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Employees residing abroad and earning employment income from work in Sweden are generally subject to taxation under SINK – the Special Income Tax for Foreign Residents. To apply for the SINK tax, a decision from the Swedish Tax Agency is required, and it is now time to apply for it.
Who does the SINK tax apply to?
The SINK tax applies to employees abroad with income from Sweden where the employment lasts for a maximum of six months. In such cases, they are considered to have limited tax liability, and SINK applies. For work lasting more than six months, regular taxation rules apply.
SINK tax applies to various incomes, including:
- Salary and benefits in private service, if the activity is conducted in Sweden
- Board fees, regardless of where the assignment is performed
- Holiday pay
- Pension due to state or municipal employment
- Amounts from private pension insurances in Sweden
Definitive Withholding Tax
The SINK tax is a so-called definitive withholding tax and amounts to 25%. The employer deducts the tax from the gross salary, and the employee does not need to declare their income. The employee cannot make deductions from their income, for example, for expenses related to commuting to and from work.
Applying for SINK
To apply for the SINK tax, a decision from the Swedish Tax Agency is required, and an application must be submitted. Applications and decisions regarding SINK are tied to one income year at a time. Therefore, a new application must be submitted if SINK is to apply for a period in the upcoming income year. The application can be submitted to the Swedish Tax Agency by the employer, the employee, or a third party. For example, Azets offers this service. The Swedish Tax Agency processes applications for the next income year no earlier than December of the year preceding the income year in question. The application form for the next year is published at the end of the year on the Swedish Tax Agency's website.
If you are already a client of Azets, we can handle the application for the SINK tax on your behalf. Please contact us, and we will gladly assist you throughout the process.
If you, as an employer, have any questions regarding the rules for foreign personnel, contact us at Azets. We are experts in payroll administration, accounting, and HR, providing guidance to businesses.
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