Quick overview of swedish real estate

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Tax treatment of income and gains of Swedish real estate

Taxpayer Basis of tax Tax levied Tax rates (2021)
Resident individual Rental income Individual income tax 30 %
  Capital gains Real estate profit tax 22 %
Non-resident individual Rental income Individual income tax 30 %
  Capital gains Real estate profit tax 22 %
Resident company Rental income Corporate income tax 20.6 %
  Capital gains Corporate income tax 20.6 %
Non-Resident company Rental income Corporate income tax 20.6 %
  Capital gains Corporate income tax 20.6 %

 


Rental income

Individuals

Introduction

Rental income is taxed as part of a taxpayer’s annual income.

Liability to tax

Rental income received by individuals is subject to individual income tax.

Basis to tax

Individuals are allowed to make a general deduction from the rental income regarding a private property/home. The deduction is 40.000 SEK per property for the income year 2021. Thereafter, the individual may also deduct 20% of the income from rent. The deductions may not exceed the income. The remaining surplus is subject to individual income tax.

Companies

Introduction
Rental income is taxed as business income.

Liability to tax

Rental income earned by companies is subject to corporate income tax as business income..

Basis to tax

Business income is taxed against a tax rate of 20.6%. 


Capital gains

Individuals

Introduction
Capital gains are taxed as part of a taxpayer’s annual income.

Liability to tax
Capital gains received by individuals are subject to capital tax (i.e real estate profit tax)

Basis of tax
The profit is calculated as the sale price minus estate agent's fee minus purchase price minus improvement costs. The individual will be taxed at a 30% tax rate for 22/30 of the profits for private property/home (effective tax rate 22%).

Companies

Introduction
Capital gains are taxed as business income.

Liability to tax
Sales of land and buildings are subjected to corporate income tax.

Basis to tax
Business income including all capital gains are subject to Swedish corporate income tax at the tax rate of 20.6%.

Exemptions
Capital gains and dividends from unlisted bonds are exempted from corporate tax in Sweden.
Unlisted shares in real estate companies are included in the definition and therefore not subjected to corporate tax.


Swedish VAT & transfer taxes

Taxpayer Basis of tax Tax levied Tax rates (2021)
Resident individual Rental income Value Added Tax -
  Transfer of real estate Stamp duty 1,5 %
Non-resident individual Rental income Value Added Tax -
  Transfer of real estate Stamp duty 1,5 %
Resident company Rental income Value Added Tax 0 % or 25 %
  Transfer of real estate Stamp duty 1.5 % / 4.25 %
Non-Resident company Rental income Value Added Tax 0 % or 25 %
  Transfer of real estate Stamp duty

1.5 % / 4.25 %

 
* 1.5% if the buyer is a Non-business association, for example housing cooperative association (sw. Bostadsrättsförening) 4.25% if the buyer is a company.


Value Added Tax

Individuals

Introduction
Value added tax is a tax based on the increase in value of a product or service at each stage of the supply the chain.

Liability to tax
Rental income for individuals is not subject to VAT. However, If the individual performs business activity then the rules for companies apply.

Companies

Introduction
Value added tax is a tax based on the increase in value of a product or service at each stage of the supply the chain.

Liability to tax
If a company performs commercial or professional activities in Sweden, it will be subject to VAT.

Basis of tax
As a general rule, the supply and lease of property are exempted from VAT. However, there is a possibility to voluntarily register for VAT for letting of business premises, provided that the business conducted on the premises is subject to VAT and the lease is during a permanent time. The applicable VAT rate is 25%.


Stamp duty (Transfer Tax)

Individuals

Introduction
All transactions on land and buildings are subject to stamp duty. It is the buyer of the property who is liable to pay the tax. However, the stamp duty can be added to the purchase price and together form the base cost of the asset and therefore be treated as an asset instead of a cost.

Liability to tax
A transfer of ownership is in general subject to stamp duty.

Basis of tax
The stamp duty is based on the higher purchase price and assessed value for tax purposes. The tax rate for individuals is 1.5%.

The assessed value for tax purpose is set by the Swedish tax authorities. The owner of the real estate receives a property declaration every three or six years where information about the real estate is stated. The Swedish Tax Agency uses the information in the property declaration to calculate the tax value. Owners of real estate can get a special property assessment in between the three or six years if there have been any major changes to the property or if it is newly formed.

Exemptions
Transfer of ownership due to inheritance, estate division or gift is not subject to stamp duty.

