A review has been conducted of the Swedish rules on R&D deductions and expert tax, and was published on January 15 2025. The report is not a proposal, but its findings are of interest. This article presents highlights from the report as regards expert tax rulings.
Expert tax relief has been available since 2001 and means that the individual pays regular tax on 75% of remuneration; i.e., 25% is tax free. The employer pays Swedish social security charges on 75% of remuneration paid out, provided, of course, that the employee is covered by Swedish social security. In 2012, an income threshold was introduced to make the assessment of eligibility for the relief easier and more predictable for the employer and employees.
The review committee found that the current rules are compatible with the international market; however, it notes that they are not used to the same extent as in other countries. Several changes have therefore been suggested.
Expert tax relief from the payor’s perspective
It is quite common for someone working temporarily in Sweden to keep a home in their home country. Having a home in another country normally means that expenses need to be paid in that country when part of the salary is paid out in the home country and part of the salary is paid out in Sweden. The reason for split pay could be that the employee stays on social security in the home country while working in Sweden. In such a case, making a social security contribution in the home country could be a reason for electing for a split payroll arrangement.
The committee notes that the expert tax relief is generally not applied on pay from non-Swedish group entities and remarks that the law as such does not contain a provision that expert tax relief is only applicable to remuneration paid by the Swedish employer. The committee did not find that a change in the law is needed to also apply the expert tax relief on remuneration from non-Swedish group entities. We are waiting for the first case to be retried with reference to the committee’s remark.
The competence rule
One can ask for an expert tax ruling based on the individual’s competence if it can be shown that the specific competence is missing in the Swedish labour market. The committee suggests that this rule should be used primarily by employees working in R&D and holding a doctoral degree, or who have similar experience relevant to the work to be carried out in Sweden. It is suggested that the criterion that the competence is difficult to find in the Swedish labour market is removed.
Other suggestions to reform Swedish expert tax relief
The current threshold of SEK88,200 appears competitive. It is suggested that the threshold should be 1.1 times the income index instead of 1.5 times the price index.
Sweden has lower salary levels and higher taxes compared with the international market. It is suggested that the tax relief is increased from 25% to 30%.
The expert tax relief is currently valid for seven years, but the duration was originally three years, then five. There is a suggestion that the employee should be able to have two or more separate working periods of a total of seven years in Sweden instead of one seven-year period.
It is suggested that the requirement to stay in Sweden for a maximum period of seven years is removed.
The expert tax ruling should also be available for Swedish citizens, according to the commission. This suggestion is combined with another, that the period during which the individual has lived in Sweden before the expert tax relief starts to apply is extended from five to 10 years. An exception will be available for individuals who have already been granted expert tax relief and split the seven-year period into two working periods in Sweden.
An application must be made within three months of taking up work in Sweden, but it is suggested that this is extended to six months.
KPMG’s comment
KPMG welcomes the clarifications and suggestions made in the report by the committee. Of special importance is the view presented that an expert tax ruling should also be applicable to remuneration paid from outside Sweden for work covered by the expert tax ruling. For a long time, many companies have struggled with this, so a change in practice would be very welcome.
