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Swedish Construction Sector Receives Tax Breaks

by Ulrika Lomas, Tax-News.com, Brussels

11 December 2008

The Swedish government has introduced an enhanced tax deduction for households undertaking repairs to their properties, in light of the severe downturn in the country's construction sector and indications of increased unemployment.

The tax deduction forms part of a wider plan presented by the government on December 5 totalling SEK8.3bn (EUR780m), primarily designed to stem growing unemployment, especially in the construction industry.

“We are streamlining and strengthening labour market policy and improving demand in the construction sector," the government stated.

Included within the plans are more generous tax deductions for those undertaking renovations, conversions and building maintenance (RMI services), within the current tax reduction system for household services

According to a press release distributed by the Swedish government:

  • Natural persons can receive tax reductions for both household services and RMI work, not including extra costs for material.
  • Like the previous RMI services, it is proposed that the tax reduction for RMI should apply in the same way for single-family homes and tenant-owned housing. The work is to be carried out in the home. The tax reduction will be linked to the individual (not to the home/building as in the previous system).
  • The proposal also improves property owners’ opportunities to increase energy efficiency in their properties, which will help Sweden to achieve the European Union objective to increase the efficiency of energy use by 20% by 2020.
  • It is proposed that the level of subsidy be the same as in the current system for household services. This means 50% of the cost, which may not exceed SEK100,000. The tax reduction will therefore be a maximum of SEK50,000 per individual per year.
  • The proposed rules will be applied from December 8, 2008.
  • The proposal is expected to mean an overall increase in employment of almost 7,000 people (around 3,000 in 2009 and around 3,500 in 2010).

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