View the latest news and highlights in the field of accounting, financial reporting, auditing, taxation and more.
New concept” Economic Employer” and possible tax liability in Sweden for foreign workers
Swedish Government has now passed the law which legislates the foreign workers tax liabilities, effective from January 1st, 2021.
Summarily, it will make foreigner worker an income taxpayer in Sweden if the work they do is benefitting a Swedish company or even a foreign company with Swedish permanent establishment.
Swedish companies who are using foreigner company’s workforce will be required to withhold 30% of the invoice to be paid out and report Swedish tax on salary for work performed in Sweden (unless they register themselves in the Tax Agency for F-tax and Employers). The obligation cannot be transferred to the Swedish company or to the company with Swedish permanent establishment.
There is an exception, when the foreigner workers are in Sweden and if the work is done within 15 consecutive days and the total of workdays in Sweden does not exceed 45 days per a calendar year. When calculating workdays, only days the workers works are counted.
There are some uncertainties and not all the specific questions are clarified by the Tax Agency, but we’ll work on getting answers.
Prepare a preliminary corporate income declaration to avoid taxation surprises in 2021
Many companies have been economically affected by the corona-pandemic and they have consequently adjusted their preliminary income tax payments to Skatteverket this year. Skatteverket has provided the same adjustment option even for a year 2021.
All Swedish businesses have even been given a chance to adjust their 2021 preliminary income tax payments, by submitting a 2020 Preliminary Income Declaration via Skatteverkets e-services.
To make sure that the preliminary tax to be paid is adjusted starting January, the preliminary corporate income tax should be submitted at latest November 30th 2020. This is not obligational of course, but not doing so will result the 2021 preliminary tax payments taken from the latest final tax information of 2019, which can be shockingly high, especially if the company has suffered during covid-time.
Please note that the preliminary corporate income declaration can be submitted whenever to adjust the preliminary tax.
Please contact your accounting responsible for more information.
Turnover-based support (omsättningsstöd) for Sole Traders
Turneover-based for Sole Traders.
Since it is obvious that covid-19 has affected many Sole Traders (enskilda näringsidkare), Swedish Government has decided to provide a support for this entrepreneurs group starting in 9th of November.
Support package is built up in a different sections:
In order to apply for support for period of March-April 2020, at least 70 % of net-sales in this period must have been fallen short of the regular sales.
For May 2020 support, the number is 60% and for June-July 2020 the net sales must have gone down at least 50% of the regular.
The negative sales numbers must have been caused by covid-19.
For more information, please contact us.
Co-Ordination number application online
Skatteverket in its part, has done some updating and from now on it is possible to apply for co-ordination number online. No need to have a bank-id, all log in is done via e-mail address:
Update for filial and other entity positions (AB board members as well).
Since the exact Brexit leaving terms are not 100% sure yet, a lot can come in last minute or change, but from Commercial Registry point of view one thing has to be done now:
All the VD and Vice VD-s (directors) of the filial who are residents of UK, now become outside of EU residents and since the requirement of the filial director is to be EU resident, a residency waiver request has to be sent in (“Dispense” in Swedish) before January 2021.
Next year (2021), an Annual Report has to be sent in for filial mother company and filial Swedish side reports.
For VAT matters between EU and UK, it is clear already: All the rules for VAT will be the same as for non-EU after the transition period.
The other taxation matters are not decided yet. Depending on final exit terms, the Tax Agency will release statement when it is due.
What if my company wants to sponsor sports team or event?
You are generally welcome to sponsor sports team, clubs, other non-profit organizations. The question is, is it tax deductible?
Swedish Tax Agency says so: If the sponsor benefits from it with a good image and “goodwill deed”, then the sponsorship is regarded as a gift and is not tax deductible.
In order this to be tax deductible, the company should receive something in return. And those returns should have market-worth, comparing to other advertisement costs. To determine what would be qualified as a “return” is quite complicated. For an example: what is the worth of an advertisement sign of the sponsoring company, what is the worth of it if it is shown in TV? If, for an example, the sponsorship is about helping to rent rooms or ticket production, the marketing worth of this is easier to determine and can therefore considered to be qualified as tax deductible sponsor-fee for the company.
Further, Swedish Tax Agency specifies the size of sponsoring company as a key-playing role here, pointing out that a smaller company can hide private costs of the board and their family members behind the sponsorship.
There are exceptions where the “return” is not required. For example, if there is a strong connection between the sponsoring company and the sponsored team / organization, or if the sponsoring means also that you organize a client-activities in connection with that. This is categorized as representation, which means that the deductible part is limited.
We recommend getting a written agreement with every sponsoring event, describing what the expectations are (if there are returns expected, be specific so they can be connected to the tax-deductible costs). Also, spare all documentation, tickets, invitations, anything that has your logo on, etc.
