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Sweden hits inflation target for the first time in six years

Sweden reached its inflation target for the first time in more than six years in July, which could spell a return to normalized monetary policy after years of negative interest rates.

Published: 15 August 2017 12:24 CEST
Updated: 15 August 2017 17:32 CEST

Sweden hits inflation target for the first time in six years

It is likely inflation will drop again in autumn. Photo: Fredrik Sandberg/TT

The consumer price index rose from 1.7 percent in June to 2.2 percent last month, while consumer price inflation with a fixed interest rate rose from 1.9 percent to 2.4 percent – the latter exceeding the target for the first time since December 2010.

Some experts said that the news, which exceeded expectations, could potentially forecast an end to the aggressive monetary policy the country's central bank, the Riksbank, has been running for the past two years.

The Riksbank took the landmark decision to slash the key interest rate, the repo, below zero in February 2015, hoping that the strategy would boost inflation to raise the price of everyday goods and services which had been stagnant in recent years, and therefore improve the Nordic nation's economic prospects.

But until July, the inflation rate had been slow to reach its target of two percent.

“What we can see is that Swedish inflation has risen from the low levels we had a few years ago,” Anna Breman, chief economist at Swedbank, told the TT news agency.

“This strengthens our view that the Riksbank will raise interest rates in spring 2018.”

She said it was however unlikely the news would alter its strategy in the short term.

The Riksbank said in April that it would not adjust the record-low interest rate, currently at -0.50 percent, this year as previously intented, but would extend it until mid-2018.

It is also likely that inflation will drop after the summer boost – caused by increased air travel and charter holidays in July – but Breman said she thought it would continue to fluctuate around two percent.

The Financial Times quoted analysts at ING as warning that “we don't expect the July Swedish CPI data to prompt a reaction from the Riksbank as the central bank has a long history of erring on the cautious side due to concerns about a strong krona. Thus, any boost from a strong CPI release may prove to be one-off”.

What to do if you can't meet Tuesday's Swedish tax declaration deadline

When exactly is the Swedish tax deadline and what help can I have to meet it?

The deadline falls on the stroke of midnight on Tuesday May 2nd, so you still have a few hours to get your declaration together.

Sweden may have relatively high taxes, but the Swedish Tax Agency seeks to make paying them as easy as possible.

If you have any questions, it is well worth ringing the helpline on 0771-567 567.

Unlike the helplines of the tax offices in most other countries, the helpline is well-staffed with informed people who go out of their way to help you.

The agency also has a good quide in English on how to file your return.

What happens if you miss the deadline?

If you fail to submit your declaration by midnight, you are at risk of having to pay a fee of 1,250 kronor, but this won’t necessarily happen. There is an element of discretion, and if you filed your return at 0.15am on May 3rd, you may well be let off.

In any case, before the charge is taken out of your tax account or skattekonto, you will first receive a note informing you of possible impending late charge, which you can then appeal.

So if you fell ill on May 2nd, or the internet broke down at your apartment at 11.55pm, you can inform them when you receive this note and you may be able to avoid a fine.

If in a further three months (August 2nd), you still haven’t submitted your tax declaration, you risk a second 1,250 kronor fine. Finally, after five months (October 2nd), you risk a third fine of 1,250 kronor.

How to get an extension if you are self-employed

You can extend the deadline until May 16th by logging into your page on the Tax Agency’s website or calling them on 0771 567 567 (or +46 8 564 851 60 from outside Sweden).

To find the extension form, go to the Mina Sidor page on your Tax Agency account, press the Skatter och Deklarationer link near the bottom, and then press the Anstånd med inkomstdeklarationen link and filling in the form.

Jan Janowski, a declaration coordinator at the agency, said that the agency prefers for people to do this than to knowingly submit an incomplete or inaccurate declaration.

“We want people to live their declaration in as complete a form as possible, but if you are still waiting for some supporting documents we would like people to apply for an extension.”

If you have an accountant, they can apply for all of their clients’ income declarations to be delayed until June 15th in a measure called byråanstånd, intended to help them with the last minute rush to declare.

This, however, has to be done for all of their clients and isn’t something they can do for you just because you are late.

Is it better to file an incomplete declaration than a late one?

If you feel unable to file your declaration even on May 16th, what’s holding you back is likely to be something like declaring capital gains tax on share or property sales, or confusion over calculating one of Sweden’s many tax deductions, such as the ROT or RUT deductions for cleaning or home maintenance.

If you are employed, the most important element of your tax declaration – your income from your job – will already be filled in on the paper or online form.

Declaring your main income from employment is just a question of checking that the details Skatteverket already has are correct and submitting a declaration either using Skatteverket’s app, or by sending a text message including your personal identity number and signature code to 71144 from within Sweden, or by calling 020 567 100 and following the instructions.

If you are still wading through spreadsheets of share sales, but have no issues with the Tax Agency’s record of your income from employment, you can make the declaration but inform the agency that you may have other capital gains or other income to declare later on.

If you do this, it’s good to be as transparent as possible with the agency about what information you are waiting for when you make your declaration.

To do this, find the andra information, or “other information” section in the declaration, and write down, in either English or Swedish, what information you are waiting for.

You could write, for instance: “I sold an apartment in Florida in 2022 but have yet to receive details of the proceeds and am waiting for my accountants in the US to calculate the capital gains.”

If you do this, you are much less likely to be fined if the Tax Agency later discovers any undeclared gains.

How long do you have to make changes to your tax declaration?

Until the Tax Agency makes a tax decision, normally in June, you can resubmit your tax declaration using the same form on the website you used to declare it the first time, and the agency will use the most up-to-date declaration when calculating your taxes.

Even after it has made a tax decision for an income year, the agency is liberal about any voluntary changes made in future.

Once a declaration has been made, you can still request changes to the final tax decision based on new information or corrections you have made for up to five years.

For the first 12 months after the end of the taxation year (IE, until January 2024), the tax agency will never levy a so-called tax surcharge (skattetilläg), even if one of its officers discovers that someone has failed to declare, or falsely declared, some earnings or income in your return.

After the first 12 months, if you bring undeclared income or falsely claimed tax breaks voluntarily to the tax agency’s attention before the agency discovers it, you are also likely to avoid a surcharge.

What happens if the agency catches you not declaring income or falsely claiming rebates?

If you are caught evading taxes or make a mistake, the penalty is set quite high. You have to pay the tax you should have paid, plus a 40 percent surcharge.

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