Sweden is well known as one of the countries in the world with the highest taxes. Sweden is also known as being a welfare state, with free education, healthcare and other subsidies, which is being funded by the high taxes.
The high taxes of Sweden can be a problem however, when foreign expats consider to relocate to Sweden. A question many expats ask themselves is how much they actually will end up having in their pocket every month, after taxes has been withheld. To address this, and to ensure that Sweden stays an attractive country for international talents, the Swedish Expert Tax Regime was introduced by the Swedish Government in 2001.
"Expats and employers of expats can make big tax savings by applying for the Swedish Expert Tax Regime!"
What is the regime and how much can I save?
If a person is comprised by the regime, 25 % of the person's employment income is received totally tax free. This is a very appealing, considering the high taxes in Sweden. Also, a person can receive the following types of income, totally tax free:
Cash allowances for costs related to moving to and from Sweden
Cash allowances for the person and his family, for travelling between Sweden and the person's home country (maximum 2 per year and person)
Cash allowances for paying children of the person's school fees
What is also very appealing with this tax regime, is the fact that the Swedish Social Security Fees are reduced also with 25 %. This leads to the employer of a person with Expert Tax saving a considerable amount of money.
What are the requirements?
So how do I get it? Well, the following requirements have to be fulfilled in order to qualify:
The employer is a Swedish company, or a foreign company with permanent establishment in Sweden
The expat is not a Swedish citizen
The expat has not lived in Sweden for the last five years
The expat's stay in Sweden is intended to not last longer than five years
The expat applies for the regime within three months of the work in Sweden beginning
Mostly, these requirements are fulfilled for expats coming to Sweden. However, there are some more requirements that have to be fulfilled by the expat:
The expat must be highly qualified in its field of work, or the expat is working within research and development, or the expat is part of the management of a corporation.
However, there is a rule saying that no matter the qualification of the expat, he will be eligible for the Swedish Expat Regime, if his gross monthly salary is exceeding SEK 114 601 (approx. 11 300 USD). This means that all well paid expats can enjoy this highly beneficial tax regime!
The application - how is it done?
When introducing the tax regime, a independent governmental body was formed to process and evaluate the applications for the regime. Therefore, one cannot apply for the regime at the Swedish Tax Agency. However, after having been granted an approval for the regime, one has to claim its applicability in the annual Swedish Tax Return, that is filed with the Swedish Tax Agency. Usually a tax lawyer is consulted to prepare and file these tax returns.
Are you an expat, looking to relocate to Sweden? Contact us at TaxHelpSweden and save thousands of Swedish crowns. Or are you an employer, looking for international expertise to hire in Sweden? Any case - both the expat and his employer will have considerable benefits being comprised of the Swedish Expert Tax Regime.
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