How to Avoid Tax Trouble as an American Living in Sweden (2026)

An increasing number of Americans are choosing to move to Sweden for family, work, or lifestyle reasons. While Sweden offers a high quality of life, relocating as a U.S. citizen involves complex tax consequences that require careful planning.

Taxes are complicated even in a domestic setting, and the challenges increase when moving abroad. For Americans, the situation is particularly complex due to the United States’ system of citizen based taxation, under which U.S. citizens and green card holders remain subject to U.S. tax obligations regardless of where they live. As a result, Americans living in Sweden may face tax claims from both Sweden and the United States. This guide explains when tax residency in Sweden arises, how Swedish and U.S. tax rules interact, how different types of income are taxed, and how double taxation can be mitigated. For a more general guide on Swedish taxes for expats, please see this article.

How Do Americans Become Tax Resident in Sweden?

Under Swedish tax law, an American individual can become tax resident in Sweden under several different bases. Tax residency may begin immediately upon arrival or at a later point, depending on the circumstances.

Sweden does not apply a fixed numerical day threshold to determine tax residency. Instead, residency is assessed based on principles developed through case law from the Swedish Supreme Administrative Court ("HFD"), with particular focus on the nature, regularity, and extent of the individual’s stay in Sweden.

Permanent Residence in Sweden

As a general rule, an American is considered permanently resident in Sweden if they live in Sweden for at least one year. If the individual resides partly in Sweden and partly in the United States, a more detailed assessment is required to determine where the individual has their strongest ties.

Habitual Stay in Sweden

This is the most common way a newly arrived American becomes tax resident in Sweden.

In general, staying in Sweden for six consecutive months fulfills this condition. Time spent outside Sweden, for example in the United States, may still count toward the residency assessment if the time abroad is shorter than the preceding or following stay in Sweden.

In some cases, tax residency may be established with significantly less time spent in Sweden. Periods of approximately 80 days have been sufficient in certain situations. Because this assessment relies heavily on case law, professional advice is often necessary. Importantly, Swedish tax residency can arise and cease at any point during a tax year.

Situations Where Tax Residency May Begin Later

There are situations where Swedish tax residency does not commence on the first day of arrival. One example is when a person regularly commutes between Sweden and another country.

In such cases, an assessment must be made based on the frequency and pattern of stays in Sweden rather than simply counting days.

Essential Ties to Sweden

An individual who previously lived in Sweden and later left the country may still be considered tax resident if they retain so called essential ties to Sweden.

This basis is primarily relevant for Americans who have lived in Sweden previously. The concept of essential ties is developed through Swedish case law and represents a complex area of Swedish tax law. Certain connections, such as Swedish citizenship, tend to carry limited weight, while others, such as close family remaining in Sweden, or maintaining a permanent home in Sweden, carry significant importance.

What Income Is Subject to Swedish Tax?

Sweden applies residency based taxation. This means that Swedish tax residents are subject to Swedish tax on their worldwide income.

For an American tax resident in Sweden, this generally includes:

• Salary and other employment income, including income from U.S. employers

• Dividends from American corporations

• Capital gains from U.S. brokerage accounts

• Self employed income

• Income from American LLCs and partnerships

• Pension income, including 401(k) plans and Social Security
  

This global tax claim creates a significant risk of double taxation, which must be managed through tax treaties and domestic relief mechanisms.

Swedish Tax Rates Applicable to Americans

Sweden applies different tax rates depending on the type of income.

Employment Income

For the 2026 tax year, Sweden applies a standard allowance of approximately USD 1,500 to USD 3,500, depending on age and income.

On the exceeding income, the following tax rates apply for the 2026 tax year.

Income (SEK)	Municipal Tax Rate	State Tax Rate	Total Tax Rate
0 SEK - 660 400 SEK	29-35% (Depending on Municipality of Residency)	0%	29-35%
>660 400 SEK	29-35% (Depending on Municipality of Residency)	20%	49-55%

Capital Income

For capital income, such as dividends, capital gains distributions, interests, capital gains and similar, the following rates apply:

Income Type	Tax Rate
Dividends and Capital Gains from/on listed securities	30%
Dividends and Capital Gains from/on non-listed securities	25%
Dividends and Capital Gains from/on "closely held companies"	20-55%

Closely Held Companies and the 3:12 Rules

A special tax framework applies to shareholders in closely held companies under the Swedish 3:12 rules. In these cases, dividends may be taxed as employment income at rates between 29 and 55 percent, although a 20 percent rate applies up to a certain threshold.

This regime also applies to ownership in foreign entities, including American LLCs and corporations. The rules were amended with effect from 1 January 2026, resulting in lower taxation for some company owners who are Swedish tax residents.

Other Taxes

In addition to income and capital taxes, smaller charges apply, such as the burial fee and public service fee, amounting to a few thousand Swedish kronor per year.

Are There Any Tax Incentive Rules Available for Americans Coming to Sweden?

For several years, Sweden has offered a special tax regime for foreign experts, specialists, and key personnel. In short, individuals who have not been resident in Sweden during the five years preceding their arrival may, if certain conditions are met, have 25 percent of their employment income exempt from Swedish tax.

Given Sweden’s high tax rates on earned income, the expert tax regime can result in a substantial reduction of the overall tax burden for Americans moving to Sweden.

An application for expert tax must be submitted within three months from the date the individual begins working in Sweden. If the deadline is missed, eligibility for the regime is permanently lost.

