A separate agreement, referred to as a totalization agreement, prevents American expatriates in Sweden from paying social security contributions to both the US and Swedish governments. Contributions made by expatriates during their stay in Sweden can be credited to both schemes. The country they pay depends on the length of their life in Sweden. These dual requirements have many U.S. emigrants living in Sweden filing two tax returns and also put them at risk of double taxation. In addition to the treaties highlighted, Sweden has concluded tax information exchange agreements and partial tax treaties. Since 1 April 2017, when the Tax Information Exchange Agreement (TIEA) with the United Arab Emirates came into force, Sweden has entered into information exchange agreements with all tax areas around the world. It should also be noted that the amendments to the EU Directive on Administrative Cooperation in the Tax Area have been transposed into Swedish legislation effective 1 January 2017. Foreign tax credits can be used to avoid double taxation.

If you are a U.S. citizen working in Sweden, you are an expatriate who is required to file a U.S. income tax return with the IRS, whether or not you have income from U.S. sources. While the United States imposes taxes on all income of its citizens and permanent residents, below are the specific provisions of the IRS tax code that help protect expatriates from double taxation. The U.S.-Sweden tax agreement was signed in 1994 and an additional protocol covering dividends was added in 2005. The treaty aims to avoid double taxation for Americans living in Sweden and Swedes living in the United States, but it does not prevent U.S. citizens living in Sweden from imposing U.S. taxes.

The U.S.-Sweden tax contract provides for double taxation on income tax, corporate tax and capital gains tax, but a clause known as the Savings Clause in Article 1, Section 4, states that „the United States can tax its citizens as if the convention did not come into force.“ This means that U.S. expats still have to submit U.S. taxes on their global income. In addition, Sweden has bilateral or multilateral social security agreements with the countries listed below. In Sweden, there are other forms of taxation that residents should be aware of. VAT is levied on all goods and services in Sweden, including goods and services available in the EU. The standard rate for Swedish VAT is 25%, with the rate reduced to 12% for food and certain tourism industries and 6% for newspapers and passenger transport. The U.S.-Sweden tax contract also allows the Swedish government to share Swedish tax information from US expats with the IRS, as well as their Swedish bank and investment data and accounts. One aspect of your foreign income tax return that will not change with a move to Sweden is the tax year; Sweden also uses the calendar year for individual tax returns. These returns must be delivered to the Swedish tax authorities by 2 May of the following year. Sweden offers its citizens some of the best social programmes available: general health insurance, unlimited sick days, subsidized childcare and free university education.

However, these luxury goods are not without costs and Sweden`s tax rates are among the highest in the world. In addition to Swedish taxes, Americans living abroad should not forget their obligation to file income tax in the United States or other reporting obligations such as the FBAR.