A “GO-TO Guide” for foreign companies and employers establishing in Sweden

As a foreign company, or employer establishing in Sweden, there are many aspects that you should take into consideration to ensure compliance. This article is a short “GO-TO guide”, highlighting, these important areas.

Permanent establishment in Sweden or not?

If you intend to register as an employer in Sweden, there will be a question whether the company will constitute permanent establishment or not. To determine that, we recommend that you take help and perform an assessment in advance.

The assessment will provide you with information about your obligations in both cases with or without permanent establishment in Sweden, such as social security contributions, reporting obligations and insight weather registering a branch or not would be more beneficial.

Economic employer in sweden or not?

Sweden adopted the economic employer concept as of January 2021. We recommend an assessment to establish whether it is a question of hire of labor, i.e., work for the economic employer, or work for the formal employer. If it is assessed that there is an economic employer in Sweden, the 183-day rule will not be applicable, and it will result in that also employees staying in Sweden less than 183 days may become tax liable in Sweden.

Tax, social security contributions and reporting

Limited or unlimited tax liability in Sweden?

There are several factors that determine whether a foreign employee that comes to work in Sweden is to be taxed and how. According to Swedish internal legislation, a person can either be subject to unlimited or limited tax liability in Sweden.

A person who is subject to unlimited tax liability is liable for tax on all his or her global income in Sweden, irrespective of whether the income has its source in Sweden or not. This person is regarded as a tax resident in Sweden.

A person who is subject to limited tax liability is, on the contrary, only liable for tax on income with its source in Sweden. This person is regarded as a non-tax resident in Sweden, and they can apply to be taxed under the Special income tax for foreign residents (SINK) at a 25% tax rate.

Expert tax relief?

If you have a permanent establishment in Sweden and hire foreign employees who are considered either an “expert” or their monthly remuneration exceeds certain threshold, (SEK 105,001 för income year 2023), 25% of their income will be exempted from tax. There could be a good idea to contact someone with the knowledge and expertise to assist you with salary packages and advise from the start when you are assessing your employees.

Social security contributions

To determine whether as an employer you are required to pay full, reduced or no social security contributions in Sweden, we recommend an assessment if a permanent establishment constitutes in Sweden. Another factor to be assessed as well is whether your employees are covered by the Swedish social security system or the social security of their home country.

Employment law regulations

The Swedish labor market entails numerous laws, which regulate the relationship between employers and their employees. However, through collective bargaining agreements (CBAs) the parties may make deviations from the legislation. Consequently, the legislation constitutes a framework within which the parties may regulate the employment terms and conditions in CBAs.

If you have a registered branch in Sweden, if you are a foreign company registered as an employer in Sweden or if you have posted workers in Sweden, the obligations might vary, and it can be wise to contact someone who can assist you with advice.

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Senast uppdaterad:
8 januari 2024