Tax-Free Reimbursements Under the Expert Tax Regime

Americans covered by Sweden’s expert tax may also receive certain tax-free reimbursements from their employer, including:

• Costs related to moving to and from Sweden

• Two annual trips to the United States for the employee and family members

• School fees for children
  

We regularly assist American clients with expert tax applications and related planning.

Tax Treatment of American LLCs, Partnerships, and Retirement Accounts

American owners of LLCs treated as tax transparent entities, such as S corporations, are generally taxed in Sweden on their share of the entity’s income at rates between 30 and 55 percent. The same treatment applies to American partnerships.

Following a landmark ruling by the Swedish Supreme Administrative Court, Sweden applies a complex and often unfavorable tax treatment to U.S. IRAs. This entails a high risk of double taxation and particularly complicated reporting in the Swedish tax return, with potential penalties and surcharges in cases of non compliance.

Social Security Contributions in Sweden

Sweden’s social security contributions are among the highest in the world.

For employees, social security contributions amount to 31.42 percent of gross salary and are typically paid entirely by the employer. For sole proprietors, social security contributions are generally 28.97 percent and deductible for tax purposes, resulting in an effective rate of approximately 25 percent.

There is a social security convention in force between Sweden and the United States that governs the pension related parts of social security contributions and benefits. In many cases, it is crucial to apply for a Certificate of Coverage from the Swedish Social Insurance Agency, Försäkringskassan, in order to ensure that social security contributions are only paid in one country.

Are Americans Eligible for Swedish Social Security Benefits?

Under Swedish law, there is a distinction between residency based benefits and work based benefits. Eligibility for residency based benefits generally requires that the individual is considered resident in Sweden.

In some cases, residency status may be uncertain, particularly where an individual spends substantial time both in Sweden and in the United States. This can affect access to certain Swedish social security benefits.

To qualify for free healthcare in Sweden, individuals typically need to be registered as resident in Sweden and hold a Swedish personal identification number. In certain situations, eligibility for Swedish healthcare may also arise due to EU regulations, such as Regulation 883/2004 on the coordination of social security systems.

Do Americans in Sweden Have to File a Swedish Tax Return?

Yes. If an American becomes tax resident in Sweden, a Swedish income tax return must be filed from the year tax residency begins.

The Swedish tax return must be filed in Swedish and may be submitted digitally or on paper. The deadline for the 2025 tax year is 4 May 2026. In many cases, professional assistance is advisable due to the complexity of reporting foreign income.

How Do Swedish and U.S. Tax Returns Interact?

As long as an individual is a U.S. citizen or green card holder, an annual U.S. income tax return must be filed.

Sweden, on the other hand, requires tax filing based on tax residency. As a result, Americans living in Sweden are often required to file tax returns in both countries, each covering global income.

All U.S. sourced income must be classified under Swedish tax law for purposes of the Swedish tax return. Likewise, Swedish sourced income and assets must be reported in the U.S. tax return. In addition, U.S. reporting obligations such as FBAR filings must be complied with.

Due to the United States’ system of citizen based taxation, some Americans ultimately choose to renounce their U.S. citizenship in order to eliminate ongoing U.S. tax filing and reporting obligations.

The Swedish American Tax Treaty

Sweden and the United States have been parties to a tax treaty since 1994. The treaty is intended to prevent double taxation and allocate taxing rights between the two countries.

Due to the United States’ system of citizen based taxation, the treaty contains an unusual provision under which the United States is not required to apply the treaty in relation to its own citizens. When the United States taxes income earned by a person resident in Sweden, Sweden is generally required to grant a credit for the U.S. tax paid.

The treaty does not apply to U.S. state taxes. To mitigate double taxation arising from state taxes, Swedish domestic credit rules under Avräkningslagen must instead be applied.

In simplified terms, if an individual is considered resident in the United States under the treaty, Sweden is generally barred from taxing most income except Swedish source income. If the individual is considered resident in Sweden, both countries may tax income, with relief provided through credits and domestic rules.

Avoiding Double Taxation Through Domestic Rules

In many cases, double taxation can be mitigated through domestic tax rules.

Americans living in Sweden may apply the U.S. Foreign Earned Income Exclusion to exclude Swedish employment income up to a certain threshold from U.S. taxation. This exclusion does not apply to passive income such as dividends or interest income, in which case foreign tax credits may instead be available under U.S. and Swedish domestic law.

Americans in Sweden can also sometimes utilize the Swedish Foreign Tax Credit law ("Avräkningslagen"), in order to obtain a foreign tax credit with U.S. taxes paid.

Reporting U.S. Income and Investments in Sweden

U.S. sourced income is generally not pre reported in the Swedish tax return and must therefore be manually included.

This includes:

• Capital gains and dividends from U.S. brokerage accounts

• Distributions from American trusts

• Withdrawals from 401(k) plans and other U.S. retirement accounts

• Employment income from U.S. sources

• Annuity income
  

The reporting process can be complex, as Sweden applies different calculation methods than the United States and does not distinguish between short term and long term capital gains.

Conclusions

Americans living in Sweden are subject to Swedish taxation on their worldwide income once they become tax resident. At the same time, U.S. tax obligations continue to apply due to the United States’ system of citizen based taxation.

The Swedish American tax treaty and domestic relief rules provide mechanisms to reduce double taxation, but the system is complex and requires careful planning. Professional assistance from a Swedish tax lawyer is therefore often advisable.

Contact Us

If you are an American living in Sweden or planning a move and need assistance with taxation or tax compliance, feel free to contact us. We regularly assist U.S. nationals with Swedish tax planning, treaty analysis, and tax return preparation.