UK Limited company contract in Sweden - Tax implications

[m0n1k3r]

Swedish/British contractor here.

Hi,

I have a UK limited company and have been offered a contract in Sweden. I will be paid in UK limited company, however have a rate agreed in SEK....and the initial contract is for 6 months...

No real problem here, however you should send a letter to HMRC and ask for a "Certificate of Compliance" (they keep changing the name).

DMBM206500 - Debt Management and Banking Manual - HMRC internal manual - GOV.UK

The link instructs you to write a letter. In practice, this usually takes 5-15 weeks. If it is urgent, you can pretend it is for an EU public sector bid and call the Employers Helpline, and it will arrive within a week.

You need this certificate to apply for an F-tax certificate. The certificate entitles your company to receive funds in full without withholding. Without one, a Swedish payer is legally obliged to withhold 30% as income tax. A company is not automatically entitled to be taxed as a company - that's what an F-tax (business tax) certificate is for. Swedish companies must also have a F-tax certificate, so the same rules apply to everybody. Finland have similar rules only that their withholding is 50%. The F-tax certificate doesn't imply a tax liability. It is merely a certificate of business tax status as opposed to personal tax status. It is usually automatically renewed at the beginning of each calendar (tax) year.

Tax application for foreign entrepreneurs (SKV 4632b) | Skatteverket
Rules on tax registration for foreign entrepreneurs | Skatteverket
Permanently established in Sweden or not | Skatteverket

Technically you don't need one unless you obtain a permanent establishment. For a six month contract you should be safe. For longer than that you might want to look into your circumstances and plan accordingly, as you'll become taxable on your worldwide income after six months (OECD rules). The UK tend to begin taxing foreigners on their worldwide income after 90 days.

Also request an A1 certificate from HMRC as evidence that you'll pay NI in the UK and not in Sweden. You first need to register your company as a business that might request such certificates before you can actually request one. See the grey box in the link below.

National Insurance: apply for a portable document A1/E101 if self-employed in European Economic Area (CA3837) - GOV.UK

If you are expected to work in Sweden for 12 months or more you are required to register as resident. This will give you a Swedish full personal registration number (NI number) which will open up certain new opportunities and access to public services and banking. It is not tied to tax liability (that happens automatically after six months).

https://www.skatteverket.se/servicel...64694c40c.html

For access to healthcare, see the following link.

https://www.forsakringskassan.se/pri...arbeta_sverige

• What are the tax implication I should be aware of?

None for a six month contract.

• Do I need to register with Swedish Tax authorities?

See above.

• What about VAT?

Use EU reverse charge rules for B2B sales (which this is) if you send the invoice to a company in Sweden, e.g. put their VAT id and the phrase "EU reverse charge applies" on the invoice, and do not charge VAT. You will instead have to submit an EC Sales List to HMRC in addition to the VAT return.

• Any other pointers or important things I should be mindful of....

Give them your IBAN and BIC in addition to UK sort code and account number. The Swedish krona is a small currency. British banks will give you a poor exchange rate when Swedish krona arrives at banks in the UK and they convert it to pounds. Better to direct payment to a Euro account (even in the UK) as the EUR-SEK exchange rate will be far better. In fact, first converting from SEK to EUR and then from EUR to GBP will typically give you more money in the end (I've tried and compared) than a straight SEK payment into a GBP account. You can get one for free with Transferwise.

For your expenses, get a Revolut and/or Mondo account and card. Revolut will allow you to hold money in SEK while Mondo will give you very good exchange rates. Using an ordinary credit/debit card issued by a high street UK bank will get quite expensive due to poor exchange rates and charges. You are unlikely to need cash - Sweden is to a large extent a cashless society and many shops, restaurants etc don't accept cash. Taxis accept both (no extra charges for card payments). If you need cash it's best to withdraw it from an ATM in Sweden.

Sweden doesn't have anything like IR35.

[NotAllThere]

Thanks for your input - below my clarifications

1) Will remain UK resident

You don't get to decide that. The Swedish tax authorities will decide if you are resident for tax purposes in Sweden. As a general principal, if you work there, you pay tax there.

[vmm]

To my knowledge, working abroad is usually a residency-related issue.

To clarify: agreed in SEK but will be paid into a UK business account (your Ltd account) and you will remain a UK resident?
I understand that the agreement is in SEK but will a Swedish or a UK entity pay you? ie via an international or a domestic transfer?

Thanks for your input - below my clarifications

1) Will remain UK resident
2) Will be paid via International transfer by Swedish entity and NOT UK entity

Thoughts/inputs?

Thanks,

[Contractor101101]

To my knowledge, working abroad is usually a residency-related issue.

To clarify: agreed in SEK but will be paid into a UK business account (your Ltd account) and you will remain a UK resident?
I understand that the agreement is in SEK but will a Swedish or a UK entity pay you? ie via an international or a domestic transfer?

[vmm]

sweden site:forums.contractoruk.com - Bing

Thanks for the info...further to add to info which is already provided is that will be travelling to Sweden on a weekly basis or as per need, so to clarify will not be shifting or residing there....I have gone through the link, however unable to find a clarification on the questions raised. Would be great to hear from someone who has been in similar situation before

[northernladuk]

sweden site:forums.contractoruk.com - Bing

[vmm]

Hi,

I have a UK limited company and have been offered a contract in Sweden. I will be paid in UK limited company, however have a rate agreed in SEK....and the initial contract is for 6 months...

• What are the tax implication I should be aware of?
• Do I need to register with Swedish Tax authorities?
• What about VAT?
• Any other pointers or important things I should be mindful of....