If you are considering a work contract in Sweden, there are many benefits in doing so. According to the World Economic Forum’s Global Competitive Index, it had a robust GDP growth rate at 3.7% in 2016 followed by a 1.7% growth rate in second quarter of 2017.
Sweden also tops the Forbes annual list of the best countries for business as one of the strongest and most transparent economies of the world. Sweden is a world leader in innovation and quality of academic research, and offers exceptional social security benefits for older people.
WHAT ARE THE BENEFITS OF WORKING IN SWEDEN?
The top three benefits of working in Sweden are:
- It has free-market capitalism and extensive welfare benefits.
- It has a robust, mixed economy, with strong connectivity to Europe.
- It has above average rates of employment and job security.
MAXIMUM SALARY RETENTION IS IMPORTANT TO ME; HOW MUCH WILL I TAKE HOME?
Your maximum salary retention depends upon the way you choose to work in Sweden. There are many factors which determine your salary retention, such as the type of income earned or nature of business, residential status, duration of the contract, applicable allowances and deductions, dependents, and tax claimable expenses.
Maximum salary retention in Sweden is generally 49% to 54% for employees and 70% to 75% for contractors using a personal services company (PSC).
WHAT ARE THE LEVELS OF TAXATION IN SWEDEN?
Sweden has a progressive income tax of up to 25% for income over SEK 638,500. In addition, there is a flat municipal tax at the rate of 31.86%, although the rate differs depending upon municipalities.
Corporate income tax is 22%. Sweden has special tax regimes to attract expats, allowing up to 25% of income to be tax and social security free.
CAN I PAY MY TAXES BACK AT HOME IF MY STAY IS LESS THAN 183 DAYS?
As an employee of Access Financial, or your own limited company, you will be liable to pay taxes on income earned in Sweden from the first day.
Your tax resident status will determine whether you are liable to pay tax on local income or worldwide income.
Contractors will be treated as Swedish residents if their principal home is in Sweden or if they have spent at least six consecutive months in the country.
WHAT ARE THE SOCIAL SECURITY REQUIREMENTS?
Swedish social security is financed mainly through employers’ contributions. Social security contribution depends upon age and the type of employment or activity undertaken by the contractor. All employers in Sweden pay social security contributions at the rate of 31.42% of gross salary. Employee contributions are voluntary.
HOW DO I REGISTER LOCALLY IN SWEDEN?
EU/EEA citizens have the automatic right of residence, either in their own right (uppehållsrätt) or as a family member (uppehållstillstånd). Non-EU citizens must have a valid work permit and residence card to enter the country.
Upon arrival, anyone who intends to work in Sweden for less than one year will need a Coordination Number (samordningsnummer) for tax and social security purposes, and to enable public agencies to identify them for various public services. To get this number, an employer or an organisation must apply on their behalf.
If a contractor intends to live in Sweden for 12 months or more, then they must be registered on the Swedish Population Register (folkbokförd) – a Swedish personal identity number is required for this and can be obtained from the Swedish Tax Agency’s (Skatteverket) office. A personal identity number will be essential to open a bank account, work in Sweden and obtain other benefits. Contractors must also have a registered address in Sweden and documentation showing that they are employed in Sweden.
IS THE PROCESS FOR CLAIMING EXPENSES DIFFERENT IN SWEDEN? WHAT’S COVERED/NOT COVERED?
All expenses related to the fulfillment of the employment agreement or contract are tax deductible. However, the deductions relating to cost-of-living allowances are limited.
Expenses incurred due to double accommodation and home travel during temporary assignments away from the ordinary place of work are allowed as a deduction. Expenses for commuting to work are also deductible based on the cheapest means of public transport or, if a private car is used, up to a fixed limit.
A basic allowance from SEK 13,200 to SEK 34,500 is also granted, and a tax credit can be used to set-off national and municipal income tax.
THERE ARE TWO WAYS TO WORK IN SWEDEN: EMPLOYMENT OR PSC. WHICH SOLUTION IS BEST?
At Access Financial we offer local employment and personal services company solutions for contractors in Sweden. Both of these methods of contracting can be beneficial dependent upon a contractor’s needs.
Employment solution advantages include almost no administration or concerns about compliance, while working through a PSC offers higher salary retention and greater control. Both solutions give contractors the opportunity to benefit from Sweden’s special tax regime for foreign nationals.
To learn more about the relative benefits, check out our previous article, Working in Sweden: Considering Self-Employment and Your Other Options.
Please note, non-EU/EFTA nationals can only work in Sweden as employees, through a local employment solution. In this case, Access Financial would take on the non-EU national as our employee on our local payroll in Sweden and manage necessary local registrations, social security, tax payments, year-end tax compliance and payroll services on their behalf.
Non-EU/EFTA nationals must also apply for and obtain a visa from the Swedish embassy or consulate in their own home country or country of residence before moving to Sweden. Your application can be submitted in person or you can apply online for a work permit and residence card to the Swedish Migration Board. Access Financial can also assist with this process.
Please get in touch to discuss your personal circumstances in depth with our team and work out which solution is the best for your situation.
WHAT STEPS DO I NEED TO TAKE TO BE COMPLIANT?
When you partner with Access Financial you simply have to provide us with all your information, including your registered address in Sweden. If you are a non-EU/EFTA national, you will need a residence permit to live and work in Sweden, but we can help you with that too.
Depending on the way you choose to work you may need additional permits. Access Financial will be there to help you throughout the process.