diff --git a/apps/systemtags/appinfo/info.xml b/apps/systemtags/appinfo/info.xml
index bfc33c6ff661a..e2e84cce1c8f9 100644
--- a/apps/systemtags/appinfo/info.xml
+++ b/apps/systemtags/appinfo/info.xml
@@ -11,7 +11,7 @@
 	<summary>Collaborative tagging functionality which shares tags among people.</summary>
 	<description>Collaborative tagging functionality which shares tags among people. Great for teams.
 	(If you are a provider with a multi-tenancy installation, it is advised to deactivate this app as tags are shared.)</description>
-	<version>1.21.0</version>
+	<version>1.21.1</version>
 	<licence>agpl</licence>
 	<author>Vincent Petry</author>
 	<author>Joas Schilling</author>
diff --git a/apps/systemtags/src/components/SystemTagPicker.vue b/apps/systemtags/src/components/SystemTagPicker.vue
index 86d81fb45a6b4..affbbf473df59 100644
--- a/apps/systemtags/src/components/SystemTagPicker.vue
+++ b/apps/systemtags/src/components/SystemTagPicker.vue
@@ -49,12 +49,13 @@
 
 					<!-- Color picker -->
 					<NcColorPicker :data-cy-systemtags-picker-tag-color="tag.id"
-						:value="`#${tag.color || primaryColor}`"
+						:value="`#${tag.color}`"
 						class="systemtags-picker__tag-color"
 						@update:value="onColorChange(tag, $event)">
 						<NcButton :aria-label="t('systemtags', 'Change tag color')" type="tertiary">
 							<template #icon>
-								<CircleIcon :size="24" />
+								<CircleIcon v-if="tag.color" :size="24" fill-color="var(--color-circle-icon)" />
+								<CircleOutlineIcon v-else :size="24" fill-color="var(--color-circle-icon)" />
 								<PencilIcon />
 							</template>
 						</NcButton>
@@ -138,6 +139,7 @@ import NcNoteCard from '@nextcloud/vue/dist/Components/NcNoteCard.js'
 import NcTextField from '@nextcloud/vue/dist/Components/NcTextField.js'
 import CheckIcon from 'vue-material-design-icons/CheckCircle.vue'
 import CircleIcon from 'vue-material-design-icons/Circle.vue'
+import CircleOutlineIcon from 'vue-material-design-icons/CircleOutline.vue'
 import PencilIcon from 'vue-material-design-icons/Pencil.vue'
 import PlusIcon from 'vue-material-design-icons/Plus.vue'
 import TagIcon from 'vue-material-design-icons/Tag.vue'
@@ -147,9 +149,6 @@ import { getNodeSystemTags, setNodeSystemTags } from '../utils'
 import { elementColor, invertTextColor, isDarkModeEnabled } from '../utils/colorUtils'
 import logger from '../services/logger'
 
-const primaryColor = getComputedStyle(document.body)
-	.getPropertyValue('--color-primary-element')
-	.replace('#', '') || '0069c3'
 const mainBackgroundColor = getComputedStyle(document.body)
 	.getPropertyValue('--color-main-background')
 	.replace('#', '') || (isDarkModeEnabled() ? '000000' : 'ffffff')
@@ -171,6 +170,7 @@ export default defineComponent({
 	components: {
 		CheckIcon,
 		CircleIcon,
+		CircleOutlineIcon,
 		NcButton,
 		NcCheckboxRadioSwitch,
 		// eslint-disable-next-line vue/no-unused-components
@@ -196,7 +196,6 @@ export default defineComponent({
 	setup() {
 		return {
 			emit,
-			primaryColor,
 			Status,
 			t,
 		}
@@ -529,9 +528,20 @@ export default defineComponent({
 		},
 
 		tagListStyle(tag: TagWithId): Record<string, string> {
-			const primaryElement = elementColor(`#${tag.color || primaryColor}`, `#${mainBackgroundColor}`)
+			// No color, no style
+			if (!tag.color) {
+				return {
+					// See inline system tag color
+					'--color-circle-icon': 'var(--color-text-maxcontrast)',
+				}
+			}
+
+			// Make the checkbox color the same as the tag color
+			// as well as the circle icon color picker
+			const primaryElement = elementColor(`#${tag.color}`, `#${mainBackgroundColor}`)
 			const textColor = invertTextColor(primaryElement) ? '#000000' : '#ffffff'
 			return {
+				'--color-circle-icon': 'var(--color-primary-element)',
 				'--color-primary': primaryElement,
 				'--color-primary-text': textColor,
 				'--color-primary-element': primaryElement,
@@ -587,7 +597,6 @@ export default defineComponent({
 
