WORKING IN SWEDEN
The most transparent, accurate and reliable contract management company in the market.
Access Financial (AF) is registered as a foreign employer in Sweden and looks after the Swedish market in conjunction with our local accountants, tax advisers and immigration specialists.
Besides local employment on our payroll paying Swedish taxes and social security, we also offer our personal service company (PSC) solution for those it suits. The Access Financial International group is the largest European cross-border contract management company.
AFSS Consultancy Service Sweden is our Swedish entity. We offer a broad range of compliant solutions for contractors working in Sweden that cover all the needs that a contractor may have. Unless and until we have performed our client fact find and taking account of the preferences of an agency or corporate client, we cannot propose one solution over another.
Our consultative approach does mean that with AF, the contractor always receives the perfect fit.
We offer three solutions as follows:
- Employment – Umbrella company solution
- Limited Company – With Permanent Establishment (eligibility based)
- Limited Company – As a Foreign Employer (eligibility based)
This solution is for contractors looking for no administration and on-time payments. The contractor on this solution becomes an employee of Access Financial in Sweden. We register the contractors in Sweden, calculate the taxes, make payment to the tax office and contractors on time while assuring the regulatory compliance. We also support our contractors and answer their queries without any hidden charge.
Limited Company with Permanent Establishment
Contractors who have and are familiar with running their limited company may choose to do so when working in Sweden for more than 12 months. The limited company may be either a Swedish company or a foreign one. In this solution:
- the employer pays 31.42% to Skatteverket
- the employer has to withhold tax and pay it to Skatteverket
- the corporation tax on the company’s profits is also payable in Sweden
Limited Company as a Foreign Employer
This solution is for contractors working in Sweden using their existing companies for less than 12 months. Employers, on this solution:
- pay only 19.8% Social Security in Sweden
- do not withhold tax (the employee has to send preliminary income declaration based on estimated annual income)
- exempt from paying Corporation Tax in Sweden
In the following sections, we will compare and contrast the available offerings to help all AF’s clients make an informed choice.
A brief description of each solution
- Social Security
- Which solution is best for you
|Employment||PSC as a Permanent Establishment||PSC as a Foreign Employer|
|Duration Limits||No limits||<12 months||>12 months|
|VAT (TVA) registration required||NA||Turnover less than SEK 30,000|
If client/agency is also in Sweden
|Must have legal right to work||Yes||Yes||Yes|
|Duration of Stay||>12 months||<12 months or Employed|
|Personal Registration||Co-ordination Number||Personal Number|
|Swedish Population Register (folkbokförd)||Not necessary||Necessary|
|Swedish Social Insurance Agency (Försäkringskassan)||Not necessary||Necessary|
Working less than six months in Sweden (SINK TAX)
If you are going to work and live in Sweden for less than six months, you pay special income tax for residents abroad (SINK) which means that you pay 25% tax on your income. Athletes, artists and seafarers pay 15%. For example, if you:
- are staying in Sweden for a period shorter than six months or onboard a Swedish merchant vessel
- receive a pension from Sweden
- have a daily commute to Sweden for work
You do not need to submit a tax return, which means that you can’t make any deductions. You must apply to SINK.
Tax Relief for Non-resident Experts
Foreign key personnel – executives, experts, researchers, and others – may qualify for special tax relief when working in Sweden. Experts will thus pay tax on only 75% of their income for the first three years of employment in the country.
Note that the Expert Tax does not apply to Swedish nationals.
Standard deductions in the tax return:
- Journey’s to and from work
- Business Trips
- Temporary work, dual residence and Journeys home
- Other Expenses
Thresholds and criteria on the following link:
National income tax on earned income (employment and business income) is at the following rates (for 2020)
|Taxable income (SEK)||The rate for bracket (%)|
|Over 65 years of age|
|Taxable income (SEK)||The rate for bracket (%)|
Municipal income tax
Individuals are subject to the municipal income tax concerning their earned income (employment and business income) (chapter 65, section 3 of the IL). Capital income is not taxable for municipal income tax purposes. The municipal income tax is at a flat rate depending on the municipality. The average rate is 32.28% (for 2020); in Stockholm, the rate is 29.82% (29.885%, including the obligatory burial fee of 0.065%) in 2020.
No wage tax exists, but employers are obliged to withhold tax from salaries and other remuneration paid to their employees as an advance payment of tax. Pensions, annuities and certain other periodical payments are also subject to withholding. The tax is withheld according to tables designed to arrive at the taxpayer’s final tax liability as precisely as possible.
Value Added Tax (VAT)
The standard VAT rate is 25%.
A reduced rate of 12% applies to foodstuffs, to services related to tourism, e.g. hotel and camping services. The 12% reduced rate also applies to restaurant and catering services (chapter 7, section 1 of the ML). Also, the 12% reduced rate applies to small repairs on bikes, shoes, leatherwear, clothes and home textiles.
A reduced rate of 6% applies to domestic daily and weekly newspapers and periodicals, to local transportation of persons and ski-lift services, and cinema, circus and concert tickets (chapter 7, section 1 of the ML). With effect from 1 July 2019, the reduced rate of 6% also applies to electronic publications such as books, newspapers and magazines.
Zero-rated goods and services include prescription medicines, gold for investment purposes, several financial services, as well as insurance and reinsurance services.
Persons carrying on a small business with a turnover of SEK 30,000 or less are exempt but may opt to register as taxable persons.
Taxes on Dividends
Dividends received by Swedish resident taxpayers are subject to a flat tax at the rate of 30% if stated otherwise on a tax treaty. Dividends paid to a non-Swedish resident are exempt from Dividend Tax in Sweden.
- Employed: 31.42%
- PSC with PE: 31.42%
- PSC with FE: 19.8%
Sweden does not have an employee’s Social Security deductions.
- Everyone who has worked in Sweden for more than six months and has a personal number has to file a year-end tax return.
- Swedish residents are liable to pay tax in Sweden on their worldwide income
- Non-Swedish residents are liable for tax in Sweden only on the income earned from Sweden.
The table shows the approximate net retention for a typical contractor using AF solutions. The following assumptions apply:
- Daily Rate €500 per day
- Working five days per week for 12 months
- Expenses are 10% of turnover
- A single person without dependents
We provide these figures for illustration, and you should request a detailed calculation from your AF Solutions Consultant.
Which solution is best for you
Depends on the circumstances of the contractor and what they, the recruitment business and their end clients seek.
In the table, we have set out the main differences between the solutions which may guide you to what is best for you. If you are still unsure or in doubt, please ask your AF Solutions Consultant.
|Employment||Limited Company with Permanent Establishment||Limited Company as a Foreign Employer|
|Status||Employed||Employed by company/Independent of client||Employed by company/Independent of client|
|Full social benefits||Yes||Yes||No|
|Personal registration needed||Yes||Yes||Yes|
|Complexity of solution for the contractor||Lower||Highest||High|
|Professional Insurances required||No||Yes||Yes|