When hiring a foreign citizen to work in Sweden, there are a number of things that employers need to check. Here, we’ve summarised the decisions and documentation that are needed before calculating the first salary.
Tax liability
When a company employs a foreign citizen to work in Sweden, different tax rules apply depending on how long the employee is to stay in the country. Their income may be exempt from taxation in Sweden in accordance with the provisions in tax agreements that Sweden has concluded with other countries. Consequently, it’s important that you check with the Swedish Tax Agency to find out what applies to the employee in question.
An employee who stays in Sweden for no more than six months can be taxed in accordance with the Swedish Act on Special Income Tax for Those Resident Abroad (SINK). An application for tax under SINK can be made by the employee or employer. SINK decisions result in a tax rate of 25% that the employer deducts from the employee’s gross salary. The employee then does not need to submit any income tax return, but they may not make any deductions from their income, such as for travel expenses to and from work.
Ordinary tax rules apply when, as an employer, you employ someone who lives abroad and stays in Sweden for six months or more. This means that the employee is covered by the same tax rules as those resident in Sweden. If the person stays in Sweden for longer than a year, the person will be registered as resident in Sweden.
If you employ a foreign citizen with a salary in excess of two price base amounts (SEK 95,201 for 2021), or a person with special qualified skills, it is possible to apply for tax relief, known as researcher tax, from the Taxation of Research Workers Board. If the employee receives a decision on researcher tax, 75% of their salary and benefits will be liable for tax and for use as the basis for social security contributions.
Social security contributions
As a general rule, Swedish social security applies and, as an employer, you must normally pay Swedish social security contributions on remuneration that the employee receives while working in Sweden. However, there are some exceptions to this rule, such as in the case of stationing abroad, in which case the employee can remain under their home country’s social security scheme for a certain period of time.
The period during which social security contributions must be paid in the home country varies depending on whether EU regulations, agreements, and conventions on social security or Swedish internal legislation applies. A person may be stationed abroad from an EU/EEA country or Switzerland for up to 24 months, and for 12 to 60 months if the person is stationed abroad from one of the convention countries with which Sweden has an agreement on social security. Under Swedish domestic law, the person can remain under their home country’s social security scheme for up to 12 months when they are stationed abroad. The employee must show a stationing certificate, such as an A1/Certificate of Coverage, to provide their social security affiliation in another country.
Other important things to bear in mind
If you employ someone from outside of the EU, you must check with the Swedish Migration Board that the person has the right to stay and work in Sweden. In most cases, a work permit is required. You must also inform the Swedish Tax Agency if you employ or station someone from outside the EU/EEA or Switzerland in Sweden for work. If, on the other hand, it is a question of stationing abroad, notice must also be given to the Swedish Work Environment Authority.
Do you have any questions as an employer about the rules on foreign staff? Get in touch with us here at Azets. We’re experts in payroll administration, HR, and accounting, and we offer advice to companies that need help.