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Expats - what to consider before the end of the year

Written by: Jonas Larsson, Payroll Consultant at Azets

As we approach the end of the year, there are a couple of things employers need to prepare for when it comes to employees living abroad, so-called “expats.” Which applications need to be submitted, and which decisions need to be renewed? We have listed everything you need to know here. 


SINK tax - Special income tax for residents abroad

If you live abroad and earn income from work in Sweden, you are usually taxed according to the Act on special income tax for people living abroad, also known as SINK tax. This tax rate is 25%. This is applicable as long as the work in Sweden is not longer than six months. In other words, this means the person is subject to limited tax liability. To be taxed under the SINK tax, a decision from the Swedish Tax Agency is required for each new income year. That is why the application for SINK tax for 2023 needs to be made as soon as possible so that the decision is in place in January 2023.


Tax adjustment decisions and certificates

In addition to the SINK tax decisions, the tax adjustment decisions made for the employee by the Swedish Tax Agency that are only valid until the end of the year, need to be renewed and new applications have to be made. Decisions need to be finalised before the payroll run in January 2023.


Financial income statements (KU)

No separate financial income statement needs to be submitted to the Swedish Tax Agency if the salary has been reported via a monthly employer declaration at an individual level. 

If remuneration has been paid by a foreign employer without a permanent place of business and if there is a social security agreement with the employee, one of the forms KU10, KU13 or KU14 has to be submitted to the Swedish Tax Agency by 31 January 2023 at the latest.


Social security contributions

Reduced social security contributions for expats from Convention Countries to Sweden are updated in January. The new contribution rates are updated via the Swedish Tax Agency in January and applied to the payroll run the same month. 


Tax deduction for business travel for people subject to limited tax liability.

People subject to limited tax liability who are taxed under SINK are generally not entitled to any deductions for business travel. In some cases, individuals may be entitled to a tax deduction if they ask to be taxed under the Income Tax Act (IL) instead of SINK. To qualify for a tax deduction for business travel, the person must earn at least 90% of their income in Sweden. 

Anyone with unlimited tax liability for part of the tax year is entitled to a tax deduction for business travel in respect of those days. 


Do you have any questions about this in your capacity as an employer? Contact us here at Azets. We are experts in payroll administration, HR and accounting and offer advice to companies that need help.