Aurenav Payroll Services for Individuals

APS provides specialist support for self-employed (e.g. freelance consultants) and companies that intend to or currently carryon business activities in Sweden. APS can also assist expatriates needing help with immigration, relocation, and individuals that need help with tax and social benefit issues.

Employee vs. Independent Contractor

Business activities implies economic activity. For legal entities such as limited companies or partnerships, it is assumed that all activities carried out are business activities. Individuals may also be taxed on income from employment or capital.

Three conditions must be fulfilled if you as an individual are to be regarded as carrying on business activities. These conditions are independence, the intention to make a profit and permanence. Above all, the condition “independence” must be fulfilled. When the Swedish Tax Agency assesses independence, several factors are taken into consideration. The requirement for independence means in most cases that the entrepreneur accepts assignments from several different principals and decides himself how the assignments are to be carried out. His own equipment and tools are often used, and the work is as a rule carried out on his own premises.

Self-employment often involves financial risk in the form of costs for premises, equipment, and goods in stock, inventory assets and employees.

If you regularly work for only one or a few principals, this is generally looked upon as employment.

Foreign employers have a duty file income statements for any remuneration that has been paid to anybody who is covered by Swedish social insurance or who is likely to be taxed in Sweden.

Whether or not a foreign entrepreneur is to be judged as permanently established in Sweden depends on how the person carries on his business activities here.

Permanent Establishment

You are permanently established if your business has a permanent establishment in Sweden. You must then pay tax on the income you derive from your business activities. A permanent establishment is a permanent place where the activities of a foreign entrepreneur are carried out. It may be a shop or an office for example, or even an office in your place of residence. If the business management is here it may mean that there is a permanent establishment. Similarly if there is an agent or a representative who is dependent upon the foreign entrepreneur and can sign a binding agreement. Building work or other types of contracting work may imply a permanent establishment. In this case the duration of the contract work may be relevant. A company with a permanent establishment is regarded as a Swedish employer.

F-skattsedel (F-Tax Card)

Foreign entrepreneurs who want to conduct business activities in Sweden can apply to register for an F-tax card. If you engage the services of a self-employed person or a company that has an F-Tax card you should not deduct tax nor should you pay any employer’s contributions (social security contributions) on the amount you pay for the work.

F-Skatt Bevis (F-Tax Certificate)

All self-employed (independent contractors) and companies that handle their own income tax, VAT taxes, and employer social taxes are required under Swedish law to have an F-Skatt Bevis. Foreign companies that are hiring independent contractors in Sweden need to obtain a copy of the individual's F-Skatt Bevis.

An individual who has been issued an F-Skatt Number is required to file either a monthly or a yearly tax declaration. A self-employed person who makes less than SEK 2M per year can file an annual tax declaration. In most cases, a self-employed person will be required to pay a monthly preliminary tax. The requirement to pay monthly preliminary taxes exists until an individual files an application to deregister - this process typically takes between 30 and 60 business days.

VAT Registration

If you are liable for VAT you have to be registered for VAT in Sweden. Even if you are not liable for VAT in Sweden you have to be registered for VAT if you:

• Transfer goods to another country within the EC. By transfer, it is meant that you transfer goods to your operations in another EC country without the goods changing ownership.
• Sell goods exempt from VAT to another EC country because the purchaser refers to his VAT registration number.
• Export goods or services when you have the right to claim a deduction (the right to refund) for input VAT in Sweden. By export, is meant that you sell goods or services to a country outside of the EC.

When a foreign entrepreneur sells goods or performs services in Sweden, it is normally the purchaser who is liable to pay VAT if this purchaser is VAT-registered in Sweden (reverse tax liability). You do not therefore, as a rule, have to be registered for VAT in Sweden if all your customers are VAT-registered.

Registration as an Employer

If you have employees in Sweden you may be obliged to register as an employer with the Swedish Tax Agency. This applies if you are going to have employees in Sweden for whom you have to pay employers’ contributions (social security contributions). Employers’ contributions are based on the salary that is paid out to an individual who does not have an F-Tax card and who works in Sweden. If you have made an agreement with your employees that they are to be responsible for their social security contributions you do not have to pay employer’s contributions for them.

Foreign employers have a duty file income statements for any remuneration that has been paid to anybody who is covered by Swedish social insurance or who is likely to be taxed in Sweden. These statements must be filed before January 31st for the previous tax year (The Swedish tax year is the same as the calendar year).