A guide to contracting in Sweden

A guide to contracting in Sweden

18th May 2018

With a reputation as one of the world’s most beautiful countries, it’s no wonder that so many people want to visit Sweden. On a professional level, however, contractors can also expect to be privy to some fantastic opportunities.

The country is considered a great place to work, securing the top spot on the 2017 Forbes list of the best countries for business. It is also known for its innovative environment, achieving the number one ranking on the European Commission’s Innovation Scoreboard last year.

So where are the opportunities for contractors now and what do professionals need to be aware of when making a move to this destination?

A growing economy with tech at its heart

Despite a few unsettled months, reports from the National Institute of Economic Research revealed that the country’s economic sentiment rose 1.6 points in April 2018. Looking at specific sectors, confidence across manufacturing appears to be faring quite well at the moment, with index points rising 5.1 in just one month.

Elsewhere, the tech field is also noting an uptick in activity. Already home to a vast Facebook data centre (which recent news suggests will soon double in size), Sweden looks set to soon see an influx of new centres as firms seek to capitalise on the low cost of electricity in the area. According to reports, Swedish utility company, Vattenfall, is currently in talks with Silicon Valley and Chinese firms that are looking to make a move into the area. This upturn in activity will certainly drive demand for a number of contract professionals with data centre expertise.

It’s clear that Sweden hosts a wealth of opportunities for contractors, however there are legislative changes that professionals need to be aware of, particularly concerning employment legislation and tax.

A move against evasion

As we mentioned in our blog a few months back, Swedish authorities have been making moves to clampdown on tax fraud. In the latest developments, the country’s tax agency – Skatteverket – has  been tasked with scrutinising transactions with any of the countries on the EU’s tax haven blacklist. According to the Finance Minister, Magdalena Andersson, “We’ve given Skatteverket resources to work against international tax evasion, but what we’re doing now is saying that they should specifically increase screening of the countries that are on the list. That means that if you have transactions with any of the countries there’s a risk you will be caught in a tax check.”

For contractors currently operating or seeking work in Sweden, this commitment from authorities to tackle fraud serves as a clear warning: ensure your finances are in order or face the penalties. But what other legalities do you need to be aware of?

Contracting in Sweden: the legal bit

In the first instance, it’s important to note that the country has strict deemed employment legislation which makes many Swedish firms reluctant to employ contractors under a self-employed model. Much of this reluctance comes from the increased risks for the business, with tax liabilities transferred to the end client if incorrect payments are made. Many firms will also find that tax administration is particularly burdensome if a self-employed contractor is deemed to be a permanent fixture, making this employment model unfavourable with a large number of companies.

While many organisations favour the employed option in order to ensure that a professional is paying full tax, social security requirements from an employer in Sweden are high at 31.42% – a fact that should certainly impact your pay negotiations. It is perhaps useful to note that under the employed solution individuals are entitled to holiday and sick pay, a benefit which might help offset the high taxes you could face.

It is also worth being aware that expat contractors operating in Sweden can potentially benefit from tax relief. There are of course a number of criteria that an individual must meet before they can be considered for this expat rate, including a minimum rate of pay. Last year this figure after social security payments was SEK 89,600, or £8,104, per month.

A contractor who doesn’t meet this first criterion can potentially gain tax relief if they are deemed to be specialist or key personnel, such as a scientist, researcher, technician or any other skilled professional considered difficult to recruit for in Sweden. However, you will need to factor in the differences in timescale between these two tax relief claims. While both must be submitted within three months of your start date, an application based on pay is much easier to process than one based on expert status which can often take several months to complete.

With complex tax and compliance regulations in Sweden, it is certainly advisable to use an expert contractor management organisation.

Contact us today:


Live chat with one of our expert staff

Like our LinkedIn page

Follow us on Twitter

Get in touch on Facebook

Contact Us