SWEDEN Law and Practice Contributed by: Christoffer Dahl, Niclas Söderlund, Michel Weimer and Björn Mårtensson, XR Legal
• the employment and habitual residence abroad last more than six months and the income is taxed in the jurisdiction where the work takes place (“the six-month rule”); or • the employment and habitual residence abroad last more than a whole year and the income is not sub - ject to tax in the jurisdiction where the work takes place based on local law/practice or an agreement other than a double taxation agreement (“the one- year rule”). For an exemption to apply, the habitual residence abroad must be due to the employment. The employ - ment must be of such a kind that the individual’s pres - ence is required in the jurisdiction where the work takes place. 2.4 Taxation of Non-Resident Individuals Non-resident individuals are generally only taxed on Swedish-sourced income. • Special Income Tax on Employment for Non-Resi- dents (SINK): Non-residents are subject to a 22.5% tax on Swedish-sourced employment income (including, for example, pension, board remu - neration, etc) unless a reduction applies. Reduc - tions may vary based on the type of income and employment. • Income from immovable property: Non-residents are subject to tax on rental income and/or capi - tal gains for private and commercial properties (including apartments). • Property tax: All owners of taxable real estate prop - erties in Sweden are subject to property taxation in Sweden. • Withholding tax: Sweden levies a withholding tax of 30% on dividends unless the tax rate is reduced under domestic legislation or an applicable tax treaty. • Ten-year rule for previous tax residents: Non-resi- dents who, during the current calendar year or ten previous calendar years, have been tax residents based on residence or habitual residence may be subject to tax in Sweden on capital gains from the divestment of shares. The current provisions cover capital gains from the sale of both Swedish and foreign shares, as well as shares acquired while residing in Sweden. They also apply to the sale
of Swedish shares acquired after emigration but disposed of within ten years of leaving Sweden. The ten-year rule may be limited by provisions in tax treaties concluded between Sweden and other countries. 2.5 Tax Residence of Legal Entities Registered Companies Swedish companies are considered Swedish tax resi - dents upon registration. No specific income tax reg - istration is required. It should, however, be noted that many businesses elect to apply for a specific Swedish tax registration (“F-tax” (“ F-skatt ”)) to assume respon - sibility to pay taxes on their own behalf; otherwise, the business’s customers may be required to make tax payments on the business’s behalf. It should also be noted that the mandatory withholding of taxes for EU entities with no permanent establishment in Swe - den has been criticised on an EU level as a limitation upon the freedom to provide services, with a Euro - If a company is not registered in Sweden, it can be deemed a tax resident if its highest company organ is operating in Sweden or in another relevant circum - stance, such as Sweden being the place for the com - pany’s everyday business. 2.6 Definition of Permanent Establishment Under the main rule, a permanent establishment is defined as a fixed place of business from which the business is wholly or partly carried on. Unless all three requirements (place, permanence, where business activities are carried out) are fulfilled, there is no per - manent establishment in Sweden. pean Court of Justice ruling pending. Companies not Registered in Sweden The definition is based on the OECD Model Tax Con - vention, but the Swedish definition also includes, for example, real estate that constitutes a current asset and shares in foreign subsidiaries.
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