At last, we appear to be getting a clear and unambiguous definition of the concept of “continuous stay” (Swe: stadigvarande vistelse). In November 2023, the Swedish Tax Agency submitted a memorandum to the government proposing a definition of the concept. After that, the proposal went quiet, but on 28 May the government issued a draft legislative referral that follows the Swedish Tax Agency's proposal. The amendments are proposed to enter into force on 1 January 2027.
What does continuous stay mean?
A person who continuously stays in Sweden is subject to unlimited tax liability under Chapter 3, Section 3 of the Income Tax Act. At present, there is no definition of the concept in the legislation, and the preparatory works do not provide any guidance either.
According to the Swedish Tax Agency, a period of stay of six months or more essentially means that a person is considered to have continuous stay in Sweden. A person must spend their overnight rest in Sweden for the stay to be regarded as continuous. The period of stay is calculated without regard to the turn of the calendar year.
Temporary interruptions in the period of stay do not break the stay in Sweden. According to the Swedish Tax Agency, interruptions that are shorter than or equal in length to the preceding or subsequent period of stay in Sweden are considered temporary. However, the Swedish Tax Agency has taken the view that these guidelines may be set aside in certain situations, particularly where individuals have had recurring stays in Sweden over more than one year. For this reason, it has been difficult for individuals to draw any conclusions about their own situation based on the guidelines issued by the Swedish Tax Agency. Case law has not provided any clear answers either.
The application of the concept has in practice caused significant difficulties for the Swedish Tax Agency, individual taxpayers, and the courts alike.
Proposed definition of continuous stay in Sweden
The Swedish Tax Agency's proposal, which the government is now forwarding without amendments, means that a definition of the term continuous stay will be introduced in the Income Tax Act. The proposed definition is intended to apply to all provisions in the Income Tax Act where the concept of continuous stay appears.
Continuous stay shall be defined as a stay comprising more than 160 days of presence in Sweden during a calendar year. If the number of days of presence during the preceding calendar year exceeded 120, then more than 120 days of presence during the following calendar year shall be considered as continuous stay. Only days on which the stay in Sweden includes an overnight rest shall count as days of presence.
If the conditions for continuous stay are met during a calendar year, the stay shall be considered as continuous from the first day of presence in Sweden through the last day of presence during that year. If the conditions for continuous stay are met during two or more consecutive calendar years, the stay shall be considered as continuous from the first day of presence in the first of those years through the last day of presence in the last of those years.
The government proposes that the legislative amendments enter into force on 1 January 2027.
Access the referral to the Council on Legislation (in Swedish)
Commentary
It is welcome that we now appear to be getting a clear and unambiguous definition of the concept of continuous stay. This will make things easier for Swedes living abroad, employers, cross-border commuters, the Swedish Tax Agency, and courts that must apply the concept. Individuals who spend shorter but recurring periods in Sweden will also finally have a predictable situation and no longer have to live with the uncertainty of how the Tax Agency will assess their tax status in Sweden.
We at PwC are happy to assist you with questions regarding the concept of continuous stay and the new proposal, as well as other questions relating to tax and social insurance.