So long story short – sponsoring gives you no right to tax deduct the cost unless the situation falls onto the specific circumstances described above.
These are benefits of lesser value (meaning: lesser than salary value) provided by employer to employees in order to create better working /health conditions to work. It can be from fruits and refreshments at the office /workplace up to a wellness allowance in sports facilities and training courses.
Most of these benefits are tax-free payments to employees (no other taxed costs either, such as social taxes nor deductions of any kind). However, products to promote and help wellness are not tax free (running shoes, skis, all sort of bought or leased equipment).
In order for these benefits to be considered as personnel care benefits, they should be aiming to all the employees in the company and not total over 5000kr per year. If the employer pays more than 5 000kr per year, the whole amount has to be taxed as salary.
Some examples: gym card, personal trainer services, lighter food items in the office (that does not qualify as separate meals), well-being / entertainment trips and outings.
Also, over the internet wellness services are considered in, such as internet-based trainings programs, weight-loss programs, applications for nutrition and pulse measuring.
All benefit payments are to be backed up with proof, which means spare and bring checks and invoices for the services and allowance used and bought.
More information here. Feel free to ask us for guidance too.
Update: Last day to apply for Redevelopment Support from Swedish Government
31st of August 2020 is the last day to apply for redevelopment support from the Tax Agency.
Please see below for the conditions and terms.
Redevelopment Support from Swedish Government
A new redevelopment support is available from Swedish Government to those companies who have had drastic sales loss during March and April 2020, due to corona-pandemic.
Support is available to apply for from 22 of June until 31 of August via Skatteverket.
Who is eligible?
All companies who have F-skatt registration are welcome to apply for support. Companies who have tax related or other debts in Kronofogden are not eligible.
Further and most importantly, to be able to apply a company must have reported a net sales turnover minimum of 250 000 during the last financial year.
Net sales should have reduced at least 30 % during March and April 2020 when comparing with March and April 2019. Reducing cause has to be covid-pandemic related.
What kind of sales turnover is counted in?
Sold goods and services that are the usual part of company’s daily operations.
How much is the support in numbers?
It depends how much the company’s sales have reduced during the above mentioned period. Minimum support given in 5000kr and maximum is 150 Mkr.
Additionally, if the given support is at least 100 000kr, there is possibility to get an economical aid for administrative costs up to 10 000kr.
Please contact us for more info.
Byggnads contract bargaining is forwarded to October 2020 this year.
Usually it is in May when the bargain details will be effective, that means also that the salaries will be raised certain percentage based on the new terms Byggnads negotiates with their opponents in the industry. This year it will be postponed to the month of October. No contracturary salary raises until then.
Swedish Government has decided to lower the social tax from 31,42% to 10,21% during four months of March, April, May and June 2020.
This tax relief can be applied to up to 30 employees per company and up to 25 000 SEK of gross salary per payee and per month. That means for the rest of the salary amount that is raising above 25 000 SEK, a full social tax rate will apply (31,42%). (Meaning the tax relief can be up to 5 300 SEK per payee and per month.)
Please contact us how to fill in the employer declaration, if needed. For already declared March - salaries, there is possibility to redo the declaration.
It is important to note that this specific social tax relief cannot be combined with other regional support.
Growing-suppport (please scroll back for this news earlier in 2019) can still be set for the first employee of the company.
Abovementioned social tax relief is also effective for Sole Traders and part-owners for Handelsbolag. The tax relief is effective for up to 100 000 SEK of the profit and for the whole 2020.
Officially confirmed support from the Swedish government
Deferment /further delaying with taxes and fees:
Companies whose suffering is caused by coronavirus will get chance to apply for a certain support from the Tax Agency, state and Social Insurance Office.
There are two types of deferral:
Defer of the employer fees (social taxes), VAT and deductible taxes.
Defer of paying other type of taxes.
For the first, payment can be furthered up to 1 year from the Tax Agency decision date. Payment deferrals are for max three accounting periods between January and September 2020. The quickest way to get the decision for your company is to wait until 30th of March and use the digital service on Tax Agency’s site.
Secondary, preliminary tax payments can be changed as well.
Tax Agency will not accuse nor blame the company board members for the lack of responsibility in these times. Exceptions are companies who have record of late payments or who are obviously misusing the current situation.
Many employers can have difficulties to submit declarations on time, please note that the Tax Agency is considering that.
The following is the support and help companies/employers get:
First sick-day (karensdag): taken away/no longer in relevant. Meaning that the employees get paid from day 1 they are sick. This will be effective from 11TH of March till 31st of May 2020. All the social-insured here can request compensation back in time (retroactively) from the Försäkringskassan (Social Insurance Office).
