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Clearer rules regarding place of employment

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In a new written statement, the Swedish Tax Agency clarifies where employees with exchangeable work places are to be considered having their major place of employment.

In September, the Tax Agency issued a new statement regarding the place of employment in industries where the physical work sites are changeable. The purpose of this statement is to clarify how the assessment of the place of employment is to be undertaken, and to clarify that this assessment is not bound to a specific industry, but is to be applied generally. This will decrease the previous uncertainty and interpretation possibilities regarding this area.

The location at which the employee is seen to have his or her employment impacts taxation in a number of situations. Amongst other things, there is an impact on how one is to be taxed for compensation for certain types of expenses incurred in business trips, for the receipt of daily allowances and as regards compensation for lodging. The regulations are based on the major rule that deductions are not allowed for personal living expenses. There are, however, exceptions to this major rule implying that the employee, under certain conditions, can make a deduction for increased living costs, for example, in conjunction with business trips, with temporary work at another location or if the employee has two residences.

For the employer, the issues is that they can, depending on where the employee has its place of employment, pay daily allowances, compensation for lodging and travel costs, without these costs being subject to tax deductions and without them incurring social security contributions. Where the employee has his or her place of employment determines, therefore, if compensation according to the above can be seen to comprise compensation for private living costs and is, then, taxable, or if it refers to costs incurred in service and is, then, not taxable or, alternatively, is deductible.

Application of the major rule

The major rule implies that the employee is considered to have his or her place of employment at the location at which the major portion of the work is executed. If the employee executes his or her work duties while moving around or at alternate work sites, then the place of employment, according to the alternative rule is the location at which the employee collects and leaves work materials or prepares and terminates his or her work duties. For employees who execute work during a limited period of time at various locations, the residence is considered to be the employee’s place of employment. The rules are to be tested in that given order, implying that if the major rule or the alternative rule are not applicable, then, as a final alternative, the exception rule applies implying the residence to be the employee’s place of employment

The Tax Agency states that the location of the place of employment is to be determined for each assignment and employment individually, suggesting that consideration is given to the actual circumstances of the actual employment. The assessment of where a “permanent” employee is to be considered to have his or her place of employment is, according to the Tax Agency, to be made based on the circumstances in place during a longer period of time, usually a period of two years. With employment during a limited period of time, the assessment is, instead, made based on the circumstances during the actual period of employment. Guidance for both assessments if found in the terms and conditions stated in the employment agreement.


As the previous statement referred to specific industries, there was a certain degree of uncertainty and interpretation possibilities in terms of how the regulations were to be handled in other industries. With the new statement, the uncertainty and/or interpretation possibilities are seen to be limited. Furthermore, the new statement implies that there is a major risk that the employers concerned (with employees with changeable places of employment) have historically handled this type of compensation in an incorrect manner. As this can result in major fiscal consequences both for the employer (employer’s contributions and tax surcharges) and its employees (tax on services and tax surcharges), a review of the company’s handling of these items can be strongly recommended.

Oscar Warglo and Ida Lejerdal

Do you have any questions on entrepreneur and SME Taxes?

Ida Lejerdal

Ida Lejerdal

Ida Lejerdal arbetar på PwC:s kontor i Stockholm med skattefrågor rörande bland annat ägarledda företag och deras ägare. 
010-212 91 65
Ida Lejerdal works at PwC's office in Stockholm, focusing on tax issues such as taxation of owner-managed companies and their owners.
+46 10-212 91 65

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