Including tax and social security reporting
New monthly reporting obligation for employers
What will change?
As of January 1 2019 most employers with reporting obligations in Sweden are required to report payments and tax withholdings on a monthly basis for each employee. In brief, the change means that the employer reporting of payments, tax and social security contributions (PAYE return) must be done both on an individual and a company level. This constitutes a radical change from the current system where the PAYE return is filed for all employees together. In order to allocate the correct payments and tax withholding to each employee, up until December 31st 2018 an annual income statement must be prepared for each employee. This new reporting replaces the filing of the annual income statements.
What difficulties will arise?
Effective January 1, each month will be seen as a “closed” period. This means that the payroll reporting in a greater extent needs to be correct in the first place since any corrections can be difficult to process, time consuming and may lead to cash flow issues. The payments and benefits must be reported in the month the employee receives the payment or can use a benefit, car, housing etc. We can see the following challenges for the companies:
- Assuring that processes, routines and information exchange between HR/Mobility departments and payroll departments are effective in order to provide reporting information on time.
- Corrections due to new benefits and salary.
- Making sure that various decisions such as adjusted tax withholdings, expert tax reliefs, non-resident tax decisions (SINK) and work permits are in place on time.
- Handling payroll debts due to an end of an employment (related to cash flow issues).
- Making sure that an external payroll provider is up to date and align the payroll system with the Swedish Tax Agency’s website for filing purposes.
- Permissions/Authorizations within companies for filing purposes.
- Assuring that the payroll department receives support and resources for implementing new routines.
What support can Deloitte offer?
Based on discussions we have had with our clients, we see many companies facing difficulties in ensuring compliance under the new rules. Deloitte can assist with the following services:
- Workshop, three or six hours. We review your payroll reporting process and identify any problems within your organization and develop solutions to these problems.
- Provide arguments and information in order to receive internal approval from the organization
- Education, three or six hours. Presentation of the new rules in detail with a focus on challenges for your specific employees.
- Alterations and alignment of payroll systems.
- Salary calculations for expatriates.
- Preparation and filing of monthly employer tax return (PAYE return).
- Corrections of employer tax returns.
- On site assistance for implementation of payroll processes
- On site payroll review