Companies

Introduction
All transactions on land and buildings are subjected to stamp duty. It is the buyer of the property who is liable to pay the tax. However, the stamp duty can be added to the purchase price and together form the base cost of the asset and therefore be treated as an asset instead of a cost.

Liability to tax
Transfers of ownership are subject to stamp duty. The stamp duty is paid to Lantmäteriet - an authority belonging to the Ministry of Industry. Lantmäteriet is responsible for the real estate division in Sweden.

Basis of tax
The stamp duty is based on the higher purchase price and assessed value for tax purposes. It is the Swedish tax authorities that set the assessed value for tax purpose. The owner of real estate receives a property declaration every three or six years where information about the real estate is stated.

The Swedish Tax Agency uses the information in the property declaration to calculate the tax value. Owners of real estate can get a special property assessment in between the three or six years if there have been any major changes to the property or if it is newly formed.

The stamp duty is 1.5% if the buyer is a Non-business association, for example housing cooperative association (‘Bostadsrättsförening’) and 4.25% if the buyer is a company.

Exemptions
If the transfer of ownership is made within a group company, the payment of the stamp duty can be postponed until the real estate is sold to a company outside the group..


Swedish Local taxes

Taxpayer Basis of tax Tax levied Tax rates (2019)
Resident individual Assessed tax value* Property tax 0.3 – 2.8 % **
Non-resident individual Assessed tax value* Property tax 0.3 – 2.8 % **
Resident company Assessed tax value* Property tax 0.3 – 2.8 % **
Non-Resident company Assessed tax value* Property tax 0.3 – 2.8 % **

 
* The assessed tax value should correspond to 75% of market value (it is set by the tax authorities)
** The applicable tariff depends on the nature and type of the property


Individuals

Introduction
The Swedish tax authorities levies the annual tax on Swedish real estate. The tax is added to the real estate owner’s personal income tax return.

Liability to tax
The owner of the real estate at the beginning of the year is liable to property tax.

Basis of tax
The local tax is based on the assessed tax value. It is 0.75% of the assessed tax value but not higher than 8.524 SEK (2021).

Companies

Introduction
The Swedish tax authorities levy the annual tax on Swedish real estate. The tax is added to the real estate company’s income tax return.

Liability to tax
The owner of the real estate at the beginning of the year is liable to property tax.

Basis of tax
The tax rate is 1% for commercial office space and 0.5% for industrial property. The annual property tax on properties for residential purposes is 1.459 SEK/flat (for 2021) maximised to 0.3% of the assessment value.

For the income year of 2021, the charge for each residential building is 8.524 SEK or 0.75% of the assessed value for the house and associated grounds, whichever provides the lower charge.

For the 2021 income year, the property charge for residential building on leasehold land is 4.262 SEK, or 0.75% of the assessed value, whichever provides the lower charge.

For the income year of 2021, the real estate charge for leasehold land or similar that is built upon with only houses on leasehold land is 4.262 SEK, or 0.75% of the assessed land value, whichever provides the lower charge.


Swedish Net Wealth/worth taxes

There is no net wealth/worth tax for individuals or companies owning real estate in Sweden.

Vehicles for Swedish real estate

Commonly used vehicles for Swedish real estate

Limited
The so-called ‘Aktiebolag’ is the Swedish version of a limited liability company and is the most frequently used vehicle for the ownership of Swedish real estate. The minimum amount of share capital is 25.000 SEK. The shareholders of the Aktiebolag are not personally liable for the business debt.

Individuals who hold shares in Swedish Aktiebolag derive capital income that is subject to a 20-25% capital gains tax rate. Certain conditions and limitations apply.

Profits made by the Aktiebolag are subject to the corporate income tax at a flat rate of 20.6% as of 2021.

Partnership & joint ventures
Investments in real estate are also done on a collective basis by some entities and/or individuals. For Swedish tax purposes, there is no distinction between taxation of partnerships and of joint ventures. The profit will be taxed on the owners of the partnerships/joint venture. If the owner is a limited liability company the corporate income tax is a flat rate of 20.6% as of 2021. If the holder is an individual (sole trader) the tax rate varies between 30-55% depending on the other income of the individual.

Foreign partnership
The residence of a partnership is determined by the place where crucial business decisions are usually made. Generally, this will be the place where all partners meet regularly. Swedish real estate will usually lead to a permanent establishment in Sweden.

Specific real estate vehicles for Swedish real estate
The majority of real estate is owned through limited liability companies or partnerships as described above. There are no specific real estate vehicles for Swedish real estate. Real estate Trusts are not an accepted cooperation form in Sweden.

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