Five Tax Tips for Expat Freelancers in Sweden | Undutchables

Five Tax Tips for Expat Freelancers in Sweden

Categorie: Business

Five Tax Tips for Expat Freelancers in Sweden

Sweden is a great place to be a freelancer. For some expats, not having to be a salaried employee to have health insurance makes being a freelancer a more viable option than it might be in their home countries. Sweden is also very tech-friendly, so it is easy to work from home, make electronic payments, and network online. In addition, for those who have kids or who are pursuing other interests on the side, freelancing offers a flexible schedule and lots of freedom. However, freelancing also requires careful tax planning to avoid unexpected tax bills and interest charges. Below are five tips to help make paying taxes as a freelancer in Sweden simpler.

1. Get organized

It may sound obvious but before you do anything, create a system to keep your paperwork and records in order. Set up files for important documents with electronic versions of everything and create a system to record income and expenses, whether you use a simple spreadsheet or accounting software. If you are someone who dislikes doing this it might be worth it to find an accountant or service to help you navigate Swedish tax and accounting rules. An accountant can help ensure you are getting the proper deductions for your business and can give you peace of mind, so you have more time and energy to focus on other things. Even if you do hire an accountant, it is still important to keep your records organized with clear notes so you can remember things and so that you do not omit any income or expenses.

2. Decide which type of entity your business will be

For freelancers, the easiest way to start out is to set up a sole proprietorship or enskild firma (tax for sole starters) in Swedish (often shortened to EF). This means that the firm does not have a separate legal entity. Bear in mind that this also means there is no liability protection for you personally so you could be liable for any damages incurred by your clients. However, liability insurance (ansvarsförsäkring) policies are available. With a sole proprietorship if you are sick for more than two weeks you are eligible for sick pay through social security, or försäkringskassan. Because you pay into the pension and social security systems, you are also eligible for parental leave, unemployment benefits, and a pension based on your income. Although it is not required with a sole proprietorship, having a separate bank account makes it simpler to keep track of business expenses. If you would like to have the liability protection that comes with having a limited company which is a separate legal entity, you can also set up an aktiebolag or AB. (Read more here about a Aktiebolag.) Limited companies are required to have separate bank accounts and you must contribute 25,000 SEK as capital when starting the firm, which you get back when you liquidate the firm. If you do start out with a sole proprietorship, you can switch to a limited company later as your business grows.

3. When to file taxes in Sweden

Business owners must make estimated tax payments by the 12th of every month. In addition, business owners need to pay taxes for the entire year (if the estimated payments made throughout the year have not covered the total tax bill) by the 12th of February the following year to avoid interest charges. The annual filing deadline for taxes in Sweden is normally May 2nd but in 2021 the deadline falls on May 3rd.

4. How to file taxes in Sweden

The Swedish tax agency, Skatteverket, makes it easy with multiple ways to file your tax return. Business owners can file their returns via text message, phone call, snail mail, the e-service (which is only in Swedish), or the Skatteverket app (also only in Swedish).

5. Deductions for home offices

If you work from home more than 800 hours per year you can deduct some home office expenses. You need to set up a workspace that is separate from the living area and, based on the percentage of your work area in relation to your total residence, you can deduct that percentage of your utilities and the monthly fee (avgift), if applicable, as well as any repairs you have done in the designated work area. However, mortgage interest payments are not deductible. If that sounds too complicated, you can also take the standard deduction (currently 4,000 SEK per year if you live in an apartment, owned or rented, or 2,000 SEK per year if you live in a villa). Business owners who use 50% or more of their residence for their business can classify their homes as commercial properties and deduct 100% of the utility bills.

Being a freelancer in Sweden can be rewarding and gives you great flexibility and getting organized about paying your taxes allows you to focus on growing your business. For more information, please see more information on the web site of the Swedish Tax Athorities, Skatteverket.

More in general, read more here on the the Swedish tax system.

Thank you to Pilar Washburn, an expert in accountancy, working in Sweden.


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