage.
- Simple inspection of a home, such as a holiday home.
- Laundry at a laundrette, including transport.
- Drying and other garment finishing, as well as minor repairs to clothes and home textiles when this work is done in connection with laundering.
The labour cost is calculated on a standard basis at 50 percent of the amount charged including VAT, calculated on the entire service performed.
Growth support made permanent
On 1 January 2021, growth support was made permanent. This support allows a sole proprietor to receive a reduction in employer social security contributions when the company employs its first employee. For 24 months, only the retirement pension contribution (10.21%) is paid on remuneration of up to SEK 25,000 per month.
For those who had already employed their first employee before 2021, the proposal makes no difference other than that the reduction will not end at the end of 2021.
Extension of expert tax
From 1 January, foreign experts, researchers, and key persons can receive tax relief for up to five years of a time-limited stay in Sweden. Previously this was available for only the first three years. This amendment comes into effect on 1 January 2021 and applies to stays in Sweden that started after 31 May 2020.
Amendment to taxation for contracted foreign staff
Workers who are contracted from a foreign company without a permanent establishment in Sweden must be taxed in Sweden when the worker performs work in the country. The new rules apply from 1 January 2021 and the so-called 183-day rule cannot be used for labour leasing. Exceptions to this are very short-term assignments.
Tax reduction for installation of green technology
From 1 January 2021 a new tax reduction applies for the installation of green technology that replaces several previous support schemes. The tax reduction may amount to a maximum of SEK 50,000 per year.
The tax reduction is as follows:
- 15 percent of labour and material costs for the installation of solar panels.
- 50 percent for the installation of self-generated electricity and the installation of a charger for an electric vehicle.
Temporary tax deduction when purchasing fixed assets
In 2021, companies will receive a temporary tax reduction when investing in equipment. A 3.9 percent tax reduction can be requested on the acquisition value, which is made in the 2022 income tax return. The equipment must be held for a certain period of time in order to qualify for the tax reduction.
Feel free to contact Azets if you have any questions about the new regulations or need help in relation to finance, payroll, or HR.