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Sweden: Tax relief measures to address coronavirus (COVID-19) issues

Sweden: Tax relief measures to address coronavirus

The Swedish government on 16 March 2020 submitted to the parliament a referral for an amended budget in response to the coronavirus (COVID-19) crisis. The parliament is expected to approve the proposal on 19 March 2020.

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As proposed, there are measures intended to alleviate the situation for Swedish companies, employers, and employees—including provisions to strengthen the liquidity of taxpayers by allowing for the deferral of tax payments and by allowing for temporary lay-offs. The measures could provide certain companies with opportunities to request tax refunds.


Strengthen companies' liquidity through deferral of tax payments

The provision in the Swedish government's proposal would mean that companies could be allowed a deferral for paying the employer's social security contributions, preliminary taxes on salary, and value added tax (VAT) that is reported on a monthly or quarterly basis.

For companies, the extension would apply for three months of tax payments, and could be allowed for up to 12 months. 

  • Companies would have to apply for an extension from the tax agency.
  • Interest (currently at a rate of 1.25% per annum) and a fee of 0.3% per month would be levied on the deferred amount of tax during the extension period.
  • A grant to extend tax payments would only be provided to companies that do not ”mismanage” their financial situation.
  • An extension would not be available for companies with ”substantial tax debts.”

It is proposed that the new rules would be effective 7 April 2020, but could be applied retroactively from 1 January 2020. Accordingly, companies that have made tax payments for January 2020 to March 2020 could request the Swedish tax agency to refund these amounts of tax.


Temporary lay-offs

The temporary lay-off provisions would be intended to save employment positions in Sweden. Under the measure, employees would—during the temporary lay-offs—reduce their work hours but still receive more than 90% of the salary, with a cap of up to SEK 44,000 per month. The government would assume 75% of the cost for the employee reduced work hours. The proposed measure would be effective 7 April 2020, but would be applied for the employment period from 16 March 2020 to 31 December 2020.

The Swedish Agency for Economic and Regional Growth (Tillväxtverket) would  be the government body responsible for processing and determining eligible temporary lay-offs. To receive support, an application would need to be submitted to this agency, and if rejected by the agency, an appeal could be filed with the administrative court.

Read a March 2020 report (Swedish) and English prepared by the KPMG member firm in Sweden

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