Proposal for a reduced remunerational requirement to be granted expert tax relief

Overview

The Swedish Government has on April 22 submitted a legislative proposal with regards to the expert tax relief rules. The legislative proposal suggests reducing the salary requirement for tax relief for foreign experts, researchers, and similar key personnel from two price base amounts to one and a half price base amount. This would result in a reduced salary requirement from SEK 114 600 in 2024 to SEK 88 500 for 2025.

The legislative amendments are proposed to enter into force on January 1, 2025, and will be applicable for work performed in Sweden that started after December 31, 2024. 

Background
A tax relief for foreign experts, researchers and similar key personnel in Sweden is granted to facilitate the recruitment of these professional groups provided that they meet certain qualifications or receive a monthly remuneration that exceeds twice the price base amount. The rules aim to strengthen Sweden's international competitiveness and to create incentives for international companies to choose Sweden for start-ups and to stimulate companies to locate or retain, among other things, group-leading functions that require foreign staff in Sweden. 

The remunerational requirement of two price base amounts was implemented in Swedish legislation on January 1, 2012, with the aim of simplifying and increasing the predictability of the expert tax rules. The remunerational threshold meant that an employee could be granted a tax relief solely on the monthly remuneration, without having a formal assessment of the employee’s competence. 

For individuals benefiting from the tax relief, 25 percent of the employment income is exempt from taxation in Sweden. Certain reimbursements for expenses associated with the stay in Sweden that the individual has had are also tax-free. The income exempted from taxation is in addition not basis for Swedish employer contributions. Today's legislation allows tax relief for the individual’s first seven years of work in Sweden. 

Reasons for reducing the remunerational requirement 
The purpose of the legislative proposal is to simplify recruitment of foreign experts for Swedish companies. Reducing the salary requirement for tax relief for foreign experts, researchers, and similar key personnel to a more internationally competitive level is deemed to be a suitable way of achieving this.

According to the Swedish Government, the high inflation of recent years has caused the remunerational requirement to increase faster than the salaries in society. In 2024 one price base amount is SEK 57 300, whereas in 2012 one price base amount was SEK 44 000. For 2025 the government expects the price base amount to be SEK 59 000.

In addition, the Swedish Government highlights in the proposal that other EU countries’ remunerational requirements for tax relief regimes like the Swedish tax relief for foreign experts, researchers, and similar key personnel, has a lower remunerational requirement and therefore, a reduction of the remunerational requirement is considered justified.  

Lastly, the Swedish Government argues that Sweden needs to continue being competitive on the international employee market and a reduction of the remunerational requirement is considered to have a positive effect as employers in Sweden can continue to offer competitive wages and retain employees in higher management within company groups. 

Deloitte comments
The Swedish Government’s assessment is that the amendments to the law would entail better competitive opportunities for Sweden in relation to other countries in Europe and would make it more attractive for foreign experts, researchers, and other key personnel to work and continue to work in Sweden. 

We foresee that the personnel qualifying for the tax relief would increase, both in general and by having additional professions becoming eligible for the tax relief. We also anticipate professions which previously qualified based on the competence requirement might now be able to qualify based on the remuneration requirement. We expect this to be positive for the tax relief process as the remuneration requirement does not require a formal assessment of the employee’s competence.

It should be considered that when introducing the rule in 2012, the Swedish Government stated that the compensation level should not be set too low and that several factors must be taken into account when assessing which level is appropriate. It could therefore be questioned whether the proposed new salary level of one and a half price base amount is too invasive and whether the new level has properly been assessed considering that a too low remuneration level could lead to distortions of competition and pay equality. 

As the proposal is suggested to be implemented as of January 1, 2025, it can be of great value for employers to review any planned assignments or employments to Sweden which are to begin by the end of 2024 as it could potentially be that the employee is to be comprised by the reduced remunerational requirement and therefore granted tax relief in case the threshold is reduced as proposed. 

It should also be noted that the proposal is part of a larger assessment of the rules on tax relief for foreign experts, researchers, and other key personnel why it is not guaranteed that the proposal will take effect January 1, 2025. 

Deloitte will monitor the next steps in the legislative process carefully. Please contact us for assistance or if you have any questions about the proposed changes.  

Contact Us

Alexander Strandberg
Partner, Global Employer Services
+46 76 827 73 41
astrandberg@deloitte.se

Ida Schwartz
Manager, Global Employer Services
+46 70 080 43 32
ischwartz@deloitte.se

Amanda Olsson 
Associate, Global Employer Services
+46 70 080 41 72
amolsson@deloitte.se