Abstract Aims/hypothesis The risk of complications and medical consequences of type 2 diabetes are well known. Hospital costs have been identified as a key driver of total costs in studies of the economic burden of type 2 diabetes. Less evidence has been generated on the impact of individual diabetic complications on the overall societal burden. The objective of this study was to analyse costs of hospital-based healthcare (inpatient and outpatient care) and work absence related to individual macrovascular and microvascular complications of type 2 diabetes in Sweden in 2016. Methods Data for 2016 were retrieved from a Swedish national retrospective observational database cross-linking individual-level data for 1997–2016. The database contained information from population-based health, social insurance and socioeconomic registers for 392,200 people with type 2 diabetes and matched control participants (5:1). Presence of type 2 diabetes and of diabetes complications were derived using all years, 1997–2016. Costs of hospital-based care and of absence from work due to diabetes complications were estimated for the year 2016. Regression analysis was used for comparison with control participants to attribute absence from work to individual complications, and to account for joint presence of complications. Results Use of hospital care for complications was higher in type 2 diabetes compared with control participants in 2016: 26% vs 12% had ≥1 hospital contact; there were 86,104 vs 24,608 outpatient visits per 100,000 people; and there were 9894 vs 2546 inpatient admissions per 100,000 people (all p < 0.001). The corresponding total costs of hospital-based care for complications were €919 vs €232 per person (p < 0.001), and 74.7% of costs were then directly attributed to diabetes (€687 per person). Regression analyses distributed the costs of days absent from work across diabetes complications per se, basic type 2 diabetes effect and unattributed causes. Diabetes complications amounted to €1317 per person in 2016, accounting for possible complex interactions (25% of total costs of days absent). Key drivers of costs were the macrovascular complications angina pectoris, heart failure and stroke; and the microvascular complications eye diseases, including retinopathy, kidney disease and neuropathy. Early mortality in working ages cost an additional €579 per person and medications used in risk-factor treatment amounted to €418 per person. Conclusions/interpretation The economic burden of complications in type 2 diabetes is substantial. Costs of absence from work in this study were found to be greater than of hospital-based care, highlighting the need for considering treatment consequences in a societal perspective in research and policy. Graphical abstract