In Sweden, important social functions such as school, healthcare, care and infrastructure are financed by the tax system.
According to Tax Agency “society is based on everyone participating and paying, and when not everyone agrees, there is less money for these functions”. Therefore, all work is taxable in Sweden. If you are employed, it is the employer who deducts the tax from your salary and pays it to the Tax Agency.
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Tax on the pension? That’s how it works
But how does tax on pensions work?
In Sweden, pensioners also pay tax on pension payments. And the question of whether the country’s elderly should be taxed has long been controversial. Many believe that the elderly after a long working life should not have to be taxed more than they already have, others believe that the tax system applies to everyone in order for the functions of society to continue to function.
In cases where you choose to withdraw the entire public pension, a tax deduction is made according to the tax table that applies to the municipality you are registered in. If you also withdraw an occupational pension, only 30 percent is deducted from your occupational pension payments.
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Pensioner? You must be responsible for that yourself
But the fact is, unlike how it works as an employee, that as a pensioner you have a substantial portion of your own responsibility.
If you have a high payment of the occupational pension, another private pension that is paid out every month or live in a municipality with a high tax rate, you should pay attention to how low or high the tax deduction will be. The risk is that you pay too little and get a tax hit on your income tax return.
Namely, you yourself are responsible for making sure that enough tax is deducted from your total income. And the more pension payers you have, the greater the risk that the total tax deduction will be too low.
“You yourself are responsible for ensuring that enough tax is deducted from your total income. There is no coordination between your different payers and therefore you yourself need to look at the tax deductions made by different payers and also look at whether sufficient tax deductions are made”, writes The Pensions Authority on its website.
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