Sweden: “Expert” tax relief (court decision)

How compensation paid to foreign workers is to be calculated

How compensation paid to foreign workers is to be calculated

The Supreme Administrative Court issued a decision that addresses how compensation paid to foreign workers is to be calculated in order to assess whether the employee may be entitled to the “expert” tax relief regime.

The expert tax regime is intended to attract highly qualified “experts” by offering them tax relief for the work performed in Sweden. A precondition for eligibility for the expert tax relief is that the amount of salary and other remuneration for work in Sweden exceeds an threshold amount, computed on a monthly basis.

The Supreme Administrative Court’s decision emphasizes the purpose of having an objective salary criterion, and stresses that for remuneration to be eligible for the expert tax relief, the critical element is that it relates to work performed in Sweden.

KPMG observation

Previously, the tax authorities required that the salary had to be paid by a Swedish employer or a foreign employer with a permanent establishment in Sweden. The decision means that compensation paid by a foreign employer without a permanent establishment in Sweden can also be considered, provided that the Swedish employer bears the cost of the compensation. Thus, the decision is viewed by tax professionals as a welcome change to the previous approach that the employer itself had to pay the salary in order for the employee to be eligible for the tax relief.

Read a December 2021 report prepared by the KPMG member firm in Sweden


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