 	.systemtags-picker__tag-color button {
 		margin-inline-start: calc(var(--default-grid-baseline) * 2);
-		color: var(--color-primary-element);
 
 		span.pencil-icon {
 			display: none;
@@ -600,7 +609,8 @@ export default defineComponent({
 			.pencil-icon {
 				display: block;
 			}
-			.circle-icon {
+			.circle-icon,
+			.circle-outline-icon {
 				display: none;
 			}
 		}
diff --git a/apps/systemtags/src/css/fileEntryInlineSystemTags.scss b/apps/systemtags/src/css/fileEntryInlineSystemTags.scss
index 4cf72ed429fb8..d6b6d3a28bdfc 100644
--- a/apps/systemtags/src/css/fileEntryInlineSystemTags.scss
+++ b/apps/systemtags/src/css/fileEntryInlineSystemTags.scss
@@ -22,7 +22,7 @@
 	white-space: nowrap;
 	overflow: hidden;
 	text-overflow: ellipsis;
-	line-height: 22px; // min-size - 2 * 5px padding
+	line-height: 20px; // min-size - 2 * 5px padding - 2 * 1px border
 	text-align: center;
 
 	&--more {
@@ -34,6 +34,14 @@
 	& + .files-list__system-tag {
 		margin-inline-start: 5px;
 	}
+
+	// With color
+	&[data-systemtag-color] {
+		border-color: var(--systemtag-color);
+		color: var(--systemtag-color);
+		border-width: 2px;
+		line-height: 18px; // min-size - 2 * 5px padding - 2 * 2px border
+	}
 }
 
 @media (min-width: 512px) {
diff --git a/apps/systemtags/src/event-bus.d.ts b/apps/systemtags/src/event-bus.d.ts
index 4009f3f372b5a..f17be3dca5393 100644
--- a/apps/systemtags/src/event-bus.d.ts
+++ b/apps/systemtags/src/event-bus.d.ts
@@ -3,10 +3,14 @@
  * SPDX-License-Identifier: AGPL-3.0-or-later
  */
 import type { Node } from '@nextcloud/files'
+import type { TagWithId } from './types'
 
 declare module '@nextcloud/event-bus' {
 	interface NextcloudEvents {
 		'systemtags:node:updated': Node
+		'systemtags:tag:deleted': TagWithId
+		'systemtags:tag:updated': TagWithId
+		'systemtags:tag:created': TagWithId
 	}
 }
 
diff --git a/apps/systemtags/src/files_actions/inlineSystemTagsAction.ts b/apps/systemtags/src/files_actions/inlineSystemTagsAction.ts
index afd54a4f7dee0..74e8fcd4d5ac9 100644
--- a/apps/systemtags/src/files_actions/inlineSystemTagsAction.ts
+++ b/apps/systemtags/src/files_actions/inlineSystemTagsAction.ts
@@ -3,18 +3,40 @@
  * SPDX-License-Identifier: AGPL-3.0-or-later
  */
 import type { Node } from '@nextcloud/files'
+import type { TagWithId } from '../types'
 import { FileAction } from '@nextcloud/files'
 import { subscribe } from '@nextcloud/event-bus'
 import { t } from '@nextcloud/l10n'
 
 import '../css/fileEntryInlineSystemTags.scss'
+import { elementColor, isDarkModeEnabled } from '../utils/colorUtils'
+import { fetchTags } from '../services/api'
 import { getNodeSystemTags } from '../utils'
 
+// Init tag cache
+const tags: TagWithId[] = []
+fetchTags().then((fetchedTags) => {
+	tags.push(...fetchedTags)
+})
+
 const renderTag = function(tag: string, isMore = false): HTMLElement {
 	const tagElement = document.createElement('li')
 	tagElement.classList.add('files-list__system-tag')
+	tagElement.setAttribute('data-systemtag-name', tag)
 	tagElement.textContent = tag
 
