The Swedish Government has appointed an inquiry to review the tax treatment of remuneration derived from board appointments and other assignments of a personal nature. The inquiry was prompted by the recognition that the current tax framework gives rise to an asymmetry in the taxation of board fees relative to compensation for comparable personal assignments. In developing proposals for legislative reform, the inquiry chair has been specifically instructed to give due consideration to the importance of enabling companies to attract and retain qualified external board expertise.
Background
Under current case law from the Supreme Administrative Court (Högsta förvaltningsdomstolen, HFD), board fees are classified as employment income and taxed accordingly at the level of the individual board member. The underlying rationale is that a board appointment under the Swedish Companies Act (aktiebolagslagen) may be held only by a natural person. This gives the appointment a distinctly personal character and precludes the remuneration from being invoiced through a separate legal entity.
In its 2017 decision, the court held that board fees may not be invoiced through a limited liability company and must instead be reported and taxed as employment income of the board member personally. This was further confirmed by the HFD in 2019, when the court rejected the argument that board fees could be invoiced through a law firm organized as a limited liability company (advokataktiebolag).
Challenges under the current legal framework
The current legal framework provides that board fees are subject to a distinct tax treatment compared with fees for other personal assignments — such as consulting engagements — which may be invoiced through a limited liability company, thereby enabling a more favorable structure and greater flexibility. This differentiated treatment can give rise to increased costs and a heavier administrative burden for companies that rely on external board expertise.
As highlighted in our report "Svenska styrelsers ersättningar och arbetssätt," (available in Swedish), published in January 2026, these challenges become particularly complex for companies that engage non-Swedish board members. While several European countries maintain rules comparable to those in Sweden, several jurisdictions continue to permit invoicing arrangements. Swedish companies must consequently assess the applicable withholding tax obligations and determine whether employer social security contributions are payable in Sweden or in the relevant foreign jurisdiction.
The Confederation of Swedish Enterprise (Svenskt Näringsliv) has long advocated for reform in this area. In its commentary on the new inquiry, the organization describes the government's initiative as "welcome", maintaining that a reform designed to enhance legal clarity, strengthen predictability, and reduce regulatory complexity would serve the interests of both companies and board members.
The scope of the inquiry
The Government has appointed Administrative Court of Appeal Judge Patricia Schömer to chair the public inquiry tasked with reviewing the taxation of remuneration derived from board appointments and other assignments of a personal nature. The inquiry has been directed to propose legislative amendments that ensure board fees are subject to tax on equal terms with fees arising from comparable assignments of a personal nature. The inquiry's findings are to be presented no later than 31 October 2027.
New legislation on board fees would have positive effects
In our view, the terms of reference of the inquiry indicate that the Government is prepared to consider amendments to the current legal framework. The introduction of legislation permitting board fees to be invoiced through limited liability companies would have beneficial effects for both companies and individual board members. Moreover, such a reform would be expected to resolve many of the practical difficulties that currently arise in connection with the income classification and taxation of board remuneration.
Should the inquiry conclude that board fees may be invoiced through a limited liability company, the question of whether a permanent establishment in Sweden is created for foreign entities must also be addressed. This is of particular relevance where a board member — whether resident in Sweden or abroad — carries out their activities through a foreign company, for example one established in Cyprus, and invoices the board services from that entity. In such circumstances, it should be clarified under what conditions this arrangement may give rise to a permanent establishment in Sweden for the foreign company concerned. We note that this issue does not appear to fall within the scope of the inquiry's current terms of reference, and we would recommend that it be expressly included in order to ensure legal certainty on this point.
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