Proposed reduction of SINK
The Swedish Government has proposed that SINK, the special income tax for non-residents, be reduced from 25 % to 20 %. SINK applies to individuals who are subject to limited tax liability in Sweden and is levied as a flat-rate tax on income derived from Sweden. The reduction is planned in two steps: to 22.5 % from 1 January 2026 and further to 20 % from 1 January 2027.
What is SINK?
SINK is an abbreviation for special income tax for non-residents. A non-resident, for these purposes, refers to an individual subject to limited tax liability in Sweden. This includes, for example, individuals who come to Sweden to perform work on a temporary basis, as well as Swedish nationals or former residents who have emigrated and are therefore no longer considered tax residents in Sweden, who do not have a habitual abode here, and who do not maintain essential ties to Sweden.
Unlike ordinary Swedish income taxation, which is based on a progressive tax scale and entails an annual obligation to file an income tax return, SINK constitutes a simplified taxation regime. The tax is final when paid and levied as a flat-rate percentage on income derived from Sweden, without the right to claim deductions and without any obligation for the taxpayer to file a Swedish income tax return.
At present, the tax rate is 25 %, a level that has applied since 2018, when the rate was increased from the previous 20 %.
Proposed changes
The Government has proposed that the SINK rate is reduced in two steps:
- as of 1 January 2026, the tax rate will be reduced to 22.5%,
- as of 1 January 2027, the rate will be further reduced to 20%.
Which types of income are subject to SINK
Income considered to be derived from Sweden primarily includes:
- salary and other remuneration for work performed in Sweden,
- Board directors’ fees from Swedish companies,
- pensions paid from Sweden,
- benefits under the Swedish social security system.
Where an item of income is exempt from taxation under the provisions of an applicable tax treaty, such income is likewise exempt from liability to SINK.
Our comments:
Svalner Atlas Advisors view the proposed change positively overall. Lowering the tax rate from 25% to 20% makes Sweden more attractive for individuals living abroad who wish to work here, as well as for companies sending employees to Sweden for temporary projects. However, we are somewhat critical of the decision to implement the change in two steps. Introducing the change gradually makes the process more complicated and reduces the immediate incentive to work in Sweden compared to a one-time reduction.
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