Tax regulation mechanism I (Tax Reduction for Household Works)

● Act 2009:194
● Act 1999:1229

There is income tax reduction available for installation or renovation works in apartments and single-family houses. Eligible RES-related measures are the installation of some RES devices and the replacement of an existing, fossils-based heating system with renewable ones.
The Act 2009:194 determines the legal framework for tax reductions. It builds on the Swedish Income Tax Act (Act 1999:1229), which sets out the terminology and general conditions for all income tax matters, including tax reductions.

The reduction can cover up to 30% of labour costs. The maximum tax reduction is SEK 50,000/year (approx. EUR 4.940). (Arts 7 and 17, Act 2009:194).
Only labour costs are deductible; costs of materials, administrative costs and other expenses are not.

Owners (natural persons) of apartments and single-family houses who reside in their property.

Plant operators can claim the tax reduction in one of the following two ways:
● Regular tax allowance: the claimant makes an electronic request for the allowance to the Tax Authority by 31 January of the following tax year in which the work was paid for. The Tax Authority shall decide whether or not to grant the tax reduction. (arts 8 and 11, Act 2009:194).
● Preliminary tax credit: The person commissioning the installation works applies for the pre-payment of the tax credit to the Tax Authority. The authority then pays the credit. If afterwards the tax authority decides that the preliminary payment was too high, the recipient of the credit must pay back the surplus amount. (Art 17, Act 2009:194)
In both cases, the installation must have been completed and the labour costs must have been paid prior to the application for the tax allowance or credit (Art 8, Act 2009:194).

The Swedish Tax Authority