Sweden is planning to introduce the ‘economic employer concept’ (ekonomiskt arbetsgivarbegrepp). Are you preparing your business?
Like many countries, Sweden wants to widen and defend its domestic tax base. One of the focus areas is non-resident travel to Sweden, where the failure to comply with proposed new reporting and tax payment requirements as of 1 January 2021 might result in surcharges, interest and other penalties.
The Swedish Ministry of Finance submitted a proposal for consultation in June 2017 that put forward changes to the taxation of individuals working temporarily in Sweden, together with broadening the categories of employees who pay Swedish tax.
This prior initiative from the Government was put on hold during the fall of 2018.
In September 2019, the Government announced that they will resume the implementation of these rules and want to implement the economic employer concept in Sweden as of January 1, 2021.
Sweden has historically seen the employer as the entity paying salary to an employee. As a result, in many situations a foreign employee who is working temporarily in Sweden and paid by a non Swedish entity has not been liable to pay Swedish tax. Many OECD countries apply the economic employer concept which implies that the employer can be another entity than the entity paying the salary to an employee.
In the initial information released by the Government, they state that instead of the entity who pays the salary being the important factor for deciding whether the employee should be taxed in Sweden; the important factor will be who the employee is working for. Some exceptions for intra group situations will be also be proposed.
The Government will get back with more details on the proposal during 2020. We monitor the developments closely.
As well as complying with upcoming new rules, employers will continue to be legally responsible for meeting mandatory requirements in areas such as individual income tax, payroll reporting and income tax withholding, as well as social security payments, corporate tax obligations associated with permanent establishments, and maintaining the proper immigration/work permit documentation.
So even if the details of the Government’s new proposal is yet to be seen, your organization needs to be on top of these developments and analyze how it will impact you.
How KPMG can help
Our Business Traveler services helps both companies and employees to deal effectively with these kinds of requirements. It brings together in-depth expertise in tax, immigration, mobile assignment administration using state of the art technology to make managing a global workforce simple, efficient and more transparent.
- New proposal on the Economic Employer Concept
- Regeringen presenterar nytt förslag om Economic Employer
- KPMG Business Traveller Technology & Service
- The Swedish government plans to introduce stricter taxation for Business Travelers and posted workers in Sweden as of 2021
- Corporate tax implications of business travel
- No implementation of the suggested rules for temporary work in Sweden by 1 January 2019
- Supplementary proposals regarding taxation and payment of tax for temporary work in Sweden
- The Swedish government wants to apply the economic employer concept from 2019
- Proposal on a revised definition of the employer concept
- Regeringen vill införa ekonomiskt arbetsgivarbegrepp per 1 januari 2021
- Införandet av ekonomisk arbetsgivare senareläggs
- Kompletterande förslag rörande beskattning av tillfälligt arbete i Sverige
- Fördjupad analys av regeringens förslag om beskattning av tillfälligt arbete i Sverige
- Beskattning av tillfälligt arbete i Sverige – lagrådsremissen presenterad
- Skatteverket föreslår att synsättet ekonomisk arbetsgivare tillämpas i Sverige
KPMG LINK Business Traveler tool provides companies with great visibility and control in dealing with the compliance and risk aspects associated with business travel, with minimal interruption to employees and the business. You will be able to:
- Track the travel of all employees, including on-the-go tracking via a mobile app.
- Receive instant trip analysis and guidance – fast, accurate and tailored tax, social security and immigration assessments.
- View real-time travel assessments for an employee who is contemplating a business trip.
- View management information which is available 24/7 through a live digital dashboard and generate compliance reports detailing issues and next steps.
- Receive regular updates to tax, social security and immigration rules and logic.
For more information please contact us.
+46 70 756 27 31
+46 72 186 89 96
Partner & Head of Global Mobility Services
KPMG i Sverige