Taxes and payrolls: the Swedish labour market
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the Swedish labour market.
Even if the national currency is the Swedish Krona (SEK), the whole article is in EUR to compare easily across countries and exchange rates.
General data about the Swedish labour market
| Minimum wage | Not established |
| Payment basis | Monthly |
| Payment | Must be paid by the 25th of each month |
| Maximum working hours a week | 40h |
| Maximum overtime hours a week | 8h |
| Maximum overtime hours a year | 200h |
| Working hours compensation | For overtime worked on weekdays before 8.00 pm, hours are compensated at the monthly salary divided by 94 for each additional hour of work. For hours worked after 8.00 pm or on weekends, hours are compensated at the monthly salary rate divided by 72 for each additional hour worked. |
Payroll taxes in Sweden
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % | Employee % |
| Health Insurance | 3.55 | |
| Parental Insurance | 2.6 | |
| Retirement Pension | 10.21 | 7 |
| Survivors Pension | 0.6 | |
| Labor Market Fee | 2.65 | |
| Occupational Injury | 0.2 | |
| General Payroll Tax (10.21% total contribution for employees born between 1938-1955 and 2003–2005) | 11.62 | |
| Church Tax (only members of the Church of Sweden) | 1.03 | |
| Total | 31.42 | 7 to 8.03 |
There is also a burial fee (paid by people registered in Sweden on November 1st, the year before the income year) but it varies.
Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries.
| Gross salary | Income tax |
| Up to 47,612.86€ | 0% |
| Over 47,612.86€ | 20% |
Contingencies from self-employees
Self-employees contribution to social security is the same as the one paid by employers. Having said that, the self employed pay only 0.1% as a labor market fee (instead of 2.65) and 3.64% as a health insurance contribution (instead of 3.55). This means that, in total, self-employed contribute with 28.97% and employers with 31.42%.
Example of net salary in Sweden
As a reference, we use the average salary of a software engineer. In Sweden, on average, software engineers earn annually 53,600€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 53,600 | |||
| Health Insurance | 3.55 | 1,902.8 | ||
| Parental Insurance | 2.6 | 1,393.6 | ||
| Retirement Pension | 10.21 | 5,472.56 | 7 | 3,752 |
| Survivors Pension | 0.6 | 321.6 | ||
| Labor Market Fee | 2.65 | 1,420.4 | ||
| Occupational Injury | 0.2 | 107.2 | ||
| General Payroll Tax | 11.62 | 6,228.32 | ||
| Total | 31.42 | 16,841.12 | 7 | 3,752 |
| Income tax | 20 | 447.03 | ||
| Net salary (annually) | 49,400.92 |
The employer contributes 16,841.12€ to social security and the employee 3,752€.
After paying the income tax, the employee has a net salary of 49,400.92€ coming from a gross salary of 53,600€.
Unemployment regulation in Sweden
For employees without a collective agreement, the notice period is dependent on the employee’s serenity as follows:
| Time worked | Notice period |
| Less than 2 years | 1 month |
| From 2 to 4 years | 2 months |
| From 4 to 6 years | 3 months |
| From 6 to 8 years | 4 months |
| From 8 to 10 years | 5 months |
| Over 10 years | 6 months |
Severance is not mandatory in Sweden. The probationary period can be a maximum of six months.
Different kinds of leaves in Sweden
Annual paid leave goes from 25 to 30 days. Once accrued, vacation days can be held for up to five years.
They have 13 public holidays. Public holidays that fall on the weekend are usually lost.
The first day of sickness is unpaid. Paid sick leave from the 2nd to the 14th day is paid by the employer at a rate of 75% to 80%. After that, it is paid by Social Security.
Paid parental leave
Maternity leave consists of 14 weeks: 7 before and 7 after birth. In Sweden, fathers are entitled to 10 days of paid paternity leave.
Parental leave consists of 480 days or a reduction in the working hours for the first 8 years after birth.
Other common Swedish benefits
| Benefit | % of companies with this benefit |
| Professional Development | 15.5 |
| Equal Opportunity Employer | 10.9 |
| Work-Life Balance | 9.5 |
| Diversity | 8.8 |
| Cutting Edge Technology | 7.0 |
How to employ a Swedish worker
Businesses need to be registered for tax and protected the business name by registering it.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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