No need for doctors-note for the first 2 weeks of illness. This is for all type of sickness, not only covid-19. Effective from 13th of March. (end date not decided).
Sick-pay for the first 2 weeks is paid by the state, instead of the employer. In effect from 1st of April.
Short-Time Work Allowance (Korttidspermittering):
This is for employers who are juridical persons or sole traders and have active business.
“Short-Time Work Allowance” means that if the business is suffering from the current virus-situation, employees can work shortened hours with still receiving more than 90% of their salary. The state will step with help to achieve this.
Employees can go down with their working hours to 80%, 60% or 40%. (nothing else, in order this help from the state to be effective).
If employee is working only 80% of their usual time, they’ll get 96% of their usual salary.
Employer pays 81% of the salary, state helps with 15% and the employee loses 4% of the salary.
If employee is working only 60% of their usual time, they’ll get 94% of their usual salary.
Employer pays 64% of the salary, state helps with 30% and the employee loses 6% of the salary.
If employee is working only 40% of their usual time, they’ll get 92% of their usual salary.
Employer pays 47% of the salary, state helps with 45% and the employee loses 7,5% of the salary.
Apply for this support from the state starting 2020-04-07, can also be applied back in dates starting 2020-03-16.
Beyond this support, the government has suggested some other things, which still are not confirmed. One of the suggestions is to temporarily lower the employer fees/social fees.
As soon as any clarification comes regarding yet unconfirmed support from the Swedish government, we’ll update you.
Proposed Crisis help-package
Proposed Covid 19 Crisis help-package for Swedish companies by the Swedish Government and Tax Agency:
This is what Swedish government discusses now, as of 18th of March 2020, we will let you know if / when it is confirmed and whether there are any changes to the initial proposal:
1. Help in case of shortened work-hours for employees:
Employers fees (social taxes) can be lowered to half through state covering the rest and the goal is that the employee will get over 90% of the regular salary.
Proposal change is to start from 7th of April and be effective the whole 2020 and can be backdated from 16th of March.
State is willing to temporarily take the sick-leave costs from Employers, during the months of April and May. The same would be effective for Sole Traders from day 1 till the 14th of sick day.
2. Liquidity help through tax account. Proposal is about the deferral of the
employer wages (social taxes, preliminary income tax of the salaries and VAT payments (that are declared monthly and quarterly). This includes 3 months of tax payments with deferral period of 12 months as longest.
It is proposed to be effective from the 7th of April but can be backdated retroactively from the 1st of January 2020.
(Explanation: the companies that have paid their taxes in January until March 2020 can have the amounts paid back by the Skatteverket. Deferral is going to be accepted only to companies who have had good tax-paying record).
This will be decided upon on the 19th of March 2020 and will be more detailed.
We will keep you updated.
3:12 Regulations about dividends
So called 3:12 regulations about dividends and taking the salary from your company.
What is 3:12 regulation?
This regulation pinpoints how a company share owners are taxed after taking out the dividends from the company. This regulation will be extended to the capital profit while selling the company.
Who can use the 3:12 regulation?
Owners of the limited company
What is the limited amount (gränsbeloppet) for this?
The owners of the company have every year right for dividends, taxed with 20%, up to a certain limited amount. (The same goes with the selling of the shares).
There are two ways to come up with limited summary. Main regulation and simplification regulation. It is up to the shares owners to decide, which one to use.
What is simplification regulation here?
This means that the limited amount is calculated with a template summary, which are 2,75 basic income amounts. Limited amounts are divided between the shares owners, with the beginning of the year status (1 January).
There is only one template summary per company and it is divided between the owners from the shares percent they owe. Let’s say there are two owners who owns 50 % each, they’ll get half template summary per person.
Template summaries for 2019: 171 875 kr and for a year 2020 – 177 100 kr
What is the main regulation?
That means the limited summary is calculated by the cost of the shares you owe in your company. Main regulation can also lead, under some circumstances, to calculate the limited amount based on the company’s paid out salaries during the previous financial year.
In order to calculate the salaries, the owners have to take out recommended minimum salary amounts and own at least 4% of the capital in the company. Having done this, it is possible to use the 50% of the company’s total salaries as the limited amount (gränsbelopp).
To take out too little salary from your company can have a big impact on your dividends. So if you want to have a possibility to count on the salaries, it is important for the owners to take out right amount for salary.
Long story, complicated story – we’ll explain further, talk to us.
Reduced shares capital
The government has proposed a new law, where the requirement for a limited company shares capital will be reduced from 50 000 kr till 25 000 kr. This will, hopefully, make a startup of own company more attractive.
Tax regulations that will be in effect from August 1st 2019
Lowered employer taxes for persons between 15 and 18 years of age. Total for the employer to pay, would be pensions tax of 10,21 %.
