Proposal requiring employees from abroad to personally visit the Swedish Tax Agency on the basis of certain conditions

In June, the Tax Agency presented a memorandum with a proposal to introduce the term “economic employer” into Swedish tax legislation. The memorandum also contains a proposal requiring employees who have previously not held a Swedish Personal Identity Number or Coordination Number to visit the Tax Agency, in person, if their stay in Sweden is to exceed five days.

In the memorandum, the Tax Agency proposes that natural persons performing work in Sweden and who are not, nor have been, registered in the national register, or who do not have a Coordination Number, are to apply for registration with the Tax Agency when the work in Sweden is initiated. The purpose of this registration is that the Tax Agency is to obtain knowledge of the fact that the individual in question is working in Sweden in order to be able to register that individual in the tax database. The rule on the obligation of registration does not affect the assessment of whether the natural person is liable for taxes in Sweden for the work executed.

The proposal applies to natural persons regardless of where they are domiciled and regardless of the work executed within the framework of the employment, assignment or other income-producing operations of a permanent or temporary nature. The rules also apply to natural persons undertaking business operations on a corporation tax basis (F-tax card) and who, themselves, execute the work in Sweden.

According to the proposal, there will be two exceptions to the rule on the obligation of registration:

1. A natural person non-resident for tax purposes in Sweden does not need to register if the work is executed during a maximum of five days. For the exemption to apply, there is also a requirement that the work executed in Sweden be undertaken on at the request of the entity making payment of the compensation for the work, and there is also a requirement that this entity be domiciled in another country and does not have a permanent establishment in Sweden.
2. A natural person non-resident for tax purposes in Sweden does not need to apply for registration if the work is executed in his or her own business operations and the net sales do not exceed SEK 30,000 during one income year. The limit of SEK 30,000 applies only to net sales in Sweden.

The rules are proposed to come into effect on 1 January 2019.

Already, today, there are rules regarding permits and required registration when foreign workers work in Sweden. For example, this applies to individuals from countries outside the EU, EEA and Switzerland having work permits to work in Sweden. Furthermore, employers are to inform the Tax Agency when they employ a citizen from another country who is not a member of an EU/EEA country or who comes from Switzerland. Since 2013, there is also a requirement that an employer must also register the posting of a worker coming to Sweden to the Swedish Work Environment Authority when the posted employee begins to work in Sweden. However, such registration is not to take place if the operations in Sweden are intended to take place during a maximum of five days.

Comments

The system of requiring a personal visit to the local tax authorities is already in place in neighboring countries, such as Finland and Norway. Consequently, it is seen as a natural stage for Sweden to introduce equivalent rules in order to, ultimately, protect its tax base. The proposal will probably imply a disruption for the employers coming to Sweden from abroad as they have to dedicate time for the visit. This will apply, not the least, if the work site is not located in the vicinity of a Tax Agency service office. With this in mind, one could imagine that the Tax Agency might consider establishing service offices close to the country’s major airports in the future.

Author: Fredrik Flyrén, former employee at PwC.