Doing contract work in Sweden - 183 days rule etc ?

[frenchdude]

Hi,

I've arrived in Sweden for 6 months for personal reasons, but I'm going to do some IT contracting work while here.

I'm a EU national and UK resident, and will be invoicing a Swedish IT work agency (that sells my services to the final Swedish client) through my own UK Ltd company.

1) Can someone confirm the following : because Sweden is one of the few countries that don't use the "economic employer" rule, I don't need to register or pay any local tax, and I can continue operating exactly as if I were in the UK as long as I don't stay more than 183 days ?

1b) ... and does that work even if I invoice a Swedish company directly ? I think I've read somewhere that this could automatically make me a local employee and I should go through a UK agency. If that matters, my contract with the Swedish agency is a UK one that's supposedly IR35 compliant.

2) What happens if I don't just do contracting, but become an employee and/or take shares in a Swedish company ? Do I need to start paying taxes immediately when that happens ? Or even back to the day when I arrived ?

3) Is it important that I maintain an "official" address in the UK while abroad and only provide that to HMRC, or can I freely tell them my address in Sweden when asked for my residence, as long as it's for less than 183 days ?

3b) Likewise, if I register my stay with Swedish authorities, as required for EU nationals after 3 months in another EU country, will that affect my "UK tax resident on a business trip" status ?

Thanks !

[BlasterBates]

I would advise an hour with a Swedish accountant, would cost you 100 quid could potentially save you thousands.

When you work in Sweden and tax your earnings there it's always clear cut, when you don't then there will always be a question mark in spite of what everyone here on this forum says and how certain they are about what they say.

[frenchdude]

Thanks !
You're probably right, although I surely need an accountant that's well versed in international matters like the "economic employer" concept, and that may not be easy to find.

My source for Sweden / Finland being exceptions to the rule of "local tax from day one when the final client is local" is this : http://www.contractoruk.com/document..._Local_Tax.pdf

Any comments ?

[stek]

Thanks !
You're probably right, although I surely need an accountant that's well versed in international matters like the "economic employer" concept, and that may not be easy to find.

My source for Sweden / Finland being exceptions to the rule of "local tax from day one when the final client is local" is this : http://www.contractoruk.com/document..._Local_Tax.pdf

Any comments ?

You have to consider 'you personally' and 'you Ltd'. Whilst 'you personally' might be able to take advantage, can 'you Ltd' bearing in mind all 'you Ltd's' income is derived from Sweden for that duration?

Maybe you can but get your sums/rate wrong you'll be stuffed. All the roles that have passed by me for Sweden have been rates in the £850/day range, apart from BobAgent chancers quoting rates like 350 Euro/day (not even aware Sweden is not in the Euro..)

[frenchdude]

Well, I do hope the document I'm referencing would have mentioned it if 'you personally' isn't a problem but 'you ltd' is

Interesting what you say about rates !
I do get a much higher rate in Sweden (I suppose locals need to account for high local taxes) but not higher to that extent, and that might in fact be the trick (that rate is fine by me if I don't have to pay local tax though)

What sort of rate would you see in London for the same contract that was getting you £850 in Sweden ?

[stek]

Well, I do hope the document I'm referencing would have mentioned it if 'you personally' isn't a problem but 'you ltd' is

Interesting what you say about rates !
I do get a much higher rate in Sweden (I suppose locals need to account for high local taxes) but not higher to that extent, and that might in fact be the trick (that rate is fine by me if I don't have to pay local tax though)

What sort of rate would you see in London for the same contract that was getting you £850 in Sweden ?

Those rates were in banking which isn't easy to get into with banking experience. If you read the Swedish expat fora (I lost the links now - google for them) you'll see plenty of IT contractors on there billing 10k Skr a day and you'll see a tale of one guy who got it wrong and the Skatteverket took his Stockholm flat, just like that. They have great power, socialism etc...

See, people think with EU harmonisation you can just go, turn up and work, and not worry, but you can't - you still have to conform to local tax laws, etc, does it make sense really to turn up in another State, get taxed in UK for any length of time - even at all?

