Regularly recurring visits could constitute a permanent stay in Sweden

According to a very recent advance ruling, regularly recurring visits to Sweden, totalling 111 nights during a twelve month period, are considered to constitute a permanent stay (habitual abode) in Sweden. Accordingly, the individual is liable for taxes on all income in Sweden.

Individual A is a Swedish citizen and has sold his permanent place of residence in order to move abroad, together with his wife. After the move, A will serve as a non-executive chairman of the board of directors in a Swedish company. The couple has two holiday homes in Sweden.

A expects to stay 119 nights in Sweden during a twelve month period, primarily due to his role as Board Chairman and also as he and his wife wish to make use of their holiday homes and visit Sweden during Christmas, Easter and the summer. The visits to Sweden are expected to last between 2-8 weeks on each occasion. Between these visits to Sweden, A will reside abroad during periods of 8-9 consecutive weeks.

The Council for Advance Tax Rulings has concluded that A will be visiting Sweden regularly on the basis of a certain pattern of visits. The periods abroad are longer than the visits in Sweden but they are not longer than approximately two months at a time. The Council is of the opinion that the visits in Sweden are of such a scope and regularity that they constitute a permanent stay in Sweden. Consequently, unlimited tax liability in Sweden will apply. This applies even if A would spend only 111 nights in Sweden during one year.

If A would reside abroad more than six months prior to beginning to visit Sweden, the permanent stay would start on the day on which A returns to Sweden for the first time after his move from Sweden.

Comments

The advance ruling is in line with the previous decisions from the Supreme Administrative Court (for example, Yearbook of the Supreme Administrative Court 2008 ref.56), even if the number of days in Sweden is somewhat lower in the case herein referred to than applied in previous decisions.

In order for a visit or visits to constitute a permanent stay, there is a requirement that they take place during a consecutive period of six months or longer, during which the person stays overnight in Sweden. When one assesses the long-term nature of the stay, consideration is not given to ”temporary interruptions in the stay” in Sweden. A visit abroad of more than six months terminates always an ongoing stay in Sweden. Apart from this, it is often difficult to predict what applies for an individual visiting Sweden during more or less regularly recurring periods. This uncertainty implies, in practice, problems and administrative challenges for both the employer and employee, as well as for private individuals in general.

One means of increasing the predictability of the assessment could be to introduce a rule which, for example, stipulates that an individual visiting Sweden during more than 183 days during a period of twelve months is to be seen to incur a permanent stay in Sweden. The rule could be supplemented by the stipulation that if the individual resided abroad without an interruption during more than, for example, 60 days, then a new twelve month period would begin to apply. In such a manner, both the taxpayer and the Tax Agency would know what is to apply and could act accordingly.