The year-end is often a milestone when new regulations take effect, but it is also a time to finalize the year's records. In this article, we outline what employers should consider as the year comes to a close, particularly regarding payroll management and accounting.
Payroll Management Before the Year-End
In the payroll world, the year-end is the time when data and statistics are collected, encompassing both mandatory and voluntary information. For example, it is obligatory to submit certain control data to the Swedish Tax Agency (Skatteverket) and to report salaried employees' wages to Fora.
Your payroll system is a valuable source of data, providing insights such as:
- Number of annual employees
- Total wage amounts
- Sick leave
- Accrued vacation pay and saved vacation days
- Working time reduction
- Overtime banks
- Time statistics for billing rates
- Comparisons with the previous year
If you are a client of Azets, you are welcome to contact your payroll consultant to discuss how our experts can provide data tailored to your needs.
Pensions and Insurance
The income tax return is filed at the end of each fiscal year, which, for most companies, coincides with the year-end. There are several payroll-related aspects to consider when preparing the income tax return.
Special Payroll Tax on Pension Costs
As an employer, you are required to pay a special payroll tax on occupational pension costs (SLP). This tax, currently set at 24.26%, is paid by the employer funding the occupational pension. The obligation to pay SLP may also apply to Swedish companies with foreign branches and foreign companies with a permanent establishment in Sweden.
Remember to include SLP when calculating preliminary tax.
Deduction Rights for Pension Costs
The company’s occupational pension costs may be deductible, provided the pension promise meets specific criteria. For instance, the occupational pension must have been earned during employment, and the pension promise must be secured according to applicable regulations.
According to the general rule, you can deduct pension costs up to 35% of the employee's salary, but the deduction must not exceed 10 income base amounts per year and employee. In some cases, a higher deduction may be allowed, such as in the case of early retirement, a change in retirement age, or if the pension promise is insufficiently secured.
New Year, New Figures: Insurance and Pension Values for 2025
It is important to note the adjustment of income base amounts for the upcoming year, as these influence the values of various insurance and pension amounts. The income base amounts are updated annually to reflect changes in Sweden's cost and income development. For 2025, the following increases apply:
- The price base amount increases to 58,800 SEK
- The increased price base amount becomes 60,000 SEK
- The income base amount rises to 80,600 SEK
These changes will impact your company’s costs for occupational pensions and insurance, as premiums are calculated based on adjusted pensionable salaries.
Accounting Before the Year-End
Have You Withdrawn Sufficient Salary as an Owner of a Closely Held Company in 2024?
Owners of closely held companies may, in certain cases, qualify for dividend taxation at a lower rate. The main criteria include holding at least 4% of the company’s share capital at the start of the fiscal year and withdrawing a minimum salary during the 2024 calendar year.
The minimum salary required is one of the following:
- 6 income base amounts for 2024 (6 × 76,200 SEK = 457,200 SEK) plus 5% of the total salaries paid by the company and its subsidiaries, or
- 9.6 income base amounts (9.6 × 76,200 SEK = SEK 731,520 SEK).
Since the salary must be paid by the year-end, it is now crucial to perform the calculation to ensure eligibility for the lower taxation rate.
Preliminary Income Tax Return
The Swedish Tax Agency (Skatteverket) will soon distribute decisions regarding preliminary F-tax amounts for the upcoming year. If you suspect that the determined preliminary F-tax does not accurately reflect the actual tax on the projected profit (don’t forget payroll tax on pension premiums), now is an excellent time to prepare and submit a preliminary tax return. This allows you to adjust the tax amount to be paid for the next fiscal year.
Azets experts are ready to face the new year and are available to support your company. Whether you are a client of Azets or not, our accounting consultants can assist your business with accounting matters, such as calculating and preparing the preliminary income tax return.
If you are a client of Azets and need support with payroll management before the year-end, feel free to contact your payroll consultant.
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