[SueEllen]

You can work in Sweden and Finland for 182 days and not have to pay taxes there but be very careful.

The entire point of the rulings is to get specialised expertise there, not to allow those with personal connections to either country to avoid tax.

This means if you travel to either country to visit relations for years afterwards you can be found liable for tax for the period you worked in the country. The rulings involve length of stay over 4-5 years not just working in the country. Both countries have their tax pages in English and you can find example explanations on the internet if you look for them.

Do not make the mistake of thinking that foreign tax authorities cannot chase you to the UK, as they can. They can also monitor your travel movements.

As suggested talk to a local accountant and explain to him/her your links to the country and the UK as this will determine if it's worth you operating this way.

I do know people who have worked in both countries, and I have worked in one myself however everyone was clearly UK based.

[BlasterBates]

Thanks !
You're probably right, although I surely need an accountant that's well versed in international matters like the "economic employer" concept, and that may not be easy to find.

My source for Sweden / Finland being exceptions to the rule of "local tax from day one when the final client is local" is this : http://www.contractoruk.com/document..._Local_Tax.pdf

Any comments ?

Gr8 link. This question comes up very often for different European countries, so nice to be able to quote something.

Yes looks like in Sweden you can go through your UK Ltd, but as Sue Ellen says be careful. When you avoid tax there is always risks, and if you make a mistake and don't declare anything when you should, you can end up in a tax evasion criminal investigation. Not something to be done lightly as the costs will be huge if you get it wrong. Personally if I were to do this I would inform the Swedish authorities to cover myself and so it couldn't possibly be tax evasion. When in Switzerland I wasn't tax resident there but I stilled filed out the tax declaration as if I was and added a letter saying I wasn't tax resident with all the proof. The trouble is tax officials sometimes change their mind, and you never really know where you stand. In my view better to fill in more tax declaration forms than you need to so the tax authorities get to make the decision. Just because you fill out a tax declaration doesn't change the fact whether income is taxable, so I see no downside to doing it and the positive side is once you've received the confirmation you can simply put it in your file and forget about it.

As Sue Ellen says if you are there for personal reasons i.e. a girlfriend I agree with her that you may well be Swedish tax resident even after you left if you continue to visit. Therefore your income would be taxable and you would have to fill out tax declarations in both Sweden and the UK and you would need to claim exemption in either the UK or Sweden. Complicated and awkward but unavoidable. If you've been visiting Sweden regularly for personal reasons then in fact you probably need to calculate the 183 days from your first visit.

[frenchdude]

Thank you both.

- If I'm not mistaken, the 183 days are over 24 months.

- What's a good place to find some example rates in Stockholm ? I completely missed what I should have asked for I think .. I just asked for 1.5x my London rate as a guess, it went through and I was very happy with that ( as my rent & expenses are actually slightly lower). Looks like I should have asked for double

[BlasterBates]

Thank you both.

- If I'm not mistaken, the 183 days are over 24 months.

- What's a good place to find some example rates in Stockholm ? I completely missed what I should have asked for I think .. I just asked for 1.5x my London rate as a guess, it went through and I was very happy with that ( as my rent & expenses are actually slightly lower). Looks like I should have asked for double

If you are visiting regularly a girlfriend then even if you spent less than 183 days in Sweden in total it may well still count as residency.

Lets say you stay 4 months from Jan 1st and work in Sweden and then afterwards come back every two weeks to visit your girlfriend then you would probably satisfy residency requirements in July, even if you haven't been there a total of 183 days.

This is not simply an arithmetic calculation, it's more complicated, the days counting continues even if you return to the UK for a weekend. The days are counted from the day you enter Sweden to the day you leave for good and include days your not in Sweden.

If you stay in Sweden for three months and then leave and stay in the UK for 6 months without returning to Sweden and then you come back to Sweden for 2 months then that would probably count as 5 months. If however you kept a flat in Sweden and returned every two weeks (for example) then you probably would be resident.