30 January 2023
Summary
This bulletin summarises the 2023 employment tax related changes for employers to consider, and reminders in relation to existing compliance requirements.
The Detail
New requirement to provide employee workplace information in Swedish PAYE return or in the yearly statement of earnings and deductions
For reporting periods from January 2023, there is a requirement for the employer to state the place of work in the monthly PAYE return or in the annual statement of income and deductions.
An employee can only have one place of employment with the same employer. The main rule is that the place of work is where the employee performs the majority of the work. However, exceptions apply for employees with more than one place of work and for ambulatory workers. The employer is responsible for determining the employee’s designated place of work.
Reduction for social security contribution for employees working with research and development (Changes)
Companies can obtain a reduction of social security contributions for employees working with R&D.
Amendments are proposed to enter into force on 1 July 2023 and apply to compensation paid after 30 June 2023.
According to the amendments the maximum total deduction from the employer social security contributions for employees working with R&D is increased from SEK 600,000 to SEK 1,5 million per month.
Companies without a permanent establishment (PE) in Sweden pay lower social security contributions than Swedish employers. For this reason, foreign employers without a Swedish PE are only eligible for an R&D reduction comparable to the lower non-PE percentage.
In order to receive the deduction, certain conditions must be met regarding working hours of your employees and the actual work of research and development. The R&D work needs to be properly documented.
Penalty charges if Specific Information is not filed (Reminder)
From 1 January 2021 non-Swedish enterprise without a permanent establishment in Sweden is required to file Specific information to the Swedish Tax Agency in case the foreign entity is:
The foreign enterprise must provide details on its business activities in Sweden, the time period over which the activities have been carried out, and any other information that the Swedish Tax Agency requires to assess tax liability under the Swedish Income Tax Act.
The specific information must be submitted on an annual basis and the filing deadline is the same as for the corporate income tax return e.g. for a legal entity with the year end closing date 31 December, the filing deadline is 1 July 2023 if filed on paper, or 1 August 2023 if filed digitally.
In case the specific information is not filed in a timely manner a late filing fee is SEK 1,250 may be charged. If no income has been filed within three months there can be a second fee, and a third fee after five months.
Tax relief for foreign personnel working in Sweden (Update)
Foreign citizens carrying out particularly qualified tasks or receiving a monthly remuneration above a certain level may obtain tax relief on their Swedish earned income. Tax relief means that 25 percent of the income is exempt from tax.
In case Swedish social security contributions are to be paid, the employee exemption will carry equal reduction of employer social security contributions.
In order to be eligible for tax relief some formal conditions must be met, and the application has to be made within three months after the employee started working in Sweden.
Previously the expert tax relief could be granted for three years. Since January 1, 2021, the expert tax relief can be applied for five years.
If tax relief is to be granted on grounds of the employees remuneration, the gross monthly remuneration for work in Sweden needs to exceed twice the price base amount for the calendar year when work started.
The price base amount for 2023 is SEK 52,500. If work begins in 2023, the monthly remuneration must be at least SEK 105,000.
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