Economic Employer - New Legislation For Short Time Workers And In Sweden As From 1 January 2021

Published date15 January 2021
Subject MatterEmployment and HR, Tax, Employee Benefits & Compensation, Income Tax
Law FirmGrant Thornton Sweden
AuthorIda Lowden

The newly introduced economic employer concept in Swedish domestic tax legislation will reduce the possibility to obtain tax exemption in Sweden under the 183-day rule. The amended legislation will have significant impact on short-time workers in Sweden and their foreign employers and add demands to the Swedish customer.

In general, a non-resident employee working temporarily in Sweden for a foreign employer will be liable to pay income taxes in Sweden as from day one in situations where the work carried out in Sweden should be seen as hiring of labor to a Swedish company - the economic employer. In practice, the main criteria to assess whether an employee is taxable in Sweden or not, is to ascertain which entity that is the beneficiary of the employee's work, and not which entity that pays the salary...

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