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The Local _ Finance _ Taxation in Sweden if coming from UK to live

Posted by: barrytyler80 26.Apr.2019, 11:17 AM

So I am moving to Sweden in June/July this year. Will be resident for about three years.

I will keep a UK property that I let out. I am aware that UK HMRC will still want me to declare that income to them. But I hear Sweden will obviously want to know also.

Firstly, will Sweden tax me if I am resident there for less than 183 days this year. I hear that even if you are slightly under, they can still tax you if you are playing the numbers game. I might come back to UK for a few weeks in October which will bring me below the 183 so will I be good then for paying no tax in my first year in Sweden?

Also, in subsequent years, I know I get a credit for whatever I pay in tax in UK... but I get a tax allowance in UK. Does that go out the window when I pay tax in Sweden and the tax I ultimately pay will be equivalent to the tax owed in Sweden along with their own allowance. So in effect I won't really benefit from the UK tax allowance as it will be wiped out with the extra tax then paid in Sweden.

Finally, if I am paying a service charge for my place in UK, and this is tax deductable in UK...is the service charge tax deductable in Sweden as I hear it isn't? It seems to me that doing a tax return in UK and including tax deductables seems a bit pointless as will end up just paying the extra to Sweden tax office.

If anyone can help or point me in the righ direction then that would be great.

Posted by: yet another brit 26.Apr.2019, 05:07 PM

There is some stuff on the tax agency site about having foreign property whilst tax liable in Sweden.

https://www.skatteverket.se/download/18.3aa8c78a1466c584587b6d/1402477624919/39815.pdf

If you are tax liable in Sweden, then a property abroad is treated exactly as if it was in Sweden.

Which means (as a first approximation, and as a private person) - you can deduct 40k SEK from the rent you received, and then pay CGT on the remaining profit. Exactly as if you rented out a property that you own in Sweden.

You might want to consider holding the property via a corporate vehicle, which might well reduce the liability as you can be more creative about deductions. At a cost of extreme complexity.

Another point to watch out for is that selling a property in the UK whilst tax resident/liable in Sweden will trigger CGT, even if it is your primary residence, ie unlike the UK.

Posted by: Essingen55 26.Apr.2019, 05:44 PM

Up to about two months ago,I used to think that this was a correct statement.

QUOTE
If you are tax liable in Sweden, then a property abroad is treated exactly as if it was in Sweden.


I am not so sure now, at least for British citizens.

If you look here,

https://www.gov.uk/government/consultations/restricting-non-residents-entitlement-to-the-uk-personal-allowance/restricting-non-residents-entitlement-to-the-uk-personal-allowance

you will see that British citizens abroad are entitled to the UK tax allowance on UK sourced income.

Posted by: yet another brit 27.Apr.2019, 11:33 AM

QUOTE (Essingen55 @ 26.Apr.2019, 05:44 PM) *
Up to about two months ago,I used to think that this was a correct statement.


I am not so sure now, at least for British citizens.

If you look here,

https://www.gov.uk/government/consultations/restricting-non-residents-entitlement-to-the-uk-personal-allowance/restricting-non-residents-entitlement-to-the-uk-personal-allowance

you will see that British citizens abroad are entitled to the UK tax allowance on UK sourced income.


...if you are tax liable in the UK...

Posted by: barrytyler80 27.Apr.2019, 10:04 PM

QUOTE (yet another brit @ 27.Apr.2019, 11:33 AM) *
...if you are tax liable in the UK...


Apparently I read that even though I may get a generous tax allowance in UK, this is negated when paying tax in Sweden on the same income since Sweden do not care about the UK personal allowance. They want to tax it according to their own rules. So the tax allowance perk is wiped out for me when in Sweden in effect!

I think!

Posted by: skogsbo 28.Apr.2019, 07:20 AM

If you are a full time resident here;

You will pay tax in the UK on any profit after deductibles. You'll pay no tax until your total personal income clears the usual UK threshold of around £12k.

In sweden you have a 50000kr/yr allowance per person which is meant to cover all deductibles.

Posted by: Essingen55 28.Apr.2019, 02:16 PM

QUOTE
Apparently I read that even though I may get a generous tax allowance in UK, this is negated when paying tax in Sweden on the same income since Sweden do not care about the UK personal allowance. They want to tax it according to their own rules. So the tax allowance perk is wiped out for me when in Sweden in effect!

I think!


"I think!" is exactly right. Up to recently I would have thought that your long sentence was correct, but I am not longer so certain. I know people that have correctly declared income arising in the UK here in Sweden, stated that it hasn't been taxed in the UK, only to find that it isn't taxed here in Sweden either.

Sometimes I wonder if the tax authorities themselves understand their own rules.

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