Areas of Strength

• Sweden regularly measures a comprehensive range of tax gaps, including those for corporate income tax (CIT), personal income tax (PIT), value added tax (VAT) and excise duties. In addition, the results of these efforts inform and shape the risk compliance strategy of Sweden as they help to identify, assess and prioritise key compliance risks. Moreover, Sweden is among the few Member States that regularly publishes their tax gap estimates across the board on the website of the Swedish Tax Agency which promotes transparency for the activities of the agency.
• Sweden overall performs strongly in terms of VAT compliance. It has a VAT compliance gap of 5.3% of the VAT total tax liability (VTTL), well below the EU average of 9.5%. The VAT compliance gap remained stable and was among the lowest in the EU throughout the period between 2019 and 2024.
• Sweden has the lowest tax arrears in the EU at less than 1% of total net tax revenue in 2023. Further, Sweden also performs well in recovering taxes from the requests of other Member States under the EU Tax Recovery Directive: in 2024 Sweden recovered 24% of the tax requests from other Members compared to an EU-average of 4.7% (years 2022-24). In Sweden, tax recovery is entrusted to a specific authority, the Swedish Enforcement Authority (SEA, Kronofogdemyndigheten), that has a wide range of powers to recover unpaid tax debts. This promotes tax recovery efficiency as the same rules and practices for recovery apply to all types of taxes. All public and private creditors are obliged to entrust SEA to enforce/recover their debt within a common framework.
• Sweden makes wide use of the data obtained from the Directive on Administrative Cooperation (DAC) automatic exchange of information. The data obtained under the DAC is used for a wide range of compliance activities like information notifications to encourage taxpayer compliance, and for risk analysis purposes. These activities have facilitated the collection of substantial revenues, thereby contributing to a reduction of the tax gaps. Sweden also undertakes targeted tax gap studies with DAC relevance, e.g. on taxpayer compliance with respect to foreign financial income and crypto assets.

Areas for Improvement

• There has been a lack of a systematic approach in Sweden when evaluating tax expenditures (TE). While Sweden performs regular and detailed reporting of TEs, it has only recently implemented an evaluation of TEs. Most of the assessments so far have been done for CIT purposes. An evaluation of mortgage interest deductibility, as proposed in the country-specific recommendations (CSRs) for Sweden in the European Semester process, would help Sweden to assess its impact on the housing market as well as other domains like tax fairness. A comprehensive and systematic risk assessment programme could help ensure the effectiveness and efficiency of tax expenditures as well as make the tax system simpler.
• Sweden’s Tax Agency could promote the wider use of digital tools like pre-filling for VAT and CIT purposes and promote e-filing by companies. The use of such tools can help promote cooperative compliance from businesses as well as reduce the high CIT compliance burden for small- and medium-sized enterprises in Sweden.

Tax Complexity

Sweden ranks 11^th out of the 27 Member States in the Tax Complexity Index (‘TCI’), where a higher rank corresponds to lower tax complexity. The TCI is based on the Global MNC Tax Complexity Project, a joint research project of Deborah Schanz (LMU Munich) and Caren Sureth-Sloane (Paderborn University). The TCI 2024 places Sweden ^8th among the Member States with regards to Tax Framework Complexity, and 20^th with regards to Tax Code Complexity. This may indicate that whereas the tax processes carried out by the tax authorities are rather efficient (notably in the area of audits, according to the authors), there is room to improve the structure of the tax regulations (particularly in the area of alternative minimum corporate income tax, according to the authors).

The full Commission Staff Working Document of the Mind the Gap Report - Challenges and opportunities for tax compliance and tax expenditure in the EU regarding Sweden can be found here.

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