Sweden Crypto Tax

It was graded 12th in the 2022 International Tax Competitiveness Index, which points out that this national taxation system is pretty well-structured and therefore easy to comply with, which promotes the economic performance of the country. There, Swedish crypto-businesses have full opportunity to use the system in a way that stimulates their sustainable growth, reputation security, and trust from crypto investors.

This will entail the responsibility of The Swedish Tax Agency for tax collection and administration in Sweden, including the imposition of relevant tax regulations and protection of society against misuse of the taxation system. Registration with the authority for the purpose of taxes mainly depends on legal structure and type of economic activities of the business. Also, several foreign companies might be obliged to register and become taxpayers in Sweden.

The agency is in close cooperation with other European Union tax authorities and international organizations in order to ensure that high standards of taxation are achieved and ensured toward maximum transparency. Sweden, being a member of the Organization for Economic Cooperation and Development, or OECD, has an obligation to adhere to many of the tax rules introduced by the organization. The latest crypto-related move is the Crypto-Asset Reporting Framework, CARF—a new international tax transparency framework whose goal it is to raise crypto taxation and tax reporting standards among its member countries and beyond. This would compel crypto businesses to report automatically tax information that is shared internationally.

In 2022, the European Commission put forward an amendment to the Directive for Administration Cooperation DAC, which is consistent with CARF and introduces new rules for all crypto-asset service providers in the EU in such a way as to ensure that taxes become more transparent. It also aligns with the landmark Markets in Crypto-Assets Regulation and anti-money laundering directives. The regulations will improve the detection of tax evasion and fraud because the rules require crypto companies to declare the transactions of customers who are resident in the EU.

Strengths of the Swedish Tax System

The tax system is territorial; hence, the domestic tax bases in Sweden do not include various types of income received by international firms abroad, such as dividends and capital gains. Besides that, Sweden permits an indefinite carry-forward of tax losses, enabling companies to set such losses against the taxable profit with a view to being taxed based on average profitability.

Sweden has signed over 90 international agreements on the elimination of double taxation to avoid double taxation and tax evasion of businesses having an international presence. They allow crypto and other businesses to claim foreign tax credits, provided certain conditions are met. If you are unsure, for which taxes and kinds of income and when a given agreement is applicable to your business case, do not hesitate to contact our team here at Regulated United Europe (RUE) and we will schedule a personal consultation for you.

This means that in its endeavour to stimulate growth and efficiency in the economy, Sweden strives for the attraction and promotion of innovative and pioneering enterprises. It also shows openness to innovation through the national support for research and development activities. The government subsidy precisely supports labor-intensive R&D and loss-making firms by way of payroll tax liability reduction for the R&D personnel, hence exemption of 19.59% of employers’ Social Security Contributions. With that, investment in innovation within Sweden is one of the highest in the world, as it focuses very heavily on broad and specialized research that can solve some of the most key issues thrown at society.

This means there are no inheritance and gift taxes in Sweden; therefore, cryptoassets could freely be transferred to other persons without any incidence of tax. For there to be an example of whether a crypto transfer is a gift, there is supposed to be a voluntary crypto transfer whereby no service is performed in return.

Corporate Income Tax

The standard Corporate Income Tax rate amounts to 20.6%, which is below the EU average, and may become even lower inasmuch as companies are entitled to deduct annually up to 25% of their profit as an appropriation to a tax allocation reserve. As a rule, resident companies are liable to tax for income derived both in Sweden and abroad. Non-resident taxpayers shall pay tax on income that has its source in Sweden. Normally, a company is regarded as a tax resident if it is established in Sweden pursuant to the Swedish Companies Act. Crypto companies will be taxed for most of their crypto-related income; however, there is some room for exemption.

Regarding Corporate Income Tax, there are a number of possible deductibles, too. General costs of start-up and maintenance of business income are deductible. Interest paid to associated enterprises is deductible as well, if the actual creditor is an EEA resident or if it is established in a state with which Sweden has concluded a double taxation agreement, or if it is taxed on the interest income at a rate of at least 10%. The following expenses, however, are not deductible: charitable contributions, fines and penalties, and most Swedish taxes.

Withholding Tax

The general rule is that no withholding tax is charged in Sweden on dividends paid to individual and corporate residents. Generally speaking, a 30% Withholding Tax rate applies to non-resident companies and individuals. Of course, when an international double taxation agreement or the EU Parent-Subsidiary Directive provides for a lower rate, this may lower the applicable tax. Whatever their residence status, no Withholding Tax is levied on interest, royalties, or fees for technical services.

