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Sweden to cut small business taxes to promote start-up culture
September 5, 2017 / 10:56 AM / 3 months ago

Sweden to cut small business taxes to promote start-up culture

STOCKHOLM, Sept 5 (Reuters) - Sweden said it will cut taxes for small companies hiring their first employees and on options payments, as it looks to boost entrepreneurship and hit its target of the lowest unemployment in Europe by 2020.

Sweden has a strong start-up culture that has produced tech innovators such as music streaming site Spotify and video games developer Mojang, but some companies have complained about struggling to attract talent.

“Small, newly founded companies can find it hard to offer competitive salaries, but will be able to offer their employees tax-advantaged personal options,” Finance Minister Magdalena Andersson said in a statement on Tuesday.

“We want to make it possible for these companies to stay and grow in Sweden.”

Payroll taxes for small companies will also be cut.

The tax measures will be included in the autumn budget on Sept. 20 and come into effect on Jan. 1 next year.

In 2016, the founders of Spotify, which has around 3,000 employees, said they would have to focus its expansion outside Sweden unless the centre-left government made hiring easier by changing rules on personal options and doing something about housing shortages in Stockholm and Gothenburg.

They also called for a focus on computer programming in Swedish schools.

Under the new tax cuts companies with up to 50 employees will be able to offer tax-advantaged options.

The measures will cost around 2 billion Swedish crowns ($250 million) in 2018.

The government said last month that it had room for 40 billion crowns in extra spending in the budget.

While Sweden has outperformed much of Europe and enjoyed years of strong growth, its unemployment rate, at 6.6 percent in July, is higher than countries like Germany and Britain. ($1 = 7.9692 Swedish crowns) (Reporting by Simon Johnson; Editing by Susan Fenton)

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