Sweden: Budget Bill for 2014 – details

October 2, 2013

As previously reported, the Government presented the Budget Bill for 2014 (Prop. 2013/14:1) to the Parliament on 18 September 2013. It outlines the long-term economic strategy, proposes measures to increase demand and employment and gives priority to initiatives that strengthen household finances.

The main tax amendments, which, if adopted, apply from 1 January 2014, are summarized below.

Corporate taxation

  • Amending the rules on taxation of closely held companies. Currently, part of the dividends from closely held companies may be taxed as employment income in the hands of a shareholder under certain conditions. In calculating the amount taxed as employment income, the shareholder may add a salary-based amount. The Budget Bill entails that the amount may be added only if the shareholder:
    • Owns at least 4% of the capital of the company
    • Has taken out salary during the preceding year equal to a minimum of 9.6 times (currently, 10 times) the basic amount

Furthermore, the amount would be subject to an annual maximum equal to 50 times the shareholder’s salary.

  • Increasing the allowance paid to employers accepting trainees from SEK17,500 to SEK47,500 per trainee per year
  • Reducing social security contributions paid by the employer for employees engaged in research and development

Individual taxation

  • Increasing the lower bracket for national income tax by SEK15,100 for individuals
  • Reducing the income tax burden for individuals over the age of 65 years
  • Increasing the employment income credit
  • Reducing the social security contributions for individuals under the age of 23 years to 10.21%. The current reduction of social security contributions applicable for individuals under the age of 26 years would be abolished. The reduction would, however, remain effective for individuals who have reached 23 years but not 25 years of age by the beginning of the income year
  • Increasing the special housing allowance for families with children. The allowance would be increased by:
    • SEK200 to SEK1,500 per month for one child
    • SEK250 to SEK2,000 per month for two children
    • SEK300 to SEK2,650 per month for three or more children

Other taxes

  • Extending the temporary reduction of the taxable value of certain green cars by three years (i.e., until the end of 2016)
  • Introducing a tax reduction for micro producers of electricity from renewable sources during 2014
  • Extending the temporary reduction of excise duty on energy products partly produced from biomass

Adopting the bill

The Parliament will take a decision on the Budget Bill in two phases.

The first decision concerns the general outline and the amounts for 2014, as well as the tax measures.

The second decision is on the allocation of the budget between the 27 different public sectors and how the money is divided within each sector.

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