Small business owners will pay less tax when the rules are simplified. A new proposal has been submitted to the government.
The complex tax rules for one-person companies have been revised several times over the years. According to a new proposal, the rules will now be simplified and improved for business owners.
According to investigator Linda Haggren, the proposals would mean a reduced administrative burden. It would also mean lower taxes for business owners.
Totaling around 400,000 entrepreneurs, according to the investigator, around 80% of them will benefit.
The proposal would result in a reduction of the state's tax revenues by 420 million kronor annually.
The background to the entire regulatory system is to prevent small business owners from taking out wages as capital distributions and thus paying lower taxes. Income from work/salary has a higher tax rate.
The so-called 3:12 rules have been criticized in earlier evaluations from independent researchers for being tax-advantageous. Lawyers and consultants, to mention a few, have been able to take out wages at a lower tax rate than ordinary wage earners with the help of the rules.
The Social Democrats have no sharp proposals to increase taxes for one-person company owners.
Parts/facts from the committee's proposal:
The threshold where the profit/take-home pay is taxed at a lower tax rate is increased by 15%.
Eight out of ten entrepreneurs will benefit from the proposal. Primarily, it is men with higher incomes who are affected.
Half of all one-person companies have no employees.
Tax revenues for the state will decline by one billion kronor in the first year and then 420 million kronor annually.
Source: Government
In Sweden, we have two different tax rates, one for income from work and one for income from capital. This opens up the possibility for those who have the opportunity, capital owners, to have their income taxed as capital instead of work/salary. Salary income is taxed progressively, that is, higher the larger the income, up to 60%. Capital is taxed at a normal rate of 30%.
The so-called 3:12 rules originated from the beginning to prevent owners of one-person companies from shifting too much of their salary income (with higher tax) to capital income (with lower tax). From 2006 and onwards, these rules have been changed several times, which has made it more tax-advantageous to take out money from the company as a capital distribution, with 3:12 rules at a tax rate of 20% (including company tax, the actual tax rate is around 35%).
The 3:12 rules, which are complex in nature, specify how much of the work income can be taken out at the lower tax rate.
