When foreign companies take on projects in Sweden, they must navigate a complex landscape of tax and employment regulations. This article is part three out of three and breaks down the key considerations foreign companies should be aware of throughout their project when working in Sweden.
This article is the third and last of three parts on how foreign companies operating in Sweden can navigate Swedish regulations. You find the other articles below:
Part 1: Navigating Swedish Regulations: Prior to Project Commencement
Part 2: Navigating Swedish Regulations: Throughout Project in Sweden
Navigating Employer Obligations, Tax and Compliance — After Project Completion
After the project it is crucial to ensure that all key factors are fulfilled to be compliant with local regulations and potential requirements set by the client after the project has been completed.
Company De-registration
Several de-registrations in Sweden should be completed to avoid further obligations after project ends, such as employer reporting and annual corporate tax return filings.
Submission of Specific Information or Corporate Tax Return
Make sure that all obligations are fulfilled, such as submission of specific information or corporate tax return after project completion. It is also important to make sure that any corporate taxes are settled compliantly before leaving Sweden.
De-registration of Employees
Employees registered for population purposes with the Tax Agency should de-register when leaving Sweden. It is also important to notify the Tax Agency when returning to the home country in case of address change so that the Tax Agency can reach out to the employee after leaving Sweden.
Employee filing obligations and final tax payments
Individual income tax returns in Sweden are filed with the Tax Agency in the year following the income year. This means that employees who worked in Sweden during year 1 have a filing obligation in year 2. Even after a project concludes in year 1 and the employee returns to their home country, there may be ongoing tax liabilities that need to be addressed. These lingering obligations are important to keep in mind. Also note that any trailing payments paid to employees after leaving Sweden (which is related fully or partially to the work performed in Sweden), for example bonus payments, is considered taxable and should be reported in Sweden.
Summary of Key Actions for Foreign Employers
| 1. | Perform necessary assessment for corporate tax and employer/employee obligations and registrations. |
| 2. | Establish policies and procedures for employees working abroad. |
| 3. | Register for F-tax, VAT and employer purposes as required. |
| 4. | Understand and confirm employment law requirements, such as contracts and collective bargaining agreements and enter into agreement if needed. |
| 5. | Ensure compliance with employee tax liabilities, including employee tax registrations and possible tax applications. |
| 6. | Report and pay tax and social security contributions for employees unless exemptions apply (A1 certificate or bilateral agreements). |
| 7. | Ensure all work permits and documentation are in place for non-EU/EEA employees. |
| 8. | Monitor project duration and employee roles to assess whether a permanent establishment is created, or employee tax liabilities are affected. |
Aspia’s Expatriate Payroll, together with Skeppsbron skatt, offer a comprehensive solution to foreign companies with project and employees in Sweden.
The current legislation in Sweden is complex and require expertise knowledge in multiple legal areas. Note that this is not an exhaustive guide to managing projects in Sweden but serves as a foundational overview of the complexities involved in operating projects in a foreign country. To avoid incompliance and penalties we recommend that companies act before project commencement and seek professional advice.
