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Simplified expert tax

October 2011 - Tax & Private Client. Legal Developments by Delphi.

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The purpose of the rules when they were introduced was to strengthen Sweden’s international competitiveness and to create incentives for companies to choose Sweden for start-ups and encourage companies to locate or retain leading management functions in Sweden.

According to the Swedish Income Tax Act ("Tax Act") relief is provided for experts, researchers and other key employees when they meet certain qualifications, such as not being a Swedish citizen and not having lived or resided permanently in Sweden at any time during the five calendar years before the calendar year of starting the employment.

There are three different groups of people referred to:

  1. Experts with specialist tasks with such a knowledge level that is considerably difficult to recruit within the country.
  2. Individuals with research and development tasks at the same level as above.
  3. Individuals with managerial or other tasks making them considered employees with a key position in the company. This group does not require difficulties recruiting within the country, the only subject for assessment are the significance of the tasks.

In practice it has been very difficult to meet these requirements as finally decided by the Taxation of Research Workers Board (Sw. Forskarskattenämnden) which has called for an update of the rules. The legislative change results in an amendment to the Tax Act which states that employees with a salary exceeding two price base amount (SW: prisbasbelopp) per month will qualify for a tax relief regardless of their qualifications or job assignments. This way, a qualification assessment will be superflouos; a tax relief shall always be granted for a person with the required salary (including other benefits) or higher. The applicable amount for 2012 is SEK 88 000 per month, making the minimum annual salary SEK 1 056K (appr. USD 180K). A “specialist/expert” not reaching that amount of monthly salary may still be able to qualify for a relief under the current rules. The new rules will start to apply as from 1 January 2012.

 

The procedure will still be the same for being granted the status, i.e. an application must be filed with the Board, however, those experts with higher salary than the above will automatically be granted the tax status.


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