New Legislation Introduced on the 1st of January 2017

As always a new year brings new legislative changes. To give you a better picture we have compiled the most important of these, to guide you through the ever-changing legal landscape.

Abolishment of Tax Deductible Business Meals
The largest change at the start of 2017 is probably the fact that representation expenses for meals, such as business dinners, will no longer be tax-deductible. Sweden has a long history of restrictive deductions regarding the cost of such meals, which in recent years has been limited to a maximum deduction of SEK 90 per participant and occasion. Due to the difficulty of distinguishing legitimate representation meals from illegitimate the cost deductions are now discontinued entirely from the 1st of January 2017. Value-added tax (VAT) paid on representation meals will, however, continue to be tax deductible to such a part of the price which does not exceed SEK 300 per person. The cost of representation in the form of simpler snacks such as for example fruit, baked goods, sandwiches and coffee (the traditional Swedish “fika”) will continue to be tax deductible as long as the size or cost of the servings it not such that it could reasonably be expected to replace one on the day’s main meals.  The exact cost limits for such representation has not yet been established through case law, but some private accounting firms are preliminarily using SEK 60 per person as a new maximum cost limit for such representation.

Discontinuation of the Equality Bonus
From 2017 and forward the so-called jämnställdhetsbonus (equality bonus), which was given to parents who divided their parental leave equally between themselves, has also been discontinued entirely since it was not deemed to have led to a higher prevalence of such behavior.

Improvements to the Public Health-Care Schemes
Sweden’s free dental care for young people has on the other hand been extended to individuals up to 21 years of age, and the plan is to continue raising this age limit in the coming years until it reaches 23 years of age in 2019. Contraceptive medication will also henceforth be free of charge for women and girls below the age of 21. The already low healthcare fees are also eliminated for individuals over the age of 85. The monthly benefits for students, the elderly, the sick and families with children are also raised.

Raised benefits for Families with Children
A family with three children below the age of 18 will for example now receive a total of SEK 3,880 per month in barnbidrag (child benefit). A Swedish person number is generally needed to take advantage of the Swedish benefits, though some exceptions exist for the citizens of other EU countries.

Lower Tax subsidies for Home Improvement and Household Services
The rules regarding the so-called ROT and RUT deductions, which subsidizes the costs of home renovation and household assistance respectively, has been made more restrictive. For individuals below 65 years of age the maximum subsidy for RUT (household assistance) has been lowered from SEK 50,000 to SEK 25,000. The maximum subsidy for ROT (home renovation etc.) has been lowered from 50% to 30%, though the maximum amount there remains SEK 50,000 per person and year.

Changed Tax Rates
As usual the income tax rate has also been modified for the new year, though the exact result of this varies between Sweden’s various municipalities. The overall trend, however, leans towards slightly raised taxes. The petrol tax has in turn been raised with SEK 0.238 per liter to a total of SEK 6.50 per liter.

Immigration Reform
From the 1st of January 2017 Sweden has also adopted the new EU standard for processing applications for asylum from refugees, which is hoped to make the process more effective and more equivalent to that of other EU member states.

Social Fee Discounts for Sole Traders
To encourage sole proprietors to create new jobs any sole trader who has not had any employees since at least the 1st of January 2016, will receive a 12 months’ tax discount on the social fees for the first employee they hire after the 31st of March 2016. Thanks to the discount the social fees for such an employee will, during their first year of employment, be only 10.21% rather than the usual 31.42%, since only the pension portion of the fees will be payable. The tax discount is only valid for the part of the employee’s gross salary which is below SEK 25,000, and only applies for employments longer than 3 months with at least 20 work hours per week. The program is currently regarded as a temporary measure and is scheduled to be discontinued of the 31st of December 2021.