This report covers changes to proposals on economic employer in Sweden that could reduce the potential exposure to the new rules and lighten companies’ administrative obligations.
In our previous report, we set out the details of the proposal submitted in 2017 by the Swedish Ministry of Finance relating to the changes planned for the taxation of individuals who are working temporarily in Sweden.
Adjustments to the original proposal had been going through the Legislative Council; but it has been confirmed that the anticipated implementation date of 1 January 2019 will not happen.
Following recent elections, with Sweden currently forming a new government, it is not clear when the proposals will be implemented or whether the existing proposals will now be subject to further revisions.
The information set out below details the progress of the legislation so far. For more detail on the original plan, please see our earlier GMS Flash Alert 2017-134 (12 September 2017).1
What the Tax Agency had proposed would lead to a significant expansion of workers liable to pay tax in Sweden. If that proposal were to be enacted, ultimately it would mean that more people who are working temporarily in Sweden would be caught by Sweden’s tax net – including cross-border workers.
However, the recent amendments to the original proposal have been positively received by businesses as reducing the potential exposure to the new rules for Swedish and international corporate groups sending employees to Sweden for shorter periods of time without regard to the nature of the business trip. Also, it appears the administrative obligations for employers would be less cumbersome under the amendments proposed.
A supplementary proposal was sent by the government for consideration to the Legislative Committee in May and in August.1 The additional revisions to the original proposal relaxed the criteria for taxation of temporary workers in certain circumstances, as it was felt that scenarios not intended to be caught by the new rules were potentially going to be affected and that certain requirements at this stage would be too administratively burdensome for foreign employees.
The key provisions of the legislation are:
However, the following exception applies:
(Again for more details on the initial proposal, see GMS Flash Alert 2017-134 (12 September 2017).)
In the initial proposal, it was suggested that foreign employees working in Sweden for more than 5 days would need to register with the Swedish Tax Agency. For the time being, the government has not moved forward with the Tax Agency's suggested mandatory notification for individuals who work in Sweden for more than 5 days. This, however, does not prevent the individual from potentially becoming taxable in Sweden from his first work day.
1 For (in Swedish) Regeringens lagrådsremiss från 17 maj 2018: Beskattning och betalning av skatt vid tillfälligt arbete i Sverige, click here (PDF 1.79 MB)
For (in Swedish) Regeringens promemoria från 14 augusti 2018: Kompletterande förslag rörande beskattning och betalning av skatt vid tillfälligt arbete i Sverige (PDF 268 KB), click here (PDF 278 KB).
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