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Changes to the 183 day rule in Sweden

The current rules

An individual’s tax liability in Sweden is determined by residence status for taxation purposes and the source of income derived by the individual. Extended business travellers are likely to be considered non-residents of Sweden for tax purposes if their stay in Sweden does not exceed 6 months. Extended business travellers are likely to be taxed on employment income derived from workdays in Sweden, provided the stay in Sweden exceeds 183 days in a 12-month period. However, The Swedish Government has confirmed their intention to introduce an economic employer concept within Swedish tax legislation.

Key considerations for taxation will be based on the entity for which work is carried out and who bears the costs rather than just the entity that pays employee salaries. Due to this Swedish tax liabilities may now arise for many foreign employees working temporarily in Sweden, and foreign employers will have Swedish tax reporting obligations. This change, which the Swedish government have approved and will come in to force on 1 January 2021, will affect international companies who assign employees to their Swedish subsidiaries as well as organizations who provide services to clients in Sweden using internationally mobile labour.

Key points

Currently, the assessment of who is the employer of a worker for tax purposes is based on who is actually paying the employee’s salary. When introducing an economic employer concept, several other factors will instead be taken into account such as for whom the work is carried out; who is responsible for the risks and output generated by the employee; who bears employee costs and who provides direction to the employee.

This will have an impact for determining if foreign employees are tax liable in Sweden for their work performed in Sweden. According to the main rule within the Special Income Tax Act for non-residents (SINK), employees are tax liable in Sweden for their work performed in Sweden. The 183 days rule in the SINK legislation can however limit this tax liability if the following conditions are met:

  • The employee spends not more than 183 days in Sweden in a 12-month period, and
  • The remuneration is not paid by or on behalf of an employer who is domiciled in Sweden
  • The remuneration is not borne by a permanent establishment that the foreign employer has in Sweden.

However, in the legislation, the above will not be applicable if the individual is performing work for a company’s business in Sweden and the work is performed as an integrated part of that company’s activities and the employee is under the Swedish company’s control and management. In these situations, basis for taxation would then arise from day 1 in Sweden for foreign employees working temporarily in Sweden.

However, it has been suggested that if the foreign employer and Swedish receiving company are part of the same company group, the regulation regarding hiring of labour should not apply if the work in Sweden is carried out for a maximum of 30 days per calendar year with any given work period not exceeding five consecutive days. This will (to some extent) limit the number of foreign employees who are expected to become tax liable in Sweden.

Once a Swedish tax liability has been confirmed due to temporary work in Sweden, according to Swedish domestic legislation, tax treaties should be applied to avoid double taxation.

When will the changes take place?

Sweden’s parliament approved the introduction of the economic employer concept, after a process of discussion and revision that began in 2017. The new regulations will be effective as of 1 January 2021.

The changes will mean that more foreign employees will be tax liable in Sweden as well as foreign employers having Swedish employer tax obligations. Any such foreign employers paying out salary will need to register as an employer in Sweden to be able to file monthly employer PAYE returns in order to withhold, report and pay preliminary tax to the Swedish Tax Agency.

In order to meet the new requirements, we recommend that foreign employers start to review their employees’ travel pattern and work tasks in Sweden in order to determine potential Swedish tax obligations.

How TCP can help? 

Navigating the complexities of the Swedish tax system, particularly with the new rules to the 183 day rule, can be difficult. TCP have an entity in Sweden enabling us to offer our payroll services, whether you are an agency, contractor or employer. We can smooth out all the processes and procedures necessary to making everything run smoothly between everyone in the working relationship, as well as ensuring you operate compliantly, while taking in to contact the new tax rules.

Our team would be happy to help or answer any questions you may have. Call us on +44 (0)208 5800 800 or contact us via If you like what you have seen so far and would like to keep up to date with our latest news and advice, please sign up to our newsletter here.

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