How can an Umbrella Company Help with Contracting in Sweden?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Sweden. Even better, most are experts in Swedish and expat tax law, meaning they’ll also help you optimise your earnings in Sweden.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Sweden.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Sweden, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Sweden and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Sweden
One of the most consistently challenging aspects of contracting in Sweden is complying with the country’s tax system. As well as paying tax in Sweden, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Sweden
If you’re working in Sweden under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Sweden for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Sweden, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Sweden through PAYE is left with the prospect doing everything themselves.
Do you know much about Swedish Tax Law? Does Sweden have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Sweden can range from 0 to 25 percent, excluding municipal tax, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Sweden
|When Do You Need to Lodge Your Tax Return?
|Tax Filing Deadline
|2nd May (with a possible extension until 31st May)
|Can you file it online?
How to File Taxes in Sweden as a Contractor
Step 1: Register with the Swedish Tax Agency
Register with the Swedish Tax Agency by visiting your nearest Tax Agency office, which can be found here(link is external).
The tax agency will register you in the Swedish Population Register and issue you a personal identity number (personnumer).
Step 2: Obtain Your Income Tax Return Form
An income tax return form will be sent to you in April if you are registered with the Swedish Tax Agency, and liable for income tax. If you have not received a form by the 15th of April, order a new form online here(link is external), or contact the Swedish Tax Agency on +46 (0) 771 567 567 or here(link is external).
Step 3: Complete Your Income Tax Return Form
Complete your income tax return form, verify the pre-printed information, and make the necessary changes. This information can be submitted via the Swedish Tax Agency’s e-service (Inkomstdeklaration), via their app (Skattevert), by mail, by SMS, or by dialling 020-567 100.
It is advised that you consult a translator, as the e-service and app are in Swedish.
Tax Figures in Sweden
|Swedish Krona (SEK)
|Tax-free Threshold in Sweden
Municipal Tax: Employment and business income is subject to municipal income tax at an average rate of 32%. Rates vary across municipalities.
Tax Rates for Non-Residents: The above tax rates apply to tax residents. Non-residents are taxed at a flat rate of 25%. Non-residents working in Sweden for a Swedish or a foreign employer, with a permanent establishment in Sweden, are subject to a 25%. Non-residents working in Sweden for a non-Swedish employer, without a permanent establishment in Sweden, are not taxed in Sweden, provided that the individual does not spend more than 183 days in Sweden during a 12-month period.
Tax Residency in Sweden
When do you become a tax resident in Sweden
You become a tax resident in Sweden when:
You become a tax resident in Sweden when you:
You have your real home and dwelling in Sweden; or
You have stayed in Sweden for 6 months (183 days) or more, continuously; or
You have essential ties with Sweden and have previously been a resident in Sweden.
If you have been a Swedish citizen or a tax resident in Sweden for at least 10 years, you are considered a tax resident in Sweden for up to 5 years after your departure.
Does the 183 day rule apply in Sweden
Am I taxed on my global income in Sweden
Residents are taxed on their global income. Non-residents are taxed on their Sweden-sourced income only.
You are not taxed on your global income in Sweden if you have been assigned to work abroad for at least 6 months, your income is taxed in the country of employment, and you do not spend more than (i) 6 days per month or (ii) 72 days per 12-months in Sweden.
Can you set up your own Limited Company in Sweden?
|How long does it take to set up
|How much does it cost
|SEK1,900 – SEK2,200
|Is it easy?
|Starting a Business Rank: 13/190 (Source: World Bank)
Tax Calculator in Sweden
If you are a contractor and want a calculation on your tax and net retention in Sweden, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Sweden
Contractors in Sweden are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Swedish umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Swedish taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Swedish tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Sweden
We work with numerous umbrella companies in Sweden, many of whom are experts in tax and immigration laws. If you have any questions about tax in Sweden, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Swedish work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Sweden but without the overhead of directly dealing with the Swedish tax authorities. Get in touch with us today for some reliable advice on tax in Sweden!
A Contractor’s Guide to Work Permits in Sweden
Immigration is one of the primary concerns for any contractor hoping to start working in Sweden. Permanent employees will find it easy to get their Swedish work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Swedish work permit, known more commonly as the Schengen Visa, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Sweden is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Sweden (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Sweden. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Sweden and match contractors with the right company for them. If you’ve already secured a contract in Sweden, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).