F-tax may be revoked in case of failure to submit specific information

The F-tax system in Sweden plays an important role for companies and self-employed, as it determines who is responsible for paying social security contributions and taxes. The system is designed to support honest business and prevent abuse, organized crime, and unfair competition. Anyone who conducts or intends to conduct business activities can apply for F-tax, making the business owner responsible for paying taxes and fees, instead of the client deducting taxes.

The Swedish parliament has now adopted the Government's proposal for amendments to the Tax Procedure Act, introducing new preventions for approval and grounds for revocation of F-tax. These provisions will enter into force on 1 November 2025 and are part of the Government's efforts to combat economic crime and strengthen the business climate in Sweden.

Briefly, the new rules consist of the following:

Incorrect payments when installing green technology

A new ground for refusal of approval and for revocation of F-tax is introduced for companies which have not complied with a decision on repayment of wrongly paid out amounts in connection with the installation of green technology. This aims to prevent companies abusing the system of tax reduction for installation of green technology from continuing to have an F-tax certificate.

Foreign companies without a permanent establishment

A new ground for refusal of approval and for revocation of F-tax is introduced for foreign companies which have not complied with an order to provide specific information needed for the assessment of tax liability. This is to ensure that foreign companies operating in Sweden also comply with the regulations.

KPMG’s comments 

By introducing obstacles for approval and grounds for revocation of F-tax, the Swedish Tax Agency is provided with further means to ensure compliance with the rules, as there are currently hardly any consequences for companies not complying with the obligation to submit specific information. A major issue, however, is that F-tax is in principle required for every payment to a foreign company for work performed in Sweden. A foreign company registered for F-tax due to minimal operations in Sweden and where the risk of a permanent establishment is almost non-existent is thus also covered by the rules on special information, arguably creating an unnecessary administrative burden for such a company. KPMG emphasizes the importance of monitoring how these rules are applied in practice to ensure that they truly contribute to a healthy and fair competitive environment.

In this context, it is also important to mention that the European Commission has stated that Sweden's rules regarding the withholding of preliminary tax for foreign companies without F-tax are contrary to EU law. You can read more about this in KPMG's previous TaxNews here and here.  

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The article in Swedish