International tax


A Swedish storm of regulatory changes

For the upcoming year (2019) Swedish legislators have outlined proposals that will increase the Swedish reporting requirements for companies significantly. A number of the proposals have already been confirmed and more remain in the legislative process. In our opinion it is likely that all the proposed changes will enter into force during 2019.

Utforska innehåll

Following the Posted Workers Directive (PWD) companies with employees posted to countries in the EU but outside their home country must to take into consideration the applicability of host country labor law requirements. For example in Sweden foreign employers must report postings of all non-Sweden employees to Sweden and provide an appropriate contact person to the Swedish Work Environment Authority.

Depending on the country concerned there are sanctions and penalties that may apply if the appropriate reporting and reviews are not undertaken. There is no current consistency in approach across the EU countries involved as to reporting or penalties.  It is therefore important for employers to ensure that they carefully track and monitor the travel pattern of their employees (business travelers, commuters, etc.) to be able to ensure compliance with the registration and reporting requirements in each country.

How can Deloitte help you?

  • Advise to ensure that the correct labor law requirements for the country are met
  • Support with completion of PWD registrations in Sweden and all other EU countries as required
  • Guidance on the establishment of robust internal procedures to monitor and track cross border working employees

From January 2019 all employers with reporting obligations related to employees in Sweden will have to report the payments and tax deductions that they have made for every employee each month, and file an employer tax return per employee.

The cash basis principle applies, which means that a remuneration or benefit should be reported in the accounting period it was disbursed. Each month will be a closed period and therefore reporting must be timely and accurate.  All decisions and processes relating to work permits, adjusted tax withholding or expert tax relief must be in place from the start of work in Sweden.

How can Deloitte help you? 

  • Preparation and filing of employer tax returns 
  • Establishment and implementation of a payroll system
  • Remuneration and salary calculations (benefit and reward services, gross up, etc.)
  • Annual review and reconciliation of compensation

There are proposed changes to the interpretation of who is considered to be the employer of an employee working in Sweden – this is a change to the Economic Employer approach. Under the proposed changes the assumption would be that the company benefitting from the work should generally be considered as the employer rather than the company that pays the salary. This amended interpretation of the employer concept will have a major impact on tax liabilities and associated reporting requirements in Sweden for both foreign employers and employees.

The consequences of the proposed legislation will be that individuals performing work for a foreign employer will generally be tax liable for income related to work physically performed in Sweden from the first day of work in Sweden. This tax liability also triggers reporting and tax withholding obligations for the employer.

How can Deloitte help you?

  • Evaluate which company is likely to be considered as the actual economic employer
  • Keeping track of business travelers
  • Assessment of tax liability for employees working in Sweden  
  • Tax return assistance

There is a proposed requirement for foreign companies that have employees performing work in Sweden to register as an employer in Sweden. The foreign company will also be required to withhold Swedish tax on salary paid to employees for work performed in Sweden and proceed with monthly reporting and tax payments in Sweden (employer tax returns), regardless whether the income is ultimately taxable in Sweden for the employee or not.

In addition to the above, there is a proposed requirement for foreign companies doing business in Sweden to provide certain information to the Swedish Tax Agency in order for the Tax Agency to determine whether a permanent establishment (PE) (a taxable place of business) in Sweden has been established. 

How can Deloitte help you?

  • Registration of foreign company in Sweden
  • PE investigation
  • Payroll reporting in Sweden
  • Application to reduce preliminary tax withholding
  • Application to reduce/exempt income from Swedish taxation for non-residents
  • Tracking individuals and identifying income that is subject for reporting requirements 

Contact us

Anna Sabelström Holmberg

Anna Sabelström Holmberg

Partner| Global Employer Services

Anna is a tax partner working with international taxation of individuals and related questions. She is Head of Global Employer Services at Deloitte in Sweden. Anna has more than 20 years of extensive ... Mer

Alexander Strandberg

Alexander Strandberg

Partner | Global Employer Services

Alexander Strandberg är partner och skattejurist med drygt 15 års erfarenhet av internationell personbeskattning, socialförsäkring, incitamentsprogram och frågor kring arbetsgivarrapportering. Alexand... Mer

Charlotte  Lindesvärd

Charlotte  Lindesvärd

Director | Global Employer Services

Charlotte is a Director within Global Employer Services (GES) at Deloitte Sweden, and serves as the GES leader in the Malmö office. Charlotte has been with Deloitte since 1998 and has experience with ... Mer