“Grow-support” will be extended up to 24 months. Company that will employ its first employee has a right for lower employer taxes. Changes will be executed for employments that started after the 28th of February 2018.
*Some exceptions apply, please ask us directly about this.
Other two new regulations are applying to fossil fuel in the power heating plants and taxation for electronics that contain dangerous chemicals. Interested anyway? Please let us know.
Deadline for Income Declaration
Note that 2nd of May is the last day to sign off and leave in your personal Income Declaration! That includes Sole Traders.
Tax Agency will look closer into these areas
These are the main business areas that Swedish Tax Agency has decided to look closer into when examining 2018 Income Declarations:
Food and Beverage, Construction, Car reparation, Beauty salon and cosmetic procedures.
The main focus will be in the work environment and labour issues.
AGI (Employer Declarations in the Individual level) systems are expected to help sorting out all kind of fraudelent issues.
Other business areas that are under closer scrutinity are cryptocurrency and internet sales (through social media) companies.
New laws 2019
Here we have selected some of the year 2019 new regulation that concern mostly the entrepreneurs:
Karensavdrag (the so called sick day -waiting day is replaced with the waiting (karens) deduction instead)
Practically it means that the employer can deduct 20% from the sickness payout per week.
The meaning behind this is that the deduction has the same percentage and is not dependable what time the employee applies her sickness on the first sick day.
Reduced corporation tax
Reducing will be in effect in two levels. From 22% to 21,4 % will be reduced for companies with financial year beginning after 2018-12-31 and to 20,6 % for companies with financial year beginning after 2019-12-31.
Employer declarations in individual level (AGI)
A lot talked about it already. The employer will declare employment taxes monthly to Skatteverket directly with employee’s social security number. This what was before done at the end of the year, will be now done in monthly basis.
Main entrepreneur in the construction field has responsibility for unpaid salary wages
Shortly, if the under entrepreneur is refusing to pay its employees, then main entrepreneur in this particular construction site is responsible to pay out salaries to under entrepreneurs employees. All contracts must be signed and present and this regulation will be in effect for project contracts signed after 2018-12-31.
Higher job tax deduction and higher ground deduction for pensioner
This is in focus for lower income individuals. Also pensioner will have lower income tax with this regulation.
Higher limit for state income tax for employee salaries
For a tax year 2019 employees will pay state tax with 20% for part of income that is higher than 490 7000 per year and 25% for part that is higher than 689 300 kr per year. This means that an employee’s monthly salary can be 42 000kr without the mandatory state income tax. (Before it was 39 000kr per month).
AGI declaration (employer declaration)
From January 2019 Swedish Skatteverket will imply a new method for Employer declarations. That means salary taxes will be declared in accordance with the employee’s personal numbers.
So far Skatteverket has been using so called KU10 declaration to match the employee and paid salary taxes. This will change now, to a monthly matching.
For an accounting system it means a more detailed payroll service, matching and declaring one by one. The first decalaration of AGI will be submitted in February 2019.
Corporate tax reducement
Swedish Parliament made a decision earlier in the summer of 2018 to reduce the corporate tax from the present 22% down till 20.6%. The new regulations will be in effect from the new year (January 2019) and the reduction will occur in two steps till it’s full availability by the year 2021.
In 2019 the tax reduction will be 21.4% and by the 2021 the last step of reduction process will be 20.6%.
This will also change the expansion fund tax rate and some transitional provisions regarding accrual funds and affiliated group (koncern) contributions.
Warning for all types of fraud!
It has come to media attention that there have been many fraudulent requests for Mobile Bank-ID signings. Please be alert and careful before you sign with your Mobile Bank ID and make sure that in your mobile screen comes up the name of the service provider or account where you are about to sign in, as double or “silent copying” can occur by the imposters.
Another fraud alert is for the “fake invoices”. Before making payment or agreeing to any contract or note, please make sure you know the sender and you are aware of their terms, even with their “fine print”.
Here is a published list of companies which can try to get your agreement to use their services or issuing invoices without prior contact with you.
As a brief update from ID06 related matters, we would like to let you know that Swedish Tax Agency along with the Sveriges Byggindustri has come to a conclusion where it is necessary to change the ID06 registration regulations. The plan is to change and update all up to date registered ID06 cards. The new ID06 card system project will be named ID06 AB with technical platform LoA2 (Level Assurance 2).
The reason behind the change is that there has been lot of fake cards and fraudulent registrations for non-existing employees. It is not reasonable to start the correction to the existing cards, therefore during the upcoming year all cards will have to be reissued with new regulations. New cards will be registered most likely with employers identification documents (mobile bank id) and the desired security level will be the same as bank logins.