New rules apply from January 1, 2021. The period for which tax relief, the so called “expert tax relief” can be granted has been extended from three to five years.
Foreign executives, researchers, experts and other key persons who temporarily work in Sweden may apply for a special tax relief. Primarily this means that only 75 percent of the “expert’s” income is taxable and included in the base for employer’s social charges. Prior to January 1, 2021 relief could be granted for the first three years in Sweden. From January 1, 2021 the period for which relief can be granted has been extended from three to five years.
In order to be qualified for tax relief the foreign expert must, among other things, have expert knowledge within technically advanced or knowledge intensive operations or be a highly qualified researcher, a person in a top management position or other key person. There is also a simplified procedure which means that individuals with a monthly salary exceeding two price base amounts are considered experts. For 2021 the monthly salary has to be at least SEK 95 201 in order for tax relief to be granted in accordance with the simplified procedure.
The purpose of the extension of the period of validity is that the Swedish rules in a better way shall compete with and correspond to rules in other European countries. In the proposal it was emphasized that it is important that the rules are competitive since companies established in Sweden would otherwise have a disadvantage in recruiting foreign experts, researchers and other key persons.
The change came into effect on 1 January 2021 but will apply on stays in Sweden that commenced after May 31, 2020. The purpose of the transitional regulation is that companies should not have to postpone their recruitment until the decision on the new rules was taken.
Transitional regulation for a person whose stay in Sweden started on 1 June 2020 or later
They who have already applied and received a decision with a period of validity for three years need to file a new application in order to receive a decision applicable for five years. A new application can be filed provided that the stay in Sweden did not commence before 1 June 2020.
An application for tax relief should normally, at the very latest, be filed with the Taxation of Research Workers Board three months after the start of the stay (and work) in Sweden. If the stay in Sweden started during the period 1 June – 31 December 2020, a new application - in order to receive the five year relief instead of the three year relief - should be filed no later than March 31, 2021. The original application must in such a case also have been filed within three months from the commencement of work (and stay) in Sweden.
Lillon Lindberg works with international personal income taxation at PwC’s office in Stockholm. Cecilia Arrhenius works with international personal taxation and social insurance at PwC’s tax department in Malmö.
Lillon: +46 (0)10-213 31 77, firstname.lastname@example.org
Cecilia: +46(0)10-212 67 46, email@example.com