“Drrrr, drrrr, drrrr, there are 223 people waiting, we will answer your call as soon as possible”.
Sweden introduced new rules and the economic employer concept from 1 January 2021 together with an obligation for the foreign legal employer to withhold Swedish tax which pays wages and provides benefits.
The new rules also contain an obligation to withhold 30% preliminary tax on invoices from foreign companies for work / services performed in Sweden, unless the foreign unit has registered and received a Swedish F-tax slip.
The purpose of the new rules is to create neutrality between Swedish and foreign service providers.
In a digital world, the Swedish Tax Agency developed and introduced an online portal to be used for F-tax and employer registration and a portal for foreign income tax applications (the tax that staff who work temporarily in Sweden pay).
These have often been used and the first sentence refers to the experience of calling the Tax Agency and asking why you have not yet heard anything about the case that was submitted in May 2021. Our current understanding (September) is that the Tax Agency currently handles cases submitted in March / April 2021
This is probably just a first bump in the road due to the fact that many companies have to make the registrations at the same time. In the long run, it will probably not be a long processing time and we are grateful for the online portal, especially considering that most people around the world have worked from home during the pandemic.
Working from home has made it difficult to print and sign documents, especially if you need multiple original signatures on the same document. As the portal is designed, it has been possible to avoid the registration applications being signed in blue ink and sent with original signatures. Companies have had the opportunity to receive an F-tax slip, and as a result they receive full payment of their invoices, ie avoid 30% tax tax and wait until next year with any refund.
In southern Sweden, about 15,000 to 18,000 people commute daily to work in Denmark and the Copenhagen area. There are special provisions that make daily life as an employer easy. As long as the employee works at least 50% in Denmark during each three-month period, all work performed in Denmark is considered and the Danish employer can withhold Danish tax and pay Danish social security contributions. This means that the Danish employer does not have to handle Swedish employer wage obligations in addition to the Danish ones every month.
Then the pandemic happened and people were asked to work from home. There were travel restrictions between the countries and lots of people worked more than 50% from home in Sweden, which is why the special provision is no longer fulfilled by everyone. Fortunately for employees, there is an agreement on the transfer of tax between Sweden and Denmark, but even if it takes some time for the authorities to make the transfer, it is a fairly convenient feature for occasions like this. The challenge probably lies with the Swedish Tax Agency to estimate the number of employees they need to devote to these tasks this and next year.
For Danish employers who have staff working from home in Sweden, the new rules in Sweden mean that they may need to handle Swedish tax content in addition to the Danish tax content. There are currently lobby groups working hard to develop a new simplified solution that is appropriate for this topic and this region. Well, crisis is the mother of invention so we can be sure that there will be a suitable solution soon!
The new standard is now around the corner – where will the staff work in the next few years? From home, inside or outside the country? From a holiday home in another country? And when recruiting globally, will people avoid moving to another country signing a new employment contract because we all learned to work digitally? This is the time to evaluate and develop guidelines for the desired workplace so that line managers know when to accept and reject questions from staff on this topic and get a register of guidelines.
“Hey, tax officer here, how can I help you?”
Senior Manager, KPMG
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