Tax When Selling a Car: What Applies When You Sell?
The short version: if you sell your ordinary passenger car as a private individual, you almost never have to pay tax on the sale, whether you make a profit or a loss. That is because a car you have used privately counts as personal property (personligt lösöre), and the rules for that kind of property are completely different from those for, say, shares or a home. There are exceptions, above all if you buy and sell cars on a larger scale or sell through a company, but for the vast majority of car owners the answer is reassuringly simple.
Why there is no tax on a private car sale
A car you have owned and used privately is treated for tax purposes as personal property, the same category as furniture, a bicycle or a sofa. If you sell at a loss, which is the normal case because cars fall in value, there is no profit to tax, and the loss is not deductible either. If, in an exceptional case, you sell at a profit (for example a collector's car that has risen in value), there is a standard deduction that means smaller gains on personal property are in practice rarely taxed. You should double-check exactly what the standard deduction and thresholds are this year with Skatteverket (the Swedish Tax Agency), because the amounts can change.
In practice this means you do not need to declare an entirely ordinary car sale where you sold the car for less than you once paid for it. That is the situation almost everyone who sells their family car, commuter car or first car ends up in.
The exceptions: when tax can actually apply
You sell cars often and for profit
If you repeatedly buy and sell cars to make money, Skatteverket may judge that you are running a business, even without a registered company. Entirely different rules then apply, and the surplus is taxed as income. A one-off sale of your own car is nowhere near this, but anyone who does ten deals a year with the aim of making a profit is in a grey area and should read up properly or ask Skatteverket.
The car is owned or sold by a company
If a limited company or a sole trader's business owns the car, the situation is different. The sale is then handled in the bookkeeping, VAT may apply depending on how the car was purchased, and any surplus or shortfall against the book value affects the result. If the car was bought with VAT deducted (common for vans, for example), you should normally add VAT to the sale. Be careful here to check with your accountant: the VAT rules for cars are among the trickiest there are.
A company car you buy out and sell
If you have had a company car (förmånsbil) and get the chance to buy it out privately at a price below market value, the difference may count as a taxable benefit. The subsequent private sale itself, however, is usually tax-free in the same way as for any private car.
What you should keep, even if there is no tax
- The purchase contract with the price, date and both parties' details: your receipt that you no longer own the car.
- Documentation of the change of ownership (confirmation from Transportstyrelsen) so that tax and insurance responsibility are transferred.
- A record of what you once paid for the car, in case you ever need to show that the deal made a loss.
- For a company sale: the VAT documentation and book value for your accountant.
Note also that vehicle tax (the annual road tax, fordonsskatt) has nothing to do with tax on profits. With a correct change of ownership, your responsibility for vehicle tax ends at the end of the month, and any tax paid for the coming period is refunded automatically by Transportstyrelsen. So it is not something you need to settle with the buyer.
Focus on the price, not the tax
Because a normal private car sale is not taxed, tax is not what you should spend your energy on. Getting as good a price as possible is. An effective way is to let several dealers place competing bids on the car at the same time. The bids are free and do not commit you to anything, but they give you a clear market value to work from, and the money you receive is yours to keep, with no deduction for profit tax.
Frequently asked questions
Do I have to pay tax when I sell my car privately?
In practice almost never. A privately owned car counts as personal property, and since cars are normally sold at a loss, there is no profit to tax. Exceptions mainly apply to trading as a business or selling through a company.
Do I need to declare the sale of the car?
You normally do not need to declare an ordinary sale where you received less than you paid. If you have made a real profit, for example on a collector's car, you should check the rules for personal property with Skatteverket.
Do the same rules apply if a company owns the car?
No. The deal is then handled in the bookkeeping and VAT may apply depending on how the car was purchased. Always check with your accountant, as VAT on cars is a complicated area.