Expert tax relief in Sweden to be more advantageous
The Government of Sweden has submitted a bill extending the period for granting expert tax relief from five to seven years. If the Government bill is approved by Parliament, the extension will be in effect for eligible employees commencing work on 1 April 2023 or later. This article explains how the tax relief works and who is eligible to apply for it.
How the tax relief works
Workers eligible for the Swedish expert tax relief, will obtain exemption from income tax and social security for 25 percent of the Swedish employment income and certain employee benefits relating to the move and travel to and from Sweden. An application for the relief requires to be submitted to the Taxation of Research Workers Board (Sw: Forskarskattenämnden) within three months from the commencement of work and must be approved for the tax relief to be in effect.
The approval of the application currently means that the tax relief is available for the period of five years from arrival in Sweden as it is of today. If the Parliament approves the bill for the extension, however from 1 January 2024 the period for which tax relief is available increases to seven instead of five years.
There is a provision for existing eligible workers who commenced their work in Sweden on 1 April 2023 or later to be able to apply in order to extend their current tax relief period to seven years. The application in respect of workers commencing their work 1 April 2023 to 31 December 2023 must be submitted no later than 31 March 2024. The eligible worker should have the intension to utilise the full seven year period of tax relief.
Who is eligible to apply?
To be considered an ‘expert’ in the terms of the tax relief, the worker must be an ‘expert’, ‘researcher’ or ‘key employee’. If, however, the employee cannot be considered an ‘expert’, but the monthly salary exceeds a certain limit, he or she can still qualify for the relief. The monthly salary limit is dependent on an annual price base amount and for 2023 the limit is set to 105 000 SEK. Moreover, to apply for expert tax relief, the employee is required to work for a Swedish company or a permanent establishment in Sweden. The applicant cannot be a citizen of Sweden and must not have been a permanent resident in Sweden at any time during the five calendar years preceding the calendar year when the work starts.
Comment from Mazars in Sweden
The improvement to expert tax relief is an attempt to attract qualified work force to Sweden. If the grant period is extended to seven years as suggested, the relief will be more comparable with similar reliefs in other countries in Europe.
If you have any questions about how expert tax relief works in Sweden, or any other global mobility questions relating to Sweden, please do not hesitate to contact our Tax department in Sweden.