On 25 November, the Supreme Administrative Court came with a new ruling how compensation paid to foreign workers is to be calculated in order to assess whether the employee may be entitled to so-called expert tax.

The precondition for being granted expert tax relief on the basis of the so-called salary condition is that salary and other remuneration for work in Sweden exceeds two price base amounts on a monthly basis. The ruling is a welcome change to the previous approach about which employer that should pay salary for the employee to be granted the tax relief.

Previously, the authorities have required that the salary should be paid by a Swedish employer or a foreign employer with a permanent establishment in Sweden. The court's ruling means that compensation paid by a foreign employer without a permanent establishment in Sweden can also be taken into account provided that the Swedish employer bears the cost of the compensation.

The Supreme Administrative Court emphasizes that the purpose of having an objective salary criterion is that it should simplify for the employer and provide increased predictability. The Supreme Administrative Court also stresses that what applies according to the law i. e. in order for a remuneration to be covered by expert tax is that it refers to work in Sweden.

KPMG comment

The purpose of the so-called expert tax is to attract highly qualified international experts by offering them a tax relief for work in Sweden.

The previous approach implied that the tax relief was usually not actualized if the foreign expert continued to be paid from the home country, in whole or in part, despite the fact that the work was performed in Sweden and to the benefit of the Swedish employer.

The decision means a welcome clarification and in future employees on so-called split payroll will also be able to include the foreign part of the income to achieve the salary threshold.

KPMG agrees that the decision is in line with the legislator's opinion and with the aim of attracting international experts to the Swedish labor market.

Some uncertainty remains about whether the ruling means that the tax relief can also be applied to compensations paid by a foreign employer and not just that it can considered when calculating whether the salary condition is met. Due to the ruling, the Swedish Tax Agency has announced that their previous position "Are payments from someone other than the Swedish employer covered by a decision from Forskarskattenämnden" is redundant. This can be interpreted as meaning that the expert tax relief can also be applied to compensations paid by the home country employer provided that the cost is invoiced to the Swedish employer.

As the decision is precedent for future implementation, KPMG follows developments closely to assess further consequences.

Please feel free to contact us if you have any questions.

Read more
The article in Swedish

Kontakta oss