Sweden

Individual - Significant developments

Last reviewed - 06 July 2020

Some changes to the taxation of individuals and the payroll administration took place during 2019. We have listed the most relevant changes below:

  • Sweden have introduced a pay-as-you-earn (PAYE) system with monthly reporting per individual for all employers from 1 January 2019.

For income year 2020, the highest additional 5% state tax on employment income has been removed. The highest marginal tax rate has therefore decreased with 5% for 2020. Further, the Swedish Tax Agency has proposed that Sweden should change from a kind of formal employer approach to economic employer approach when it comes to taxation of work in Sweden. The rules will likely be implemented  as of 1 January 2021. The changes will have a great impact on many non-Swedish employers who have used the 183-day rule exemption to avoid taxation of their workforce in Sweden.