Sweden proposes to introduce the concept of "Economic Employer" effective in 2021

Sweden introduce "Economic Employer" concept

The Swedish government has published a proposal to implement the concept of "economic employer" within Swedish tax legislation.


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On 23 June 2020, the Swedish Government published a proposal to implement the concept of "economic employer" within Swedish tax legislation. It is suggested that the rules enter into force on 1 January 2021 and they will have a major impact on Swedish and international companies who have foreign employees working temporarily in Sweden.

Overview of key points

The new regulations, if implemented, will result in a shift in Sweden, by which Sweden will now consider factors beyond who pays the employee’s salary when assessing who is the employer for employee tax purposes. The entity, which is considered to be the employer of an employee, is of great importance when assessing whether the employee would be liable to tax when working in Sweden on a temporary basis.

It is suggested that employees working within a corporate group will only be affected if they work more than 15 days in a row or 45 days in total during a calendar year.

If employees are to pay tax in Sweden because of the new rules, the foreign entity/company must register in Sweden and do the reporting and payment of taxes to the Swedish tax authorities.

According to the proposition, the foreign company must register as employer and undertake the reporting and payments of taxes in Sweden. Thus it is not as in Denmark where the obligation lies with the receiving Danish entity.  

When registering in Sweden as a foreign employer, the Swedish tax authority will usually also review whether the activity in Sweden could lead to a permanent establishment in Sweden from a corporate tax perspective.


Companies will need to have a process for keeping track of:

  • who is travelling to Sweden,
  • the number of days spent in Sweden by each employee (in total as well as how many days in a row),
  • what people are doing while they are working in Sweden.


For large organisations, this is an administrative challenge, not least because of the obligation to register and manage the reporting and payment of taxes, so it is crucial to start building processes to be able to handle the new rules from 1 January 2021. 

Want to know more?

You are welcome to contact us if you wish to discuss the effect of the new regulations on your organisation.

Partner, Mobility and People Services Fredrik Lundgren

Director, Mobility and People Services Christina Brink 

Senior Manager, Mobility and People Services Michael Hansen

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