Sweden: Worked Example of Tax on Rent

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Tax Example: Rent

NON-RESIDENT COUPLE (RENTAL INCOME CONSIDERED AS BUSINESS INCOME):
Non-resident couple's joint monthly rental income1		€1,500	€6,000	€12,000
Annual Rental Income		18,000	72,000	144,000
Less Costs2		(5,628)	(7,634)	(11,696)
Less Depreciation Expense3		(2,892)	(17,280)	(38,880)
Less Special Employer’s Contribution Tax		(2,300)	(11, 422)	(22,664)
= Taxable Income		€7,180	€35,664	€70,760
Income Tax Rates4
Up to SEK328,800	25%	1,796	8,916	17,690
SEK328,800 – SEK495,000	20%	–	–	–
Over SEK495,000	25%	–	–	–
Annual Income Tax Due		€2,844	€8,916	€17,690
Other Taxes
Special Employer’s Contribution Tax5		2,300	11,422	22,664
Annual Income Tax Due		€4,096	€20,338	€40,354
Tax Due as % of Gross Income		22.76%	28.24%	28.02%
Thanks to:

DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on August 13, 2008.

Notes

¹ The property is jointly owned by husband and wife, but then taxed separately (50% upon each partner). Exchange rate used: € 1 = SEK9.20.

² Estimated values. Actually incurred annual costs such as real property tax, insurance, maintenance, water, electricity, some less extensive repairs of the property and realtor agency fees are all deductible.

³ Estimated values. Annual depreciation rate for buildings is 2%. When selling the property, depreciation is brought back through reverse write-down method.

⁴ Foreign residents’ business income is taxed at progressive rates. (However, although business income is generally taxed at progressive rates, sole proprietors may convert a portion of the business income as capital income, which will be taxed at a flat rate of 30%. See previous table.)

⁵ Taxpayers receiving business income is liable to pay the special employer’s contribution tax (special salary tax) levied at 24.26% of the taxable income. This cost is deductible when computing the taxpayer’s income tax liability.

NON-RESIDENT COUPLE (RENTAL INCOME CONSIDERED AS CAPITAL INCOME):
Non-resident couple's joint monthly rental income1		€1,500	€6,000	€12,000
Annual Rental Income		18,000	72,000	144,000
Less Costs2		(5,628)	(7,634)	(11,696)
Less Depreciation Expense3		(2,892)	(17,280)	(38,880)
= Taxable Income		€9,480	€47,086	€93,424
Income Tax Rates4
Flat rate	30%	2,844	14,126	28,028
Annual Income Tax Due		€2,844	€14,126	€28,028
Tax Due as % of Gross Income		15.80%	19.61%	19.46%
Thanks to:

DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on August 13, 2008.

Notes

¹ The property is jointly owned by husband and wife, but then taxed separately (50% upon each partner). Exchange rate used: € 1 = SEK9.20.

² Estimated values. Actually incurred annual costs such as real property tax, insurance, maintenance, water, electricity, some less extensive repairs of the property and realtor agency fees are all deductible.

³ Estimated values. Annual depreciation rate for buildings is 2%. When selling the property, depreciation is reversed and taxed as business income. Acquisition costs are deductible when computing for capital gains tax liability.

⁴ Although business income is generally taxed at progressive rates, sole proprietors may convert a portion of the business income as capital income, which will be taxed at a flat rate of 30%. The conversion amount is a quota of the equity of the business. These rules are applied for the couple in this case.

NON-RESIDENT COUPLE (THROUGH A LOCAL CORPORATION):
Non-resident couple's joint monthly rental income1		€1,500	€6,000	€12,000
Annual Rental Income		18,000	72,000	144,000
Less Costs2		(5,628)	(7,634)	(11,695)
Less Depreciation Expense3		(2,893)	(17,280)	(38,880)
= Taxable Income		€9,479	€47,086	€93,425
Income Tax Rates4
Flat Rate	28%	2,654	13,184	26,159
Annual Income Tax Due5		€2,654	€13,184	€26,159
Tax Due as % of Gross Income		14.74%	18.31%	18.16%
Thanks to:

DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on August 13, 2008.

Notes

¹ The property is jointly owned by husband and wife through a local corporation. Exchange rate used: € 1 = SEK9.20.

² Estimated values. Actually incurred annual costs such as real property tax, insurance, maintenance, water, electricity, some less extensive repairs of the property and realtor agency fees are all deductible.

³ Estimated values. Annual depreciation rate for buildings is 2%. In computation of capital gains tax liability when selling the property, the total depreciation amount is brought back through reverse write-down.

⁴ Corporate income is taxed at a flat rate of 28%.

⁵ Dividends (but not capital gains) on the shares to the owners may be liable to Swedish taxation.

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