Individuals who work from Sweden during a continuous period of more than six months are normally fully taxable in Sweden. The reason for the stay in Sweden is not relevant for the assessment. Therefore, even if the stay in Sweden is due to the COVID-19 crisis, a person can become liable for tax if the stay exceeds six months. If the person is also a tax resident of another country, any double taxation is normally resolved through the applicable double tax treaty. People who work in Sweden but who are not tax residents of Sweden can be taxed under the regulation on special income tax for non-residents at a flat rate of 25%. However, the rules do not apply if the stay exceeds six months.
Employment income received by a Swedish tax resident on assignment abroad can be exempt from Swedish tax. The rule is applicable if the assignment abroad lasts for at least six months, the income is taxed in the country from which it is derived and the number of days spent in Sweden during the assignment period do not, for any reason, exceed 72 days during an assignment year abroad. To the extent that these employees are forced to reside in Sweden for longer periods due to COVID-19, the six-month rule can be jeopardised. However, even if all conditions are not formally met, the rule can still be applicable in the case of “force majeure”, provided that the employee, at the beginning of the assignment, had good reason to believe that the six-month rule would apply. However, if an employee cannot start the assignment abroad due to COVID-19 restrictions, the exception would most likely not be applicable.
Under the 183 day-rule, salary can be tax exempted if a person’s stay in Sweden does not exceed 183 days and the remuneration is not borne by a permanent establishment in Sweden. The COVID-19 crisis may cause concerns that employees performing their work from Sweden due to restrictions may result in the creation of a permanent establishment. It is the opinion of the Swedish Tax Agency that the COVID-19 crisis does not affect the limit of 183 days, but that the exceptional and temporary change of the location where employees exercise their employment, such as working from home, should not create a permanent establishment for the employer. However, if the COVID-19 crisis is prolonged and a foreign company has a more permanent employee in Sweden, it may not be deemed exceptional and temporary.
