Sweden Proposes Cuts to Corporate Income Tax and SINK-Tax from 2026

In May 2025, the Swedish Ministry of Finance circulated a number of proposed legislative amendments to Swedish tax law. Among the proposals is a reduction of both the SINK Tax and the Swedish Corporate Income Tax rate to 20%. In this article, we provide a brief overview of what these proposals could entail.

What is the Swedish SINK Tax?

This tax is commonly referred to as SINK tax, although its formal name is Special Income Tax for Non-Residents ("Särskild inkomstskatt för utomlands bosatta"). As the name suggests, this is a tax levied on individuals who are not tax resident in Sweden.

The tax is of a withholding nature, meaning that for income to be subject to the tax, it must have its source in Sweden. As a general rule, the tax applies solely to employment-related income, such as salary, pension income, and similar types of remuneration.

After having long remained at a rate of 20%, the SINK tax was raised in 2018 to 25%, which triggered vocal opposition from Swedish expats living abroad. However, in certain cases, it is possible to relocate to another country and withdraw, for example, pension income without being subject to SINK tax at all, provided the move is to a jurisdiction with a favourable tax treaty with Sweden, and that the relocation is properly planned for from a tax perspective.

Why is a Cut of the SINK Tax Being Proposed?

The background to the proposal remains relatively unclear. However, based on the limited information released by the Ministry of Finance, it is estimated that approximately 90,000 Swedes would be affected by the proposed changes. According to the proposal, the amendment would enter into force on 1 January 2026.

A very brief memorandum has been published by the Ministry, which primarily argues that the recent years' reductions in Swedish income tax rates under the Swedish Income Tax Act create a need—on neutrality grounds—for a corresponding reduction in the SINK tax rate.

The proposal thus represents positive news for the many Swedes abroad who derive Swedish-sourced income.

Swedish Corporate Income Tax Expected to Be Reduced to 20%

In parallel with the proposed SINK tax reduction, the government is also proposing that the Swedish corporate income tax rate be reduced from the current 20.6% to 20%, with effect from 1 January 2026.

The proposal would mean that corporations with financial years commencing after that date would be subject to the new rate.

The rationale behind the proposed reduction is primarily that Sweden’s current corporate tax rate is currently slightly above the average in both the EU and OECD. In this context, the government particularly emphasises the need to improve Sweden’s tax climate, especially in light of the fact that many other countries have implemented or are considering similar reductions. It is also conceivable that tax competition between jurisdictions has become increasingly influential, given that many business operations today can be conducted with little or no dependence on physical location—a trend that became especially evident during the pandemic years.

It remains to be seen whether the proposals will ultimately become real legislative changes. Nonetheless, we at nomadtax view the Swedish government’s stated ambition to ease Sweden’s very high overall tax burden as a step in the right direction. However, it should be noted that the proposed reductions, particularly the reduction of the corporate income tax rate, are of a very marginal, arguably negligible, magnitude.

Do not hesitate to contact us if you would like advice on how any of the proposed changes might affect your situation.