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New monthly obligation for employers in Sweden to report paid remuneration and tax withholdings per employee

Overview
In December 2016, the Swedish government put forth a proposal for the monthly reporting of individual employee remuneration and tax withholding. The primary purpose of the proposal is to provide more control information for the Swedish Tax Agency and other agencies, and, thereby, reduce tax evasion.

On May 10, 2017, the Swedish Parliament approved the proposal.

The proposal in brief
Employers should file information about paid remuneration and tax withholding per employee with the Swedish Tax Agency on a monthly basis. This reporting, known as the PAYE return, replaces the Annual Income Statement that is used today.

The PAYE return should contain information about the remuneration, tax withholdings, and social security charges paid. Both the Swedish Tax Agency and the employer filing the PAYE return should inform the individual about its contents.

The PAYE return can be filed on paper or electronically. If filed electronically, the employer can either submit a file that contains the necessary information for all employees, or manually register the necessary information for each individual. An e-service, which individuals can log into using an electronic ID, will manage the electronic filing.

For employers that are required to keep an employee ledger and who have more than 15 employees, the regulations will be in effect beginning July 1, 2018. For other employers, the regulations will come into effect beginning January 1, 2019.

The Social Insurance Office, Swedish Migration Agency, and the Swedish Public Employment Service will have direct access to the PAYE returns for certain purposes.

Deloitte's view
The subject of monthly reporting on an individual level has been discussed before, but has not previously led to legislation. For example, similar reporting is already used in Norway.

Even if lawmakers introduce the new legislation by July 1, 2018, at the earliest, it will require companies to take rather immediate action in order to prepare their accounting and payroll systems to meet the new demands of monthly reporting on an individual level.

 

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