Payroll Outsourcing Services for Companies

Since the 1st of January 2002, both domestic and foreign employers have been required to register with and file income statements with the Swedish Tax Authority (Skatteverket). The Act (SFS 2001:1227) - as stated in Chapter 6, Sections 1 and 2 - requires the filing of income statements by any organization or individual who has paid out taxable remuneration (including benefits in kind) for gainful employment to an individual or to the estate of a deceased person in Sweden or working abroad. The act makes no difference between Swedish and foreign employers. This means that from the income year 2002, foreign employers/payers with no permanent establishment in Sweden have to file income statements for salaries, wages, fees, and other taxable benefits in kind paid to an employee/payee in Sweden provided that the recipient has:

1. Performed work in Sweden and is taxed for that income in Sweden or is covered by the Swedish social security system, or
2. Performed work abroad and is covered by the Swedish social security system according to a certificate on applicable legislation on form E 101.

The income statements must be filed no later than the 31st of January the year following the income year; i.e. no later than the 31st of January 2005 for the income year 2004. The employer/payee is also required to send a copy of the income statement or an equivalent end-of-year income statement on the employer's own form to the employee/payee.

It is important to note that the Act includes organizations and individuals that do not have a permanent establishment in Sweden.

Company Taxes in Sweden

Sweden has a nominal corporate tax rate of 28% (25% effective rate). Sweden has also introduced Controlled Foreign Company (CFC) rules that now apply to foreign entities that are subject to an effective tax rate that is less than 15.4%.

Labor Regulations

Swedish employees have a number of benefits that are defined and regulated by the government that foreign employers need to be aware of. Three of the most common areas that foreign companies must be aware of include vacation regulations, sick pay regulations, and tax treatment of benefits.

• Employees are entitled to a minimum of five weeks vacation per year during which they get a slightly higher pay rate than their normal salary.
• Employee sick pay benefits have specific procedures that both the employee and the employer are required to follow. Employees are not paid for the first day of sickness. The employer is responsible for the next thirteen days of sickness during which the employee is paid at a reduced rate. Thereafter, the government provides the sickness benefit (starting with the fifteenth day of sickness).
• The Swedish government has strict regulations regarding expenses and the taxation of benefits.

Organizations in Sweden are impacted by social legislation, regulations, and national labor union frameworks that create a complex labor environment. Some unique aspects of Swedish socialism include policies relating to tenure and promotions, parental leave, sick child care provisions, pensions, expenses, and pay raises. APS has experienced consultants available to assist your organization in developing payroll and human resource policies that will meet Swedish regulatory requirements.

Labor Relations

Most employees in Sweden belong to one of the national labor unions. An employers union negotiates broad labor framework agreements with the various labor unions.

Managing Payroll and Human Resources

APS provides a one-stop solution through our team of professional consultants and support staff - whether you are a large organization or self-employed, we are here to help you navigate the complex tax, immigration, and regulatory environment in Sweden.