Sweden: Economic employer concept effective 1 January 2021

Sweden: Economic employer concept

The Swedish Parliament on 4 November 2020 approved legislation to introduce the ”economic employer concept” in Sweden.


The new measures will be effective 1 January 2021.

The legislation generally concerns which party will be considered to be the employer of an individual working in Sweden. Previously, foreign personnel who temporarily work in Sweden have typically not been taxable in Sweden when the employer that pays the salary is not a Swedish company. The government sought this change to protect the Swedish tax base. Further, the legislation effectively harmonizes the Swedish treatment with that of certain trading partner countries including Denmark, Norway, the United Kingdom, and Germany.

With the new legislation, a critical factor in determining whether an employee is taxable (or not) in Sweden is to look to the entity that is the beneficiary of the employee’s work (and not the entity that pays the salary to the employee). The new measures will not affect employees working in Sweden for a maximum of 15 days in a row or 45 days in total during a calendar year. Only when the employee’s work exceeds these days will the salary be taxable once it is determined that the economic employer is located in Sweden.

Read a November 2020 report prepared by the KPMG member firm in Sweden

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