Deduction of costs in sole trader businesses
All costs necessary to run the business are deductible. This means that you can deduct all costs related to the business you are running. Private expenses for you, your family or other close relatives may never be deducted.
Deductions for businesses
The Swedish Tax Agency has compiled information on its website about what you can deduct in your business and the amounts and percentages that apply. Among other things, you can consult a deduction encyclopaedia for sole trader businesses.
Deduction encyclopaedia for sole traders (in Swedish)
See amounts and percentages at the Swedish Tax Agency (in Swedish)
Deduction for costs incurred before business start-up
As a sole trader, you can deduct certain costs you incurred the same year and the year before you started your business. The deduction applies to costs that would have been deductible if they had been incurred after the start of the business. For example, it may apply to consumables and supplies worth less than half a price base amount.
If you purchased goods or services before you started your business, you may be able to deduct VAT in some cases. The requirement is that you purchased the goods or services with the intention of using them exclusively in your economic activity (not for private use). You may not deduct VAT if you purchased the goods or services with the intention of using them privately, but later use them in your business.
More information about costs is available at the Swedish Tax Agency (in Swedish)
Some costs are not deductible
Some costs are not deductible, even though they are part of the business activity. Examples include:
- personal living expenses
- fines
- income taxes
- late tax payment charges
- penalties
- tax surcharges and late fees
- fees under the Work Environment Act and Working Hours Act
- damages under the Co-Determination in the Workplace Act (MBL)
- membership fees
- meal costs in connection with business entertainment
- costs of setting up and registering the company.
Machinery and other equipment
As a general rule, you should not deduct expenses for machinery and other equipment directly. You should instead allocate and deduct the expenses over several years. This is called depreciation. There are two different methods of depreciation: depreciation as recorded in the books and residual value depreciation.
Expenses may be deducted immediately if they have an economic life of three years or less or if the value is less than half a price base amount.
More information on deductions for depreciation is available at the Swedish Tax Agency (in Swedish)
Expenditure on premises
The deductions you are allowed to make depend on whether you have premises in your own business property, rent premises or have an office in your private home. The rules are different for different forms of business.
More information on deductions for premises are available at the Swedish Tax Agency (in Swedish)