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The Swedish Ministry of Finance proposes changes to the tax relief for foreign experts, scientists and other key personnel staying temporarily in Sweden (expert tax relief).  

The amendment, which means that the tax relief would apply for a maximum of five years instead of the current three years, is suggested to come into force on 1 January, 2021. The suggested extension would however apply to stays in Sweden that started after 31 May, 2020. 

An important purpose with the Swedish rules on expert tax relief is to strengthen Sweden’s position in the global market for highly skilled labor by attracting foreign experts, scientists and other key personnel to Sweden. Several European countries, such as our neighbors Finland and Denmark, have similar rules, but with a longer time limit. 

The expansion of the period for the expert tax relief is good news also in the world of sports, where international players are recruited to a large extent. It means an incentive for sportsmen and -women to remain in Sweden for longer. Johan Sander, Tax Partner at KPMG, has commented in an article for the football site Fotbollskanalen.  

An application for expert tax relief must normally be submitted within three months of the work commencing in Sweden. A proposed temporary measure means that employees commencing their stay in Sweden between 1 June and 31 December, 2020 would have up until 31 March, 2021 to file the application.

If the proposed changes are passed, the following applies. 

1. Stays in Sweden commencing on or before 31 May, 2020: Tax relief for a maximum of three years with no possibility of extension. 
   
2. Stays in Sweden commencing after 31 May, 2020, where an application of expert tax relief has already been filed and granted: The extension from three to five years will apply if a renewed application is submitted.
   
3. Stays in Sweden commencing after 31 May, 2020, where no application of expert tax relief has been submitted: Application must be submitted on 31 March, 2021 at the latest. 
   
4. Stays in Sweden commencing on 1 January, 2021 or later: Tax relief for a maximum of five years with no possibility of extension.
   

KPMG comments

We will carefully be monitoring the legislative process. Before the proposition of a temporary possibility to apply for expert tax relief up until 31 March, 2021 has been passed, it should be handled with caution. For example, if an employee commences work in Sweden on 1 August, 2020 and waits until 2 December, 2020 with the submission of the application, then the normal three-month deadline has passed. If the proposed changes never materialize, the possibility to be granted expert tax relief would be permanently lost. 

We still recommend that an application for expert tax relief is submitted as soon as possible while waiting for the amended rules. Once the change has been implemented, a new application for tax relief can be submitted to benefit from the extended time period of five years. 

Do not hesitate to contact us should you have any questions about expert tax relief or other questions. 

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The article in Swedish

Johan Sander
Global Mobility Services
johan.sander@kpmg.se

Ann-Sofie Barnevik Andersson
Global Mobility Services
Ann-Sofie.Barnevik@kpmg.se

Anna Ljungkvist
Global Mobility Services
anna.ljungkvist@kpmg.se