+	// Set the color if it exists
+	const cachedTag = tags.find((t) => t.displayName === tag)
+	if (cachedTag?.color) {
+		// Make sure contrast is good and follow WCAG guidelines
+		const mainBackgroundColor = getComputedStyle(document.body)
+			.getPropertyValue('--color-main-background')
+			.replace('#', '') || (isDarkModeEnabled() ? '000000' : 'ffffff')
+		const primaryElement = elementColor(`#${cachedTag.color}`, `#${mainBackgroundColor}`)
+		tagElement.style.setProperty('--systemtag-color', primaryElement)
+		tagElement.setAttribute('data-systemtag-color', 'true')
+	}
+
 	if (isMore) {
 		tagElement.classList.add('files-list__system-tag--more')
 	}
@@ -84,6 +106,7 @@ export const action = new FileAction({
 	order: 0,
 })
 
+// Update the system tags html when the node is updated
 const updateSystemTagsHtml = function(node: Node) {
 	renderInline(node).then((systemTagsHtml) => {
 		document.querySelectorAll(`[data-systemtags-fileid="${node.fileid}"]`).forEach((element) => {
@@ -92,4 +115,29 @@ const updateSystemTagsHtml = function(node: Node) {
 	})
 }
 
+// Add and remove tags from the cache
+const addTag = function(tag: TagWithId) {
+	tags.push(tag)
+}
+const removeTag = function(tag: TagWithId) {
+	tags.splice(tags.findIndex((t) => t.id === tag.id), 1)
+}
+const updateTag = function(tag: TagWithId) {
+	const index = tags.findIndex((t) => t.id === tag.id)
+	if (index !== -1) {
+		tags[index] = tag
+	}
+	updateSystemTagsColorAttribute(tag)
+}
+// Update the color attribute of the system tags
+const updateSystemTagsColorAttribute = function(tag: TagWithId) {
+	document.querySelectorAll(`[data-systemtag-name="${tag.displayName}"]`).forEach((element) => {
+		(element as HTMLElement).style.setProperty('--systemtag-color', `#${tag.color}`)
+	})
+}
+
+// Subscribe to the events
 subscribe('systemtags:node:updated', updateSystemTagsHtml)
+subscribe('systemtags:tag:created', addTag)
+subscribe('systemtags:tag:deleted', removeTag)
+subscribe('systemtags:tag:updated', updateTag)
diff --git a/apps/systemtags/src/services/api.ts b/apps/systemtags/src/services/api.ts
index b98bfcb47cff3..ae99b2292b6f2 100644
--- a/apps/systemtags/src/services/api.ts
+++ b/apps/systemtags/src/services/api.ts
@@ -13,6 +13,7 @@ import { t } from '@nextcloud/l10n'
 import { davClient } from './davClient.js'
 import { formatTag, parseIdFromLocation, parseTags } from '../utils'
 import { logger } from '../logger.js'
+import { emit } from '@nextcloud/event-bus'
 
 export const fetchTagsPayload = `<?xml version="1.0"?>
 <d:propfind xmlns:d="DAV:" xmlns:oc="http://owncloud.org/ns" xmlns:nc="http://nextcloud.org/ns">
@@ -82,6 +83,7 @@ export const createTag = async (tag: Tag | ServerTag): Promise<number> => {
 		})
 		const contentLocation = headers.get('content-location')
 		if (contentLocation) {
+			emit('systemtags:tag:created', tag)
 			return parseIdFromLocation(contentLocation)
 		}
 		logger.error(t('systemtags', 'Missing "Content-Location" header'))
@@ -115,6 +117,7 @@ export const updateTag = async (tag: TagWithId): Promise<void> => {
 			method: 'PROPPATCH',
 			data,
 		})
+		emit('systemtags:tag:updated', tag)
 	} catch (error) {
 		logger.error(t('systemtags', 'Failed to update tag'), { error })
 		throw new Error(t('systemtags', 'Failed to update tag'))
@@ -125,6 +128,7 @@ export const deleteTag = async (tag: TagWithId): Promise<void> => {
 	const path = '/systemtags/' + tag.id
 	try {
 		await davClient.deleteFile(path)
+		emit('systemtags:tag:deleted', tag)
 	} catch (error) {
 		logger.error(t('systemtags', 'Failed to delete tag'), { error })
 		throw new Error(t('systemtags', 'Failed to delete tag'))