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BUDGET

Sweden budget tax cuts: What we know about how much you’ll get

The government will put forward its new budget proposal on September 18th, but as usual many of the changes have been announced in advance. Here are some of the tax breaks.

Sweden budget tax cuts: What we know about how much you'll get
Here's what we know about the budget so far. Photo: Martina Holmberg/TT

The most significant reform is the decision to abolish the austerity tax, introduced in 1995 as a temporary move to consolidate the budget after Sweden's 1990s financial crisis. It was originally intended to be scrapped three years after its introduction, but it stuck around and formed part of the state income tax.

The death of the austerity tax is expected to cost the state around six billion kronor a year (roughly $620 million), and follows the so-called January Agreement which allowed the Social Democrat-Green coalition to form a government with the somewhat reluctant support of the opposition Centre Party and Liberals.

If you are already a high earner, this will bring a lot more money to your coffers. Today, the austerity tax is paid by people on a salary of more than 703,000 kronor a year. According to the finance ministry this means that Sweden's 345,000 highest earners will get a tax cut of on average 17,700 kronor a year.

LONG READ: Does Sweden's tax system really screw the rich?

But high earners are not the only people in line for a tax cut.

Old-age pensioners on a pension of more than 17,000 kronor a month are also set to get a lower tax bill in 2020. This is expected to cost the state 4.3 billion kronor.

PENSION HACKS: How to make the most of your time in Sweden

Pensioners who live on a low income and are entitled to a 'guarantee pension' – a minimum regardless of a person's salary status when they were working – will see their minimum raised by 200 kronor a month.

As The Local has previously reported, residents working in around 80 municipalities in rural and remote parts of Sweden are also set to get a tax cut of around 100 kronor a month in the new budget proposal.

READ ALSO: Are you one of 850,000 rural residents in line for tax break?

A complicated fuel tax change will see the price per litre of petrol effectively increase by around 0.15 kronor at the pump, an adjustment for inflation mitigated by a decision to lower the petrol tax at the same time.

But according to economists there are no clear 'losers' of the budget this year, no major tax hikes expected for any particular groups and no surprises expected when the final budget is presented on Wednesday.

“Households, especially employed workers, have been getting significantly better off over a fairly long period of time with good income growth, raised benefits and lower taxes. Child and multi-child allowances were recently adjusted. There is not much room for reform. From the perspective of private finances I don't think you can expect much more,” Arturo Arques, economist at Swedbank, told Swedish newswire TT.

Vocabulary

austerity tax – (en) värnskatt

guarantee pension – (en) garantipension

budget – (en) budget

tax cut – (en) skattesänkning

child allowance – (ett) barnbidrag

We're aiming to help our readers improve their Swedish by translating vocabulary from some of our news stories. Did you find it useful? Do you have any suggestions? Let us know.

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For members

WORKING IN SWEDEN

CHECKLIST: Here’s what you need to do if you move away from Sweden

What authorities do you need to inform before you leave, are you liable to Swedish tax and how can you access your Swedish pension? Here's a checklist.

CHECKLIST: Here's what you need to do if you move away from Sweden

Tell the relevant authorities if you’re leaving for more than a year

If you’re planning on leaving Sweden for more than a year, you will have to let the authorities know. The main authorities in question are Skatteverket (the Tax Agency) and Försäkringskassan (the Social Insurance Agency).

Försäkringskassan

You have to tell Försäkringskassan when you leave so they can assess whether or not you still qualify for Swedish social insurance. As a general rule, you aren’t eligible for Swedish social insurance if you move away from Sweden, but there are exceptions, such as maternity or paternity benefits if you’re moving to another EU country.

This also applies to any family members who move with you – any over-18’s should send in their own documentation to Försäkingskassan about their move abroad. If you’re moving abroad with anyone under 18, you can include them in your own report to Försäkringskassan.

If both legal guardians are moving abroad together, both need to include any children in their application. If one legal guardian is moving abroad and the other is staying in Sweden, you need the guardian staying in Sweden to co-sign your application. If you are the sole legal guardian of any under-18’s travelling with you, you don’t need any documentation from the other parent.

You can register a move abroad with Försäkringskassan on the Mina sidor service on their website, here (log in with BankID).

Skatteverket

If you are moving abroad for a year or longer, you also need to tell the Tax Agency. This also applies if you were planning on moving abroad for less than a year but ended up staying for longer.

If you move to another Nordic country, you will also need to register your move with that country’s authorities if you will be there for six months or more. You’ll be deregistered from the Swedish population register the same day you become registered in another Nordic country’s register.

This doesn’t mean that you’ll lose your personnummer – you’ll still be able to use it if you ever move back to Sweden – but you will no longer be registered as resident in Sweden.

Similarly to Försäkringskassan, you will also need to report any children you are bringing with you, and both legal guardians must sign the form, whether or not both guardians are moving abroad or not.

In some cases, you may still be liable to pay tax in Sweden even if you live abroad – particularly if you are a Swedish citizen or have lived in Sweden for at least ten years. This could be due to owning or renting out property in Sweden, having family in Sweden, or owning a business in Sweden.

You can tell the tax agency of your plans to move abroad here.

Contact your a-kassa, if relevant

If you are member of a Swedish a-kassa (unemployment insurance), make sure you tell them that you’re leaving the country. As a general rule, you have unemployment insurance in the country you work in, so you will most likely have to cancel your a-kassa subscription.

If you are moving to another country with the a-kassa system, such as Denmark or Finland, it may pay to wait until you have joined a new a-kassa in that country before you cancel your membership in Sweden.

This is due to the fact, in some countries, you only qualify for benefits once you fulfil a membership and employment requirement. In Sweden and Denmark, you must have been a member for 12 months before you qualify. In Finland, the membership requirement is 26 weeks.

If you qualify for a-kassa in Sweden before you leave the country, you may be able to transfer your a-kassa membership period over to your new a-kassa abroad and qualify there straight away, but this usually only applies if your period of a-kassa membership is unbroken.

Check what applies in your new country before you cancel your membership in Sweden – your a-kassa should be able to help you with this.

Contact your union, if relevant

Similarly, if you are a member of a Swedish union or fackförbund, let them know you’re moving abroad.

If you’re moving to another Nordic country, they might be able to point you in the direction of the relevant union in that country, if you want to remain a member of a union in your new country.

If you’re moving to another EU country, you may be able to remain a member of your Swedish union as a foreign worker with the status utlandsvistelse.

If you chose to do this, you will usually pay a lower monthly fee than you do in Sweden, and they can still provide assistance with work related issues – although it may make more sense to join a local union in your field with more knowledge of the labout market.

If you don’t want to be a member of a union in your new country and don’t want to be a member of a Swedish union, you should contact your  union and ask them to cancel your membership.

Collect relevant documents regarding your Swedish pension

If you have worked in Sweden and paid tax for any length of time, you will have paid in to a Swedish pension. You retain this pension wherever you move, but you must apply for it yourself.

To do so, you will need to give details of when you lived and worked in Sweden, as well as providing copies of work contracts, if you have them. If you have these documents before you leave Sweden, make copies so that you can provide them when asked.

If you move to the EU/EES or Switzerland, you may also have the right to other, non-work based pensions, such as guarantee pension for low- or no-income earners, or the income pension complement (inkomstpensionstillägg).

Currently, you can receive your Swedish pension once you turn 62 – although there is a proposal in parliament due to raise pension age to 63 for those born after 1961 from 2023, so this may change.

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