3 month contract in Sweden, Ltd company....tax?

[JustRodders]

Hi

I've been offered a 3 month contract based in Sweden. I've had a Ltd company for 15 months and only worked in the UK so far. I'm told by the agent that I can do this contract in Sweden and it'll be subject to the same tax rules as if I was working in the UK - up to a 6 month duration at which point I'd become liable for Swedish tax laws which would be backdated to the start of the contract.

I'm looking for advice on that. Where can I get definitive answers? Anybody here got experience of it?

If it's of interest, I expect I'll be returning to the UK every weekend to remind my wife and kids that I exist.

[Old Greg]

Hi

I've been offered a 3 month contract based in Sweden. I've had a Ltd company for 15 months and only worked in the UK so far. I'm told by the agent that I can do this contract in Sweden and it'll be subject to the same tax rules as if I was working in the UK - up to a 6 month duration at which point I'd become liable for Swedish tax laws which would be backdated to the start of the contract.

I'm looking for advice on that. Where can I get definitive answers? Anybody here got experience of it?

If it's of interest, I expect I'll be returning to the UK every weekend to remind my wife and kids that I exist.

You will get good advice from Sue@IPAYE. Don't trust the agent, obviously.

[JustRodders]

You will get good advice from Sue@IPAYE. Don't trust the agent, obviously.

Thanks. I'll get in touch with Sue.

[BlasterBates]

Only under exceptional circumstances can you simply work for 6 months without paying tax in any country. Many contractors have been led into trouble by agents who certainly are not international tax experts.

If the client is UK based and you will be billing the UK client directly then it should be OK to use your UK Ltd, if the agency or client bills you out to the Swedish client then you need to tax yourself in Sweden. The rule is if your name appears on an invoice in Sweden a Swedish tax official will find it and then look for you.

[stek]

Don’t contract abroad even in EU unless the rate is hyperstellar (unlikely) or you intend to fully relocate.

Whilst I never actually got burned, I learnt my lesson, it’s just too complicated, tax issues, local registration, health care, flying home every week soon wears you down.

[Old Greg]

Don’t contract abroad even in EU unless the rate is hyperstellar (unlikely) or you intend to fully relocate.

Whilst I never actually got burned, I learnt my lesson, it’s just too complicated, tax issues, local registration, health care, flying home every week soon wears you down.

Not to mention living in a North Dublin shed.

[stek]

Not to mention living in a North Dublin shed.

Yeah! At €1200 a month!

[m0n1k3r]

Hi

I've been offered a 3 month contract based in Sweden. I've had a Ltd company for 15 months and only worked in the UK so far. I'm told by the agent that I can do this contract in Sweden and it'll be subject to the same tax rules as if I was working in the UK - up to a 6 month duration at which point I'd become liable for Swedish tax laws which would be backdated to the start of the contract.

I'm looking for advice on that. Where can I get definitive answers? Anybody here got experience of it?

If it's of interest, I expect I'll be returning to the UK every weekend to remind my wife and kids that I exist.

I'm from Sweden and I work there from time to time, such as right now. I also have an LtdCo in Sweden which I use depending on the circumstances (ease of VAT reclaim, credit checks, access to certain facilities, better standing with clients than using an Ltd etc).

If you, like most contractors, mostly view your LtdCo as a pass-through for the money into your own bank account through dividends, then be very careful.

The easiest and probably best is to register as self-employed in the UK and then work as self-employed in Sweden (lots of contractors elsewhere in Europe work as self-employed rather than through a company, as it is frequently more tax efficient). If you work through an UK agency then they might not agree to this, even though the Swedish tax authorities have confirmed that it is the best option for one-man bands. But then, if you work through a UK agency they are probably paying you a sub-market rate anyway (that has been my experience in 95% of the cases).

Sweden doesn't have the same rules as the UK where the agency can become liable for your taxes if your don't do them right.

If you do want to use your LtdCo, your LtdCo can "post" you to Sweden, but as you are most likely to also perform management and control of that LtdCo, you must make sure to not create a "fixed establishment". That means not having an office or location of any kind, including renting a flat. Instead, commute home every or every 2nd week and stay in different hotels each time.

Request a "certificate of compliance" from the HMRC. They are very slow at processing these.

https://www.gov.uk/hmrc-internal-man...ing/dmbm206500

You might want to cheat and call any HMRC office and tell them that you need it for an EU public sector bid. Then you'll receive it in a week rather than in 3-6 months.

