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Information for non-Swedish enterprises
Non-Swedish employers with a permanent establishment in Sweden must deduct preliminary tax from compensation paid for work carried out in Sweden – just as Swedish employers have to do.
On 1 January 2021, new regulations were introduced for non-Swedish employers without a permanent establishment in Sweden who pay employees for work in Sweden. The latest regulations also apply to non-Swedish enterprises that invoice other enterprises for work in Sweden.
Non-Swedish employers without a permanent establishment in Sweden that have employees working in Sweden
The latest regulations apply to you if your enterprise does not have permanent establishment in Sweden, but you pay compensation to employees working here. If you run a non-Swedish enterprise and invoice other enterprises for work in Sweden, please see the relevant information under “Non-Swedish enterprises that invoice other enterprises for work in Sweden”.
In this context, a non-Swedish enterprise refers to a legal entity or a sole trader with limited tax liability in Sweden.
Non-Swedish employers without a permanent establishment in Sweden must deduct preliminary tax from compensation for work carried out in Sweden
From 1 January 2021, non-Swedish employers without a permanent establishment in Sweden must deduct preliminary tax from employees’ compensation for work carried out in Sweden. Even if work is actually carried out abroad, it may be classified as work in Sweden if it falls within the scope of the employer’s business in Sweden.
Exceptions to the obligation to deduct preliminary tax
If your employees’ compensation is exempt from Swedish tax, in accordance with the 183-day rule included in the regulations on special income tax for non-residents (“särskild inkomstskatt” or “SINK”), you should not deduct any preliminary tax from such compensation. A decision by the Swedish Tax Agency is not required; if you determine that the 183-day rule applies, you do not need to deduct preliminary tax.
You should not deduct any preliminary tax from compensation if the Swedish Tax Agency has decided that such deductions should not be made. For example, we may reach such a decision if employees’ income from work in Sweden is subject to a special arrangement such as the Öresund tax agreement between Sweden and Denmark. As an employer, you can also apply to the Swedish Tax Agency for a decision regarding exemption from deducting preliminary tax from compensation for work in Sweden.
As an employer, you apply by sending a letter to the Swedish Tax Agency, including the name, address and personal identity number or coordination number of the employee in question. In your letter, you should also state the period during which your employee will work in Sweden, and the reason why preliminary tax should not be deducted. Please write the following heading at the top of your letter: “Application for exemption from deducting preliminary tax”. Please send your application to the Swedish Tax Agency at the following address:
Skatteverket
Utlandsenheten
SE-205 31 Malmö
Sweden
If the Swedish Tax Agency has granted an exemption from deducting preliminary tax because the Öresund tax agreement (“Öresundsavtalet”) is applicable, the decision is valid as long as – to the best of your knowledge – your employee fulfils the requirements of the agreement when you pay compensation.
Non-Swedish employers with a permanent establishment in Sweden must deduct preliminary tax from compensation for work carried out in Sweden – just as Swedish employers have to do.
How much tax must be deducted?
If you do not have a permanent establishment in Sweden, you must deduct preliminary income tax at 30% unless the Swedish Tax Agency has specified otherwise.
Swedish Tax Agency decisions that affect deducted preliminary tax include the following:
- Decisions regarding special income tax for non-residents (“SINK”) – If an employee has limited tax liability in Sweden, the Swedish Tax Agency may have reached a decision regarding SINK. You must deduct special income tax at the rate specified by the Swedish Tax Agency. The special income tax rate is usually 25%.
- Decisions on changes to preliminary A-tax – The Swedish Tax Agency may have reached a decision regarding a preliminary tax adjustment. Preliminary tax must then be deducted at the specified rate. The Swedish Tax Agency make such decisions at the request of employees. The aim is to ensure that the preliminary tax paid is as close as possible to the final tax due. If one of your employees informs you of a preliminary tax adjustment decision, preliminary tax must be deducted at the specified rate.
What if a social security agreement is in place?
If you have made a social security agreement with your employees (which means they have agreed to declare and pay employer contributions in Sweden instead of you paying them), this agreement is unaffected by the latest regulations. Your employees must continue to declare and pay employer contributions to the Swedish Tax Agency. However, as an employer, you must deduct preliminary tax from their compensation and declare these deductions to the Swedish Tax Agency in monthly PAYE tax returns. You must also provide statements of earnings and deductions (including compensation for employer contributions) to the Swedish Tax Agency.
You and your employees can choose to terminate the social security agreement. In this case you, the employer, will be responsible for declaring and paying preliminary tax and employer contributions. Click on the link below to find out more about what you need to do when a social security agreement is terminated.
You must register your enterprise as an employer in Sweden
If you are going to deduct preliminary tax for one or more employees, you need to register as an employer in Sweden. You can register through our e-service or by filling in a paper form.
You must file PAYE returns
If you are going to deduct preliminary tax from employees’ compensation, you must file monthly PAYE tax returns. You must also file monthly PAYE tax returns if you are going to pay employer contributions, even if you will not deduct preliminary tax.
