Expert Tax regulations have existed for many years in Sweden. They apply to non-Swedish experts, researchers and other key personnel. Based on the regulations, 25% of an employee’s remuneration are exempted from taxation, provided that certain criteria are met.
In recent years Expert Tax regulations have been subject to changes on several occasions, as the qualification period was prolonged at first from three to five years, and most recently to seven years.
Lower price base amounts for expert tax relief could strengthen Sweden's international competitiveness
In a memorandum from the Swedish Ministry of Finance it is now being proposed that the required income threshold, to qualify for expert tax relief, is to be lowered from 2 price base amounts (114 601 SEK for 2024) to 1,5 price base amounts (88 500 SEK).
The aim of the expert tax relief regulations is to strengthen Sweden's international competitiveness and to increase Sweden’s attractiveness as a country, by providing tax incentives, which will hopefully lead to more international companies choosing Sweden as a location when establishing new business.
The memorandum explicitly highlights the significance of Sweden's expert tax regulations having to be competitive, to achieve its purpose. The required income threshold is compared to that of other countries, with Belgium and Finland being stated as having income thresholds that are below the one currently required in Sweden. It is therefore argued that a reduction in the required threshold would make the regulations more competitive in an international perspective.
Potential effects of reduced expert tax relief in Sweden
The recent years’ inflation has led to an increase in the price base amount, making it more difficult to qualify for Expert tax relief based on the income threshold criterion, according to Henning Weitner, Director Expatriate Payroll at Aspia. The proposed changes are therefore effectively addressing this issue and should be viewed as a step in increasing Sweden’s competitiveness and towards a higher number of applications being submitted based on the more predictable income threshold criterion in the future.
The recent years’ inflation has led to an increase in the price base amount, making it more difficult to qualify for Expert tax relief based on the income threshold criterion.
It should be noted that employees can currently qualify for expert tax relief based on two criteria:
- the income threshold
- their level of expertise.
A reduced income threshold would mean that a greater amount of employees would be eligible for expert tax relief based on income level, which is a simpler and faster application process compared to applying based on the level of expertise. Such a change is viewed as beneficial from both an employer and employee perspective.
Furthermore, when applying based on the level of an employee’s expertise there is often an element of uncertainty involved, concerning the approval. In that sense, lowering the required income threshold, thereby increasing the number of applications based on income level, would increase predictability.
New price base amounts for expert tax relief may enter into force on 1 January 2025
The proposed changes are meant to enter into force on the January 1, 2025 and to be applied for the first time to work in Sweden commencing after December 31, 2024. In other words, the new rules will not be able to apply retroactively.
For information read here:
About tax relief - Forskarskattenämnden (forskarskattenamnden.se)
