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Developments in the Member States

Part II

Corporate taxation
Taxation of companies follows the classical system, based on the principle of broad tax base with relatively low S
statutory tax rate of 26.3 % (reduced from 28 % in 2009). The same basic rules apply to all businesses regardless
of size and legal status. Capital gains are taxed as regular corporate profit and dividends paid to the shareholders w
are not deductible. Capital losses, generally deductible against profit, can normally be carried forward indefinitely. e
The notion of a tax group does not apply in Sweden. However, the transfers of profits between companies within d
wholly owned domestic groups are allowed, making consolidation of income for tax purposes possible.
VAT and excise duties
The standard VAT rate is 25 % and it applies to some 85 % of the non-export turnover. A reduced rate of 12 %
applies to foodstuffs and to services related to tourism. A reduced rate of 6 % applies to domestic daily and weekly
newspapers and periodicals; domestic transportation of persons and ski-lift services; cinema, circus and concert
admission fees. The purchase and rental of immovable property; medical, dental and social care; education;
banking and other financial services; certain cultural and sporting activities are exempt from VAT. Zero-rated
goods and services include prescription medicines, gold for investment purposes, and a number of financial
services as well as insurance and reinsurance services. From 2012, a 12 % VAT rate will also apply to restaurant
and catering services.

Excise duties, historically an important source of government revenues, in modern times make up a mere 6.1 % of
total tax revenue (together with other consumption taxes) and consist of mostly energy taxes.

Wealth and transaction taxes

The inheritance and gift tax was abolished as of 2005 and the wealth tax in 2007. The stamp duty is levied on the
acquisition of real estate and registration of mortgages: for the former at a standard rate of 1.5 % of the property
value for individuals and, as of 2011, 4.25 % for legal entities; for the latter at 1, 2, or 0.4 % depending on the

Concerning the tax on real estate as of 2008, a municipal fee replaces the central government real estate tax. The
fee is the lower of SEK 6 825 or 0.75 % of the property's assessed value. New built dwellings have a reduced fee for
10 years (with first five years exempted and the next five with the halved fee). Real estate tax for pensioners is
reduced to 4 %.

Social contributions
Social security contributions account for half of the taxes on labour. The employer's contributions are made up of: old-
age pension contribution, survivor's pension contribution, sickness insurance, parental insurance, occupational
injury insurance, unemployment contribution and general payroll contribution, all amounting to 31.42 %.
Employees pay an additional pension insurance premium of 7 % of net employment and business income, which may
be fully credited against their income tax liability and does not apply to the part of income that exceeds SEK 440
622 (€ 48 214).

No premiums are due from individuals who are 65 or older and the employers' contributions are limited to 10.21 %
(old-age pension contribution only). The employers' contributions for persons under 26 years are reduced to
15.49 % (old-age pension contribution and ¼ of the other charges). Self-employed taxpayers must pay their own
social security contributions computed on their net business income at a rate of 28.97 %.

As of July 2010, the total amount of social security contributions for the self-employed between the age of 26 and
65 is reduced, under certain conditions, by 5 % with a fixed maximum reduction. Furthermore, the total of social
security contributions for self-employed individuals between the age of 18 and 25 is reduced to 14.88 %. As from
2007, social security contributions are waived for persons who have been in receipt of unemployment benefits,
sickness benefits, disability pension or social allowance for more than one year. This relief is valid for a period
equal to the length of the person’s unemployment (up to a maximum of five years).

Taxation trends in the European Union 159