Taxing matters: Sweden

Despite notoriously high tax rates, Swedes don’t mind paying taxes and actually welcome the involvement the Swedish Tax Agency, Skatteverket, has in their day-to-day lives.

By Helen Cowley, director of tax, Cassons

Sweden operates a progressive tax system, which means income tax rates rise as income increases.  Although those earning less than £32,000 per annum will pay tax at a rate of 29 per cent, most will pay between 49 per cent and 60 per cent tax on earnings.  Contrast this with the UK where you will need to earn over £100,000 before paying an effective rate of tax of 60 per cent.

Given that the cost of living is famously high in Sweden, you might wonder how the Swedes tolerate such high taxes on relatively low earnings.  But not only do they tolerate the taxes, many actually welcome them.  Swedes genuinely value their society and public services and therefore do not mind paying a premium.

They also seem to embrace what others might consider intrusive participation from the tax agency.  Skatteverket is quite literally involved from cradle to grave.  The trusted and popular public body is responsible for virtually every important event in life including birth, marriage and death.  These events are registered automatically, taking the burden off the taxpayer and allowing them to get on with their lives.

The Swedish mindset is different to many other countries where taxes, and possibly the tax authorities, are not so popular. If you’re thinking about basing yourself in Sweden then be prepared to pay into the system and always take professional advice before making the move.