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the swedish tax system

Erik Norrman - School of Economics and Management. 2. Contents. A global viewThe structure of the Swedish tax systemCollection, filing and control systemChallenges. Erik Norrman - School of Economics and Management. 3. The Swedish Tax System - a Global View

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the swedish tax system

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    1. THE SWEDISH TAX SYSTEM Dr Erik Norrman Department of Economics School of Economics and Management

    2. Erik Norrman - School of Economics and Management 2 Contents A global view The structure of the Swedish tax system Collection, filing and control system Challenges

    3. Erik Norrman - School of Economics and Management 3 The Swedish Tax System - a Global View…

    4. Erik Norrman - School of Economics and Management 4

    5. Erik Norrman - School of Economics and Management 5

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    8. Erik Norrman - School of Economics and Management 8

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    10. Erik Norrman - School of Economics and Management 10

    11. Erik Norrman - School of Economics and Management 11

    12. Erik Norrman - School of Economics and Management 12 The Structure of the Swedish Tax System…

    13. Erik Norrman - School of Economics and Management 13

    14. Erik Norrman - School of Economics and Management 14

    15. Erik Norrman - School of Economics and Management 15

    16. Erik Norrman - School of Economics and Management 16 The Personal Income Tax National tax on earned income- progressive Local tax on earned income - proportional National tax on capital income- proportional World-wide basis applies

    17. Erik Norrman - School of Economics and Management 17

    18. Erik Norrman - School of Economics and Management 18 Earned Income Income from employment- wage income- benefits in kind assessed at market value Income from business activities- as self-employed - as a partner in a partnership

    19. Erik Norrman - School of Economics and Management 19 Family Taxation Spouses as well as children are taxed separately for all income No spouse allowances No children allowances

    20. Erik Norrman - School of Economics and Management 20 Deductions No standard deductions Itemised expenditures exceeding SEK 1,000 may be deducted Commuting expenses exceedingSEK 7,000 may be deducted Pension contributions up toSEK 19,000 is deductible

    21. Erik Norrman - School of Economics and Management 21 Capital Income + Interest payments received + Dividends received + Capital gains realised during the year - Interest expenses deductible = Capital income

    22. Erik Norrman - School of Economics and Management 22

    23. Erik Norrman - School of Economics and Management 23 Social Security Contributions Employer´s contributions(pension, health, on the job accidence etc)33 percent Additional negotiated pension fees Employee pension contribution7 percent (75% of fee is credited against income tax)

    24. Erik Norrman - School of Economics and Management 24 The Corporate Income Tax Tax rate 28 percent Classical double taxation Special rules apply to closely held companies Inter-company dividends tax-exempt as well as capital gains on unlisted companies

    25. Erik Norrman - School of Economics and Management 25 Institutional Investment Life-insurance companies and Pension funds are taxed on a notional basis Mutual funds and investment companies pay taxes on net interest and dividends received. Capital gains are tax exempt but a notional return is calculated (1,5%-2,0%)

    26. Erik Norrman - School of Economics and Management 26 Real Estate Owner-occupied houses:1,0% of an assessed value equal to 75% of the market value is paid as property tax Other real estate:0,5% of an assessed value

    27. Erik Norrman - School of Economics and Management 27 Other Capital Taxes Net wealth tax1% of the value above - 1,5 MSEK for individuals and - 2,0 MSEK for spouses No tax on ”working capital” in unlisted firms or OTC-stocks Inheritance and gift taxes

    28. Erik Norrman - School of Economics and Management 28 Indirect Taxation - VAT The tax base is harmonised within the EU Tax exempt services are:- Medicare - Public education- Social care- Financial intermediation- Insurances

    29. Erik Norrman - School of Economics and Management 29 VAT - Rates Normal rate 25% (exclusive basis) Cultural activities, books and newspapers 6% Personal transportation and foodstuff 12%

    30. Erik Norrman - School of Economics and Management 30 Excise Duties Alcohol Tobacco Energy

    31. Erik Norrman - School of Economics and Management 31 Transaction Taxes On purchase of real estate- individuals 1,5% of acquisition value- legal entities 3,0% of acquisition value Stamp duty on collaterals for mortgage loans 2%

    32. Collection of Income Taxes - Individuals 1. Preliminary income tax on wage and is withheld by employer each month during the income year 2. The next month the employer pays the withheld amount to the Tax Administration 3. In January (the assessment year) information is sent to the Tax Administration including total income and tax withheld for each individual 4. Filing by individual 5. Final tax is calculated and sent to individual. Preliminary tax is deducted

    33. Erik Norrman - School of Economics and Management 33 Collection of Income Taxes - Firms 1. Preliminary income tax based on last years profit or an expected profit is paid each month to the Tax Administration 2. Filing by company/individual for business activity 3. Final tax is calculated and sent to company/individual. Preliminary tax is deducted

    34. Erik Norrman - School of Economics and Management 34 Collection of VAT + Value added taxes on sales Value added taxes on purchases = Amount to be paid or repaid Payments are made in March for VATin January and so on

    35. Employers set up one declaration for all taxes

    36. Erik Norrman - School of Economics and Management 36 Tax Accounts

    37. Challenges in the Future - Short Term Perspective (1-5 years) Domestic distortions- Labor supply of low-income individuals- Problems with the Dual Income Tax International tax competition- Mobile tax bases (firms, financial capital and well- educated labor)- Cross-border shopping Compliance - Black market activities- International tax evasion

    38. Erik Norrman - School of Economics and Management 38 Challenges in the Future - Long-run Perspective (5 years -) Demographic development causes pressure on expenditures Demographic development unfavorable for tax base expansion What kind of tax structure sustains economic growth?

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