New government bill regarding taxation rules for temporary work in Sweden

Summary
The Swedish Ministry of Finance has on the 23rd of June 2020 submitted a government bill to the Swedish Parliament regarding changed taxation rules for temporary work in Sweden.

The bill denotes that foreign workers who perform temporary work in Sweden for a company in Sweden shall also be taxed in Sweden. The proposed bill thus means that the so-called 183-day rule will not be applied when labour is hired from foreign companies.

Background
Current Swedish taxation rules stipulate that workers who are employed temporarily by foreign companies which are not permanently established in Sweden are not taxed in Sweden if the workers’ stay in Sweden does not exceed 183 days during a twelve-month period.

According to the Swedish Government, the bill aims to prevent Swedish taxation rules from distorting competition, since hired, foreign labour does not pay tax in Sweden. As a result, it becomes less costly for companies to hire foreign labour rather than hiring.

Whether temporary, foreign workers are to pay tax in Sweden is determined by what employer the work is performed for, and not who pays the workers’ wages. In order for the proposed bill not to affect companies that are part of international corporate groups, the proposed regulation will not be applied on work performed for a maximum of 15 successive days in Sweden, given that the work does not exceed a total of 45 days during a calendar year. 

The legislative process
In the next legislative step, the Swedish Parliament will vote on the adoption of the proposed bill. If adopted, the bill is proposed to be entered into force the 1st of January 2021.