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Those who receive payment from a non-Swedish employer
From 1 January 2021, new regulations apply if you live in Sweden and work here for a non-Swedish employer or if you are living abroad but working in Sweden.
Living in Sweden and working here for a non-Swedish employer
From January 2021, new regulations apply if you live in Sweden and work here for a non-Swedish employer. If you are working in Sweden but live abroad, please see the relevant information below.
What do the new regulations mean?
Previously, non-Swedish employers without a permanent establishment in Sweden were not obliged to deduct tax from earnings and benefits paid for work carried out in Sweden. If you have worked for a non-Swedish employer with no permanent establishment here, you will have paid your own preliminary tax on a monthly basis.
From 1 January 2021, non-Swedish employers are obliged to deduct tax from salaries and benefits for work carried out in Sweden. Your non-Swedish employer must register as an employer in Sweden – if it is not already registered – and must declare the tax deductions in a monthly PAYE tax return.
What do I need to do?
If you have paid your own preliminary tax during the 2020 income year, you will probably be notified in January 2021 of the preliminary tax you are due to pay throughout the 2021 income year. Since you no longer have to pay your own preliminary tax, you will need to file a preliminary income tax return to avoid paying too much. You can file a preliminary income tax return using our e-service, or fill in a paper form. In the “Other information” (“Övriga upplysningar”) section of the return, write that your preliminary tax payments should be stopped because your non-Swedish employer will now deduct tax from your salary instead. Keep in mind that preliminary tax payments for 2021 start on 12 February 2021. If you are due to make a preliminary tax payment on 18 January 2021, you must pay it yourself as this is the final payment for the year 2020.
How much tax will be deducted?
Non-Swedish employers will not deduct tax according to different tax rates and tax bands. They must deduct preliminary income tax at 30% unless notified by the Swedish Tax Agency that a different rate should be applied. To ensure that the preliminary tax you pay is as close as possible to the final tax due, you can apply to the Swedish Tax Agency for an adjustment to be made to your preliminary tax. You will then receive a decision notice stating which percentage of your earnings your employer should deduct for tax purposes. You must give the decision notice to your employer so that tax deductions can be made at the correct rate. You can apply for an adjustment to be made to your preliminary tax through our e-service, or by filling in a paper form.
- Adjustment application (E-service, in Swedish)
- Form: SKV 4302 (”Adjustment application (changing preliminary A-tax) in Swedish)
What if I have a social security agreement?
If you have a social security agreement with your employer (which means you have agreed to pay employer contributions in Sweden instead of your employer paying them), this agreement is unaffected by the new regulations. You must continue to declare and pay employer contributions using the specific registration number allocated to you. However, your employer must deduct preliminary tax from your income and declare these deductions to the Swedish Tax Agency in monthly PAYE tax returns. You and your employer can also choose to end the social security agreement. If you do so, your employer will be responsible for declaring and paying both deducted preliminary tax and employer contributions. You can find more information below on what you need to do when a social security agreement is ended.
Living abroad and working in Sweden
This information only applies to you if you are living abroad but working in Sweden.
From 1 January 2021, the 183-day rule no longer applies to employees who are outsourced. If you are living in Sweden on a permanent basis and working for a non-Swedish employer, the above regulations still apply to you.
What is the 183-day rule?
In certain circumstances, a person living abroad who comes to Sweden to work for a limited period may be exempt from paying tax in Sweden. The 183-day rule is part of the legislation on special income tax (“särskild inkomstskatt” or “SINK”) for people living abroad.
A person living abroad is exempt from paying income tax in Sweden if all of the following conditions are met:
- The person lives in Sweden for no more than 183 days during a 12-month period.
- The person’s salary and any other benefits are paid by a non-Swedish employer.
- The person’s salary and other benefits are not paid by a permanent establishment that the employer has in Sweden.
From 1 January 2021, the 183-day rule no longer applies to employees who are outsourced. However, it still applies to employees who are not outsourced.
» Apply for Special income tax for foreign residents (SINK)
What is outsourcing?
Outsourcing of labour is when an employer, or a payer of salary and other benefits, hires out an employee or by other means makes him or her available to work for the business of another employer or client. To determine whether or not a particular arrangement qualifies as outsourcing, you must take several factors into account, such as who has responsibility for the workplace, who pays for any materials used, and who assigns the staff to carry out the work.
