A company is considered to be a tax resident in Sweden if it is incorporated in Sweden.
Permanent establishment (PE)
The term 'permanent establishment' is defined in Sweden as a fixed place of business through which the business is carried on from a specific establishment, such as a place of management, branch, office, factory, or workshop. Places where construction work is carried on are also regarded as PEs, as well as if an agent who is dependent upon the foreign company habitually exercises authority in Sweden.
In the light of the European Union (EU) Anti-Tax Avoidance Directive (ATAD) and the Base Erosion and Profit Shifting (BEPS) project, new hybrid mismatch rules entered into effect on 1 January 2020 and apply from financial years commencing after 31 December 2019. As such, certain expenses related to hybrid situations due to PE are considered non-deductible.
In addition, certain amendments related to PE in the double tax treaties (DTTs) with Bulgaria, Greece, and Cyprus entered into effect as of 1 January 2020. As such, the tax treaties are not applied when business conducted through a Swedish PE is not subject to tax in the mentioned jurisdictions.