Proposal to Council on Legislation – Extended time period for expert tax relief

Extended time period

A certain tax relief for foreign experts, researchers and similar key personnel in Sweden is granted in order 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. For 2023 one price base amount is SEK 52 500. 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. 

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 five years of work in Sweden. The stay in Sweden must not be intended to last longer than five years.

The Government’s proposal suggests that the tax relief is extended to apply for the individual’s first seven years of stay in Sweden. The current condition that the stay in Sweden must not be intended to last longer than five years is also proposed to be extended to seven years. The purpose of the proposal is to strengthen the Swedish position on an international market and to a greater extent correspond to the rules in other countries in Europe. The initial legislation for expert tax relief had a tax relief period of three years, however, it was extended to five years on 1st of January 2021. Now, the Swedish Government has identified the need of an expert tax relief period of seven years and the Government emphasizes the importance of that Sweden’s expert tax rules are internationally competitive.

Entry into force and transitional provisions 

The changes to the law are proposed to enter into force on 1st of January 2024 and are to be applicable for stays in Sweden that commence after 31st of March 2023. Should the stay in Sweden start after 31st of March 2023 and a tax relief decision is issued prior to January 1st of 2024, the length of the decision may be extended to seven years from the day of arrival to Sweden. In those cases, an application from the employee or the employer needs to have been submitted with the Taxation of Research Workers Board by 31st of March 2024. 

Deloitte comments

An extended time limit for expert tax relief would make it more attractive for foreign experts, researchers and other key personnel to continue working in Sweden. The amendments to the law would also entail better competitive opportunities for Sweden in relation to other countries in Europe and in particular the Nordic region. It would also entail savings for employers who hire foreign experts, researchers and other key employees and thus make Sweden a more attractive location for operating certain businesses.

In addition, the fact that the proposed changes are partly to be applied retroactively also means that a new expert tax application can be granted in some cases even though a five-year relief decision has already been issued. This may entail that there are savings opportunities for both employers and employees by submitting a new application if the employee’s stay in Sweden started after 31st of March 2023. 

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.  

Kontakta oss

Alexander Strandberg
Partner | Deloitte AB 
astrandberg@deloitte.se
+46 76 827 73 41

Caroline Palmqvist
Senior Manager | Deloitte AB
cpalmqvist@deloitte.se 
+46 70 080 41 16
 
Maja Carlsson
Consultant | Deloitte AB
macarlsson@deloitte.se 
+46 70 080 42 10

Carl Tilander
Associate | Deloitte AB
ctilander@deloitte.se
+46 70 080 42 64