According to the 183-day rule, outsourcing is when a non-Swedish employers makes its employees available to one of the following:
- a Swedish client that is liable for tax in Sweden in accordance with the Swedish Income Tax Act
- a non-Swedish client that is liable for tax in connection with business operations from a permanent establishment in Sweden
The regulations regarding outsourcing also apply to the Swedish state, municipalities and provinces.
Exceptions to the regulations on outsourcing of employees
The revised regulations include certain exceptions for short-term assignments in Sweden. Work carried out in Sweden for a maximum of 15 consecutive days is not considered as outsourcing – as long as the total for the calendar year does not exceed 45 business days in Sweden. Only business days are counted as days worked in Sweden; weekends and public holidays are not included.
New regulations regarding tax deductions
From 1 January 2021, new regulations regarding tax deductions apply to non-Swedish employers with no permanent establishment in Sweden.
Answers to frequently asked questions – Special income tax for non-residents (SINK)
What is the SINK 183-day rule?
Salary and benefits from employment or an assignment are exempt from taxation if the following conditions are met:
- the employment or assignment is not for the Swedish state, or a Swedish municipality or region
- the employee stays in Sweden for no more than 183 days during a 12-month period
- salary and other benefits are paid by, or on behalf of, an employer that is not based in Sweden
- salary and other benefits are not charged to a permanent establishment that the employer has in Sweden
From 1 January 2021, the 183-day rule is no longer applicable to workers outsourced to carry out temporary assignments in Sweden.
What is outsourcing of workers according to SINK?
Outsourcing is when you are hired out by your formal employer to carry out work under the direction and management of another employer or client (known as an economic employer).
How do I apply for SINK?
You can apply either via our e-service, or by filling in form SKV4350 on paper and posting it to us. The e-service will help you fill in the application so that all the necessary information is included.
Does the SINK application process include questions from the Swedish Tax Agency to assess the outsourcing arrangement?
In our e-service, we ask questions to assess outsourcing arrangements. In the paper form, under “Employment income”, we ask whether you have a non-Swedish employer but carry out your work in Sweden for a Swedish client, and ask you to provide the name of the client. However, the paper form does not include follow-up questions to determine whether or not there is an outsourcing arrangement. We may therefore ask you to provide further information, which could delay the process. For faster processing, we recommend that you apply via our e-service.
Will I need to include an A1 certificate with my SINK application in order for a decision to be made?
No.
Am I required to include a copy of my passport or another approved form of ID with my SINK application?
In the e-service, yes. In the form, it is only needed if you do not have a Swedish personal identity number or coordination number.
How long will the SINK application process take?
Unfortunately, it’s difficult to say. It depends on how many applications we receive.
Do I need a decision on tax exemption by the Swedish Tax Agency if my income is exempt from taxation under the SINK 183-day rule?
No, this will not be necessary. However, you can still apply for a decision to be made if you are unsure whether or not the 183-day rule applies.
Are there any exceptions to the SINK definition of outsourcing?
Yes. Short-term assignments are not regarded as outsourcing.
What is a short-term assignment?
A short-term assignment lasts for a maximum of 15 consecutive days, and the worker may not carry out more than a total of 45 days of work in Sweden in a calendar year.
How are days in Sweden counted in working out the 15-day and 45-day limits?
Only working days are counted. If someone works for just part of a day, it still counts as a full working day. Days off – for example, at weekends or due to sickness – do not count as working days.
What happens if a 15-day working period spans two consecutive years?
This can happen, for example, if you start an assignment in December one year, that ends in January the following year. In this case, you must look at how many days you worked in Sweden during each year to determine whether all or part of the working period can be considered a short-term assignment. If you have already exceeded the 45-day limit for the first year, then the part of the 15-day period that takes place in that year will not count as a short-term assignment. However, the part of the period that falls in the consecutive year may be considered a short-term assignment.
I run a sole trader business abroad. Will the new outsourcing rules in the SINK legislation affect me if I come to Sweden to work?
No. The SINK 183-day rule applies only to salary and other benefits – not to income from business operations.
Does the amendment of the SINK 183-day rule affect the application of tax conventions?
Yes, it does.
Does the exception for short-term assignments apply when a tax convention is in force?
No, it does not.
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