Payroll Tax Consulting
With Sweden being the second highest taxed country in the world after Denmark, there are taxation rules to be aware of when having employees, or being a consultant, in Sweden. The Swedish model is very different from most countries and the government is currently closing loopholes.
Below are examples of the most frequent tax issues we meet in our practice:
Below are examples of the most frequent tax issues we meet in our practice:
Use of the Expert Tax Relief
A recent study shows that many companies located in Sweden do not take advantage of the possible tax break for their foreign personnel who could qualify for the expert tax relief. The reason for this is that the application is a long and tedious process. However, this tax break entitles the employer to only pay payroll taxes on 75% of the salary of the employee. For more information, see our page on the Expert Tax Relief.
Contact us for a preliminary assessment on the outcome of the application.
Contact us for a preliminary assessment on the outcome of the application.
Tax Breaks for Consultants on Assignment in Sweden for a Maximum of 6 Months
Foreign consultants or employees on assignment in Sweden can benefit from a tax break called the SINK tax. This tax break allows the employer to deduct from the gross salary 20% in income tax instead of the average 30%. For more information, see our page on the SINK Tax.
Vacation Premium for Employees Remunerated by a Combination of Commission and Fixed Salary
If an employee is remunerated by a fixed salary only, the vacation premium is 0.43% of the monthly salary per day off taken. If the employee is compensated by a commission only, the total vacation premium is 12% of the total compensation paid (called the 12% rule). By Swedish law all types of vacation pay is generally not to be paid out until the year after it was earned, unless otherwise has been agreed in the employment contract or the employment is about to end.
There is a special rule if the employee is remunerated by a combination of fixed salary and commission. If the commission is less than 10% of the employee’s fixed salary, the vacation premium is calculated in the same way as the employees compensated by a fixed salary only. However, if the commission is more than 10% of the fixed salary for a given year, the 12% rule applies and the vacation premium is, per day off, 12% of the total compensation, divided by the number of days off the employee is entitled to under the terms of his contract.
There is a special rule if the employee is remunerated by a combination of fixed salary and commission. If the commission is less than 10% of the employee’s fixed salary, the vacation premium is calculated in the same way as the employees compensated by a fixed salary only. However, if the commission is more than 10% of the fixed salary for a given year, the 12% rule applies and the vacation premium is, per day off, 12% of the total compensation, divided by the number of days off the employee is entitled to under the terms of his contract.
Sickness Insurance for the Self-Employed
The standard social insurance tax for self-employed comprises a waiting period of at least seven days in case of sickness, which means that no compensation will be paid from the social insurance office (Försäkringskassan) for the first seven days of sickness.
Self-employed persons can choose to have a higher waiting period (14, 30, 60 or 90 days) in order to reduce the health insurance paid together with the social insurance tax. The higher number of waiting days, the lower the social insurance tax.
Self-employed persons can choose to have a higher waiting period (14, 30, 60 or 90 days) in order to reduce the health insurance paid together with the social insurance tax. The higher number of waiting days, the lower the social insurance tax.
Stock and Options as Remuneration for Work
Stock and options as remuneration for work is subject to taxation and the benefit resulting from the stock and options is in general taxed as regular income. This means that the employer must pay the social insurance tax and must withhold the employee’s income tax. The benefit can be tax free in some defined and restricted instances.
We at Aurenav can help you determine if the shares or stock options you provide for your employees is to be taxed and which valuation is to be used when calculating the applicable income tax and social fees.
Our Payroll Taxes Consulting Service
Aurenav stays on top of the latest changes in Swedish labor tax laws. We take a proactive role in keeping our clients in the loop and offer payroll tax consulting services at an hourly rate. Our fee is waived if you sign up for one of our Solution Packages and if your question does not go beyond the standard Swedish payroll taxes field.
We consider all questions pertaining to employment income tax, social insurance tax, vacation tax regulations, sickness tax regulations, as well as taxes on pension and other benefits like per diems and bonuses as standard Swedish payroll tax questions.
We consider all questions pertaining to employment income tax, social insurance tax, vacation tax regulations, sickness tax regulations, as well as taxes on pension and other benefits like per diems and bonuses as standard Swedish payroll tax questions.