You need the certificate in order to apply for an F-tax certificate in Sweden. It doesn't create a tax liability, but is evidence that your company should be taxed as a business. Without it, a Swedish payer has to withhold 30% of the invoice amount for work performed in Sweden. Although a UK agency might not ask for it, it is good to have just in case. Many other countries have similar requirements.

https://www.skatteverket.se/servicel...c048f518d.html

Just remember to, while filling out the form, at all times state that there is no management, office or other facilities habitually based in Sweden.

As for personal taxation, up to 6 months is fine (again, commuting home weekly is not counted as a break in the stay, unless the time abroad is longer than the most recent period in Sweden). Once beyond 6 months, you will become liable to pay taxes in Sweden from the first day of arrival during the most recent 365 days (it is not based on calendar/tax years, but rather any 365 day period), but you will then also be able to make certain tax deductions on salary income in Sweden that are not available in the UK, such as 30% of any interest paid worldwide, including your mortgage, and long commutes to/from work by economy class flights (doesn't have to be RyanAir or easyJet) provided that your company doesn't pay them for you (but how would they know, unless you create a fixed establishment in Sweden?).

If you do become, or believe that you might become, taxable in Sweden, DO NOT take dividends whilst you are still taxable in Sweden. Instead defer those until your are outside of the grip of the tax authorities there, which might be more than 9 months after your 3 month contract ends. They are very strict about identifying dividends paid as a replacement for what should have been employment income, and will ask the HMRC to reclaim the balance, plus a 40% penalty for misreported income, plus interest and legal costs.

You would only pay taxes in Sweden if you would be on the payroll of a Swedish employer (but could then apply for a flat 25% tax rate) for the first six months, however after that you would pay taxes in Sweden on your worldwide income of whatever kind. This is no different from any other country (the UK is actually stricter).

As for NI, request an A1 certificate from the HMRC.

https://www.gov.uk/government/public...ic-area-ca3837

https://www.gov.uk/government/public...-abroad-ca3821

https://www.gov.uk/government/public...ic-area-ca3822

The HMRC is quite slow processing these.

The certificate will evidence that you pay NI in the UK. Otherwise Sweden would, should you become liable to pay taxes in Sweden, ask your company for social security contributions ("employer charges") in Sweden at a rate of 31.46%. Luckily, there is no employee's social security contributions.

Contract rates in Sweden are always expressed by the hour and range from SEK 650 to SEK 1000 by the hour (e.g. £435 to £665 pd) for most roles. Developer, project manager etc roles are usually in the upper range, from £575 pd, when working through most Swedish agencies. Swedish agencies would not insist on having a Swedish company, but they would insist on having an F-tax certificate (see above).

You should also be aware of this:

https://www.av.se/en/work-environmen...reign-posting/

Other countries have similar requirements (I have checked quite a few; the UK is the outlier). I've talked to them, and they have confirmed that the rules only apply for employers (e.g. limited companies), not to self-employed people. Leaving the country weekly doesn't break the stay, unfortunately, however contractors rarely ever get into trouble as there are really no H&S risks that the employer (e.g. your own LtdCo) have any control over whilst working on client sites.

Also keep paper receipts (if you receive them on paper) of all expenses, as you'll be able to reclaim the VAT element on most of them through the HMRC's EU VAT reclaim facilities, however you'll be required to submit original receipts.

Other than that, enjoy. You'll have no trouble getting by on English. And if you'll be in Stockholm, the standard pub for Britons looking for a traditional British pub tend to be http://www.tudorarms.com, although there are plenty of semi-Scottish, Irish and English pubs.

[m0n1k3r]

Only under exceptional circumstances can you simply work for 6 months without paying tax in any country. Many contractors have been led into trouble by agents who certainly are not international tax experts.

True. Do your own research, from the source.

if the agency or client bills you out to the Swedish client then you need to tax yourself in Sweden. The rule is if your name appears on an invoice in Sweden a Swedish tax official will find it and then look for you.

Not true. Other criteria applies. One of the many ways they find out whether people are staying Sweden without reporting it appropriately is by receiving card transaction information from Visa, Mastercard, Amex etc. Andy you do have to use a card in Sweden in many cases, as there are many places that don't accept cash.

See my posting above.

[lecyclist]

I'm from Sweden and I work there from time to time, such as right now. I also have an LtdCo in Sweden which I use depending on the circumstances (ease of VAT reclaim, credit checks, access to certain facilities, better standing with clients than using an Ltd etc).

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Great post, should be a sticky. Pretty much the same experience I had there.