Capital Gains Tax

Pursuant to the Swedish Income Tax Act, cryptocurrencies are considered other assets. The tax authority does not consider crypto assets as legal tenders and any disposal of crypto assets made by the individual is subject to the Capital Gains Tax at a 30% rate. It is possible to offset 70% of any capital losses incurred during a tax year against the capital gains, and claim a tax deduction.

The following crypto-activities are subject to tax:

• Sale and exchange of cryptocurrencies for fiat money
• Trading one type of cryptocurrency against another
• Lending of cryptocurrencies
• Sale of products or services for cryptocurrencies

Exempt from tax is the capital gain obtained upon a sale that happened for reasons connected with entrepreneurial activity of shares in a resident company. Taxation may also be exempt for the sale of shares that has been held in a foreign company, on the condition that it takes an organization form similar to that of a Swedish Limited Liability Company or a Swedish Economic Association and that the shareholding is business related. Taxable capital gains are considered other business income and is taxed at the standard Corporate Tax Rate.

Value-Added Tax

Within the country of Sweden, the general VAT rate is 25%, and this is properly in line with the EU VAT Directive. Generally, crypto businesses are obliged to register as payers of VAT; however, many can use certain exemptions under the specific line of business. For example, due to the case involving a citizen of Sweden, within the EU, cryptocurrencies are exempt from VAT. In 2015, the CJEU excluded that the exchange of cryptocurrencies for fiat money constitutes a financial service and therefore is obliged to be VAT exempt, such as legal tender, banknotes, and coins.

Other crypto-related goods and services are likely to be covered under the general VAT regime: promotion activity, development of hardware and software, and maintenance of those. However, crypto mining itself is not a taxable event, due to the lack of a sufficient client-seller relationship.

It also creates an avenue for small businesses to have tax thresholds that relieve them from their taxes, as they are not obliged to register as payers of value-added tax. The VAT threshold for registration of small Swedish businesses stands at 80,000 SEK annually, approximately 7,000 EUR. If the non-Swedish company has no permanent establishment in Sweden, it is obliged to register as a VAT payer with the inception of selling its products and services to Swedish customers.

Payroll Taxes in Sweden

Any crypto firm hiring people needs to enroll as an employer with the Swedish Tax Agency and remit contributions to the Swedish Social Insurance Agency and the Swedish Pensions Agency. The Social Security rate comes out to 38.42%, in which employers pay 31.42%, and employees are obliged to contribute the remaining 7%. Employers are required to complete employer contributions and PAYE tax returns on a month-to-month basis and report, via the PAYE Tax Return service, all the payments and tax deductions. In the PAYE tax return, an employer must provide information with regard to both employees and the employing company.

The 31.42% rate for the employer comprises the following:

• Health Insurance – 3.55%
• Retirement Pension – 10.21%
• Parental Insurance – 2.60%
• Occupational Injury – 0.20%
• Survivors Pension – 0.60%
• Labor Market Fee – 2.65%
• General Payroll Tax – 11.62%

The total Personal Income Tax is 52%, and it is withheld by employers on behalf of their employees. It includes the National Income Tax and Municipal Income Tax. The latter is always 32%, while the National Income Tax is not payable if income does not exceed 598,500 SEK (approx. 52,000 EUR); for income above this threshold, the rate will be 20%. These rates do not concern the non-residents working in Sweden who pay a flat rate of only 25%.

How to pay taxes on crypto in Sweden in 2024?

In Sweden, income from cryptocurrency is taxed by Skatteverket. In views of 2024, one should consider the new developments and updates that have occurred in the tax laws about cryptocurrencies. Further, below follows a summary of what was described as the main characteristics of the taxation of income from cryptocurrencies in Sweden for 2024, set up based on expected updates and principles at the current date.

Definition of Cryptocurrency Income

Income from cryptocurrency is considered capital gains income in Sweden and, as such, is subject to taxation. Included among these revenues are the following:

• The sale of a cryptocurrency at profit
• Income from mining
• Receiving cryptocurrency in return for goods or services

Tax Rates

Generally, capital gains are taxed at a rate of 30 per cent. It is, however, worth paying attention to the fact that rates could change in pursuance of the latest tax reforms.

Declaration of Income

1. Reporting: All cryptocurrency transactions should be declared in a tax return. It means information about every transaction: the date of purchase and sale, profit, or loss.
2. Conversion to SEK: For tax reporting, crypto income and deductions shall be expressed in Swedish kronor at the value applicable on the date of the transaction.
3. Accounting for Losses: Losses from the trade in cryptocurrencies can be used to reduce the taxable base of capital gains, but rules and limitations should be verified separately.

Special Cases