Deductible Staff Costs



Clothes

Normally, clothes are considered a benefit where employer tax should be paid. The exception is if the clothes are intended for service use and cannot be used privately. Examples of tax-free clothing include:

  • Protective clothing

  • Uniforms

  • Specialized clothing for a specific profession (hospital, food service, restaurant)


Clothes that can be used privately may in some cases be tax-free, however, the clothing must be:

  • Branded with the company's logo or name

  • Mandatory for use in service by employees

  • Suited for the service


Company Car

If the company's car is used privately more than 10 times or more than 100 kilometers per year, it is considered a benefit and tax must be paid on the benefit value. Journeys to and from work count as private.

Benefit Value

The benefit value is influenced by many factors:

  • The car's new price

  • Extra equipment

  • If the car is an environmental car

  • If the employee drives at least 30,000 kilometers for service

  • Vehicle tax


To find out the car's benefit value, you can use the Swedish Tax Agency's e-service: Car Benefit Swedish Tax Agency

Fuel, Congestion Tax, Parking

Fuel and congestion tax on private rides should be considered a benefit and tax must be paid. The benefit value on fuel should be multiplied by 1.2. Example: if the company has paid 1000 SEK for fuel, the benefit value is 1200 SEK (1.2*1000).

Regarding parking with a company car, it depends on whether the parking spot/garage is at the business or at the residence. At the business, it counts as a tax-free benefit, otherwise, tax must be paid.

Tax

How much tax should be paid on the benefit value? The benefit value is calculated as a salary if it is an employee who utilizes the benefit, hence the company must pay employer contributions and the individual utilizing the benefit must pay tax. Normally, employer contributions are 31.42% depending on age, and the tax is about 30% depending on the municipality.

If the benefit is utilized by a sole trader (enskild näringsverksamhet), the benefit instead counts as revenue and should be taxed accordingly.


Education / Courses

Deductions for education expenses are allowed if the education:

  • Is related to the current business operations

  • Benefits the business from the knowledge gained

Education to expand the business or if the education is a prerequisite to start the business is not deductible.

Study & Conference Trip

To deduct these trips, the trips must:

  • Have a strong connection between the business operations and the content of the trip

  • Be economically justified

If entertainment activities are included in the trip, a certain deduction of the trip is possible.


Gifts

Generally, gifts are taxable, where benefit taxation applies and VAT cannot be deducted. However, there are some exceptions that we will go through.

Tax-free gifts apply to employees. If you are a sole trader (enskild näringsverksamhet), you cannot give yourself a tax-free gift, but you can give gifts to employees. If you run a limited liability company (aktiebolag) and are employee, you can give yourself a tax-free gift.

Christmas Gift

A Christmas gift is tax-free and deductible if the amount is less than 500 SEK including VAT. However, cash does not count as a tax-free gift.

Anniversary Gift

An anniversary gift is tax-free when the company celebrates 25, 50, 75, and 100 years. The maximum amount is 1500 SEK including VAT.

Memory Gift

A memory gift can be given if the employee has been at the company for at least 6 years and:

  • reaches a certain age (round birthdays from 50 years and up) or

  • has been employed for a longer time (at least 20 years) or

  • retires


Pension Costs

Pensions can be divided into several categories:

  • Old-age pension - 10.21% of the salary, and is part of the employer contributions at salary payment. In a sole trader business, it's part of the self-employed contributions paid on the surplus from the results at the end of the year.

  • Public pension - 7% of the salary, and is part of the taxes. In a sole trader business, it's part of the self-employed contributions paid on the surplus from the results at the end of the year. It is only earned with an annual income of at least 22,000 SEK and is maximized with a monthly salary of about 50,000 SEK.

  • Occupational pension - 4.5 - 6% of the salary, and 30% on salary exceeding a around 46,000 SEK monthly. It's not included in the employer or self-employed contributions, hence you as a business owner need to cover it.

If you run a sole trader business and have a surplus of less than 599,250 SEK before tax (2023), it's recommended not to deduct for Pension Costs since you would reduce the surplus which in turn lowers the public pension. Therefore, it's better not to make a deduction and instead save privately in an Investment Savings Account (ISK).

Deduction

If you want to compensate for the part of the occupational pension you miss as a self-employed, you can deduct for pension savings you make through the company. You may be entitled to a deduction for your own pension savings if the savings are made through a pension insurance or individual pension savings (IPS).

To be entitled to a full deduction, pension costs must not exceed 35% of the earning salary for the specific employee. There's also a max limit of 573,000 SEK (2024).

The tax is 24.26% on the pension costs. The tax is also deductible and considered a cost in the company's results.


Representation

Representation includes coffee, lunch, beverages, etc. Read more about representation.


Salary / Withdrawal

If you run a limited liability company (aktiebolag), there are two ways to withdraw money: salary or dividend. In a sole trader business (enskild näringsverksamhet), withdrawals can be made without tax consequences. Taxation occurs on the surplus/result instead.

Salary costs are deductible, but there are more costs than just the salary payment. Costs to consider when paying a salary:

  • Monthly salary

  • Vacation pay (12%)

  • Employer contributions/tax (31.42%)

  • Contract insurance

  • Special payroll tax on pension payments

  • Other benefits


Vacation pay is 12% by law and is based on a vacation entitlement of 25 days. If the employee is entitled to more vacation days, the percentage rate increases.

Employer contributions are normally 31.42%. If the employee is older than 66 years or younger than 18 years and earns less than 25,000 SEK per month, the employer contributions are 10.21%.

If you, as a business owner, are connected to a collective agreement, contract insurance must be signed, and therefore a payroll tax must be paid on a certain part of the insurance. If you are not connected to a collective agreement, you can choose whether you want to sign insurance. Benefits in both cases are not mandatory and can be opted out.

Calculation example with a monthly salary of 30,000 SEK

Without collective agreement:

  • Salary 30,000 SEK

  • Vacation pay 3,600 SEK (12% * 30000)

  • Employer contributions 10,577 SEK (31.42% * (30000+3600))

  • Total cost: 44,177 SEK


With collective agreement:

  • Salary 30,000 SEK

  • Vacation pay 3,600 SEK (12% * 30000)

  • Employer contributions 10,577 SEK (31.42% * (30000+3600))

  • Contract insurance 1,680 SEK (5% * (30000+3600))

  • Special payroll tax 367 SEK (4.5%*(30000+3600))

  • Total cost: 46,224 SEK


These calculation examples are not precise payroll costs for all companies, as employer contributions, insurances, and vacation pays can vary.


Staff Care

This includes wellness grant, gym memberships, sports activities, massages etc. Staff care is tax-free if:

  • It is offered to all employees

  • It is of minor value

  • It cannot be exchanged for cash

Only employees and shareholders/board members in limited liability companies are entitled to a tax-free wellness grant. In a sole trader business, you as the owner do not receive a tax-free wellness grant, but if you have employees, the tax exemption remains.

Amount

Staff care that involves physical activity, such as gym memberships, is tax-free for amounts under 5,000 SEK per year. Staff care not involving physical activity, such as massages, must cost a maximum of 1,000 SEK per occasion to be tax-free. If the price exceeds these limits, tax must be paid on the entire amount.