Wage tax on a rapidly changing Swedish financial sector

The financial crisis has triggered a renewed interest in the taxation of the financial sector. In Sweden, it has led to the establishment of a government committee that is to review possible remedies. Specifically, the mandate refers to the Danish wage tax as a possible inspiration for Sweden. On this background, Svenska Bankföreningen (Swedish Bankers’ Association) has asked Copenhagen Economics to review the consequence of putting in place a tax on gross wages in the financial sector.

In this report, we look into possible new taxation systems for the Swedish banking sector. The first best solution is to introduce some version of (at least close to) a full VAT system for financial services. Other solutions has been addressed, especially a possible wage tax on the financial sector. However, there is a substantial difference between a VAT on financial services supplied to customers residing in Sweden – the real VAT solution – and a wage tax on financial production in Sweden:

The study is commissioned by Svenska Bankforeningen