Filing PAYE tax returns
You must declare the preliminary tax you deduct from employees’ compensation for work in Sweden by filing a monthly PAYE tax return. If you have to pay employer contributions in Sweden, you must also declare these in your PAYE tax returns.
Your PAYE tax returns must include details for each employee. You can file your PAYE tax returns through our e-service or by filling in two separate paper forms.
- File a PAYE tax return
- Form SKV 4786: PAYE tax return: “Main information about the employer (in Swedish)
- Form SKV 4788: PAYE tax return: “Specific information about the individual payee"
- Further information on filing a PAYE tax return (in Swedish)
- Further information on employer contributions (in Swedish)
- The Swedish Tax Agency’s bank giro number
If you no longer have any employees working for your business, you must deregister as an employer. It is important to deregister so that the Swedish Tax Agency can keep the details of your business up to date, and avoid sending you questions and forms to fill in unnecessarily.
Non-Swedish enterprises that invoice other enterprises for work in Sweden
This information applies to you if you run a non-Swedish enterprise and intend to invoice other enterprises for work carried out in Sweden – in other words, if you are likely to receive payment from another enterprise for work in Sweden.
In this context, a non-Swedish enterprise refers to a legal entity or a sole trader with limited tax liability in Sweden.
The following information does not apply to compensation paid to employees.
The payer must deduct tax
From 1 January 2021, a Swedish enterprise that makes such a payment for work to a non-Swedish enterprise must deduct preliminary tax from the payment – regardless of whether or not the non-Swedish enterprise has a permanent establishment in Sweden. The deducted preliminary tax is determined by where the work has been carried out.
The payer must only deduct preliminary tax if the work is carried out in Sweden, or carried out abroad within the scope of its business in Sweden. If all of the work is carried out abroad, this will not usually be regarded as work in Sweden.
How much preliminary tax will be deducted?
A payer must deduct preliminary tax at 30% on any payment to a legal entity unless the Swedish Tax Agency has specified otherwise.
If you are a sole trader and you receive payment from a non-Swedish payer without a permanent establishment in Sweden, the payer must deduct preliminary tax at 30%. However, if you receive payment from a Swedish payer or a non-Swedish payer with a permanent establishment in Sweden, the payer must deduct preliminary tax in accordance with standard Swedish regulations.
How do I get a refund of deducted preliminary tax?
If an enterprise has paid you for work and deducted preliminary tax from the payment, the preliminary tax will be credited to you when the final tax you are due to pay is calculated. This calculation is made during the year following the income year in question.
If you are not liable for tax in Sweden, the full amount of preliminary tax you have paid will be refunded to your tax account. If you are liable for tax in Sweden (for example, if you have a permanent establishment here), the preliminary tax paid will be used to pay your final tax. Any difference between preliminary and final tax will be refunded to your tax account.
You can apply for an early refund of any preliminary A-tax you are due – but only if you can prove that you have an urgent need for it. It is not be sufficient to state that you have no tax liability in Sweden.
How can I prevent preliminary tax being deducted from payments I receive?
If you do not want preliminary tax to be deducted from payments for work in Sweden, you have the following options:
Apply for F-tax certification
Anyone who runs a business in Sweden can be granted F-tax certification. This means you are responsible for paying your own preliminary tax to the Swedish Tax Agency. If you can show that you are F-tax certified, preliminary tax should not be deducted from payments that enterprises make to you for work in Sweden. You can apply for F-tax certification through our e-service or by filling in a paper form.
- Apply for F-tax certification
- Form SKV 4632: Tax application for foreign entrepreneurs
- Requirements for F-tax approval
Apply for a preliminary tax adjustment
If you are not liable for tax in Sweden, you can apply for a preliminary tax adjustment so that enterprises that pay you for work do not deduct tax from payments made to you. If the Swedish Tax Agency approves your application, you will be notified of our decision, and you can then show the decision notice to any enterprise paying you.
You can apply for a preliminary tax adjustment by writing a letter to the Swedish Tax Agency, including the following:
- details of the enterprise paying you (name, address and corporate identity number/personal identity number)
- the period to which your application refers
- the reason for your preliminary tax adjustment (i.e. because you are not liable for tax in Sweden)
Please write the following heading at the top of your letter: “Application for a preliminary tax adjustment”.
Send your application to the Swedish Tax Agency at the following address:
Skatteverket
Utlandsenheten
SE-205 31 Malmö
Sweden
If all of the work is carried out abroad, this is not usually regarded as work in Sweden, and there is therefore no obligation to deduct any preliminary tax. When there is no obligation to deduct preliminary tax, you do not normally have to apply for an adjustment.
Further information
Exemption from the obligation to deduct preliminary tax
If you are not liable for income tax in Sweden, a payer can apply for exemption from the obligation to deduct preliminary tax from payments made to you. In this case, you do not need to apply for a preliminary tax adjustment. If the Swedish Tax Agency approves an application, the payer will receive a decision notice from us confirming the exemption. The payer should send an application with the heading “Application: exemption from the obligation to deduct preliminary tax” to the Swedish Tax Agency at the following address:
Skatteverket
205 30 Malmö
Sweden
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