Al All you u ne need d to kno know w abo bout ut Payr yroll - - PowerPoint PPT Presentation

Al All you u ne need d to kno know w abo bout ut Payr yroll in n Sw Sweden - Mo Module 1

Country overview, company registration and reporting

Agenda

• Facts about Sweden
• Business Culture
• Employer high level overview of

registration and reporting responsibilities

Facts about Sweden

Facts about Sweden

• Population 9.5 million
• Of which 23% are under 18
• In summer there are 56 days of 24 Hr daylight
• Downside is 32 days of total darkness in winter
• The average Swede works 1,644 hours per year
• Renewables account for 48% of Swedish energy

Facts about Sweden

• An average of 1.8 million meatballs are consumed per day in Ikea Stores across the world
• 85% of Swedes live in Cities
• The 3 point seatbelt was developed by a Swedish Inventor
• There are approximately 350,000 Moose in Sweden
• Approximately 6,000 road accidents per year involve a Moose

Facts about Sweden

• Sweden is the 3rd largest country in the EU
• But has the second lowest population density
• 53% of Sweden is forests
• Sweden is a Constitutional Monarchy with a Parliamentary Democracy

Business Culture

Business Culture

• Sweden, as has often been stated, presents a fascinating business model. It has proved to be a remarkably successful post-

war economy, which has managed to combine both pro-business policies with the provision of an all-embracing welfare

• state. The 'social' policies once produced a famous remark from the mayor of Shanghai, 'I like Sweden but you are just a

bit too socialist over there'

• This seeming paradox can in large measure be explained by an understanding of one of the central Swedish characteristic -
• egalitarianism. A belief in the genuine equality of individuals and the resultant desire for consensus are at the heart of

Swedish business life and explain both organisational structures and management approach in the country

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture

• A second, often quoted, surprise about Swedish business is the relatively large number of truly international companies

emanating from a country with a population of less than nine million - Eriksson, Electrolux, Atlas Copco, ABB, Tetrapak, H&M, Ikea; the list is almost endless. It is a truism that countries with small domestic markets need to internationalise to survive and prosper but few countries have been as relatively successful as Sweden on the world stage

• The third remarkable fact about Sweden is the enormous breadth of its industries. Sweden has significant companies in

market sectors varying from electrical goods to vehicle manufacture, from telecommunications to pharmaceuticals and from mechanical engineering to chemicals. In addition, of course, it has companies with a global presence in all these industrial areas

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Structures

• Flat management and egalitarianism sit very comfortably together and this accounts for the fact that

Swedish organisations tend to be less layered than in all other European countries

• The flatness of Swedish management structures is also mirrored in the levels of remuneration offered to

different stratas within a company. A combination of tax regime and centrally agreed salary agreements have produced a country in which pay differentials are almost unbelievably low (although this is starting to change.)

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Structures

• Structures are designed to be pragmatic and systematic and to allow people to perform their tasks effectively and with as

little disruption as possible. This does not, however, mean that structures are extremely inflexible. Indeed matrix management, which works better in Sweden than almost anywhere else, leads to an openness of communication and freedom of information which many more hierarchical societies would find almost anarchic

• One key organisational necessity worthy of note is the absolute need for punctuality. Don't be late in Sweden if you want

to maintain a professional image

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Management Style

• An egalitarian approach, which seeks consensus results, produces a very specific management approach
• The paternalism, which can be found further south in Europe, sits uneasily with the average Swede and direct

'instructions' can be seen as embarrassing for all concerned

• Therefore managers are seen more as facilitators or coaches who offer advice and suggestions. Bosses are not,

necessarily, expected to know all the answers and it is assumed that the person performing a particular task is the most knowledgeable about that particular task

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Management Style

• One result of this approach is that decisions can be hard to reach and the process tends to be

drawn out

• It is important that the manager includes everybody in the process and that everybody's point
• f view is listened to and ostensibly valued. Many expatriates from countries where 'quick'

decision making is highly valued can find this process extremely frustrating. It is dangerous to try to circumvent this process, however, as unilateral decisions are unlikely to be respected or adhered to

• As managers tend towards a consensual approach and openness of discussion, information

tends to flow well between departments and functions. There also tends to be less social distance between managers and subordinates. Management denotes a level of work-related responsibility rather than a hierarchical status

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Meetings

• Meetings tend to be long with a great deal of open debate. Everybody has a view and everybody's view is worthy of

airing and consideration. Opinions are expected to be backed up by empirical evidence, which means that a great deal of pre-planning and preparation is expected

• As has already been stated, punctuality is of central importance in Sweden. Lateness is largely indefensible as it implies a

lack of courtesy and respect for the other members present. In discussions about approach to business, Swedes raise the importance of punctuality more often and more strongly than almost any other nationality

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Meetings

• Agendas are usually produced and when produced would, on the whole, be adhered to. Agendas bring the necessary

structure to a wide ranging, consensus-seeking debate

• Without an agenda, the meeting would run the risk of disintegrating into an aimless discussion
• During the meeting, participants will tend to speak one at a time with little interruption of the person who 'has the floor'.

Those wishing to make a point will often indicate the fact by raising their hands to attract the attention of the person in the

• chair. As a result, meetings can have a cold, detached feeling for those more used to emotional responses and where many

people attempt to interject at the same time

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Teamwork

• Basic Swedish characteristics of community, egalitarianism and consensus-seeking all blend to make Swedes good team

players - so long as the team accords to their ideals

• A team, which consists of a strong leader instructing junior team members, is unlikely to succeed
• There is a need for continuous consultation and for an ongoing 'buy-in' process. Team meetings are, therefore, likely to be

reasonably frequent and sometimes long

• Each team member expects and is expected to perform his or her individual tasks with the minimum of supervision from
• superiors. Such unwarranted supervision might be seen as a criticism or lack of trust in professional capabilities

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Communication

• Swedes communicate well in international business situations, helped in no small measure by the generally high

levels of English spoken in the country

• The international nature of many Swedish businesses makes it essential for any ambitious Swede to have a good

knowledge of the world business language

• However, as with all non-native speakers of English, Swedes take into the second language their own approach to

communication matters. As with many northern European countries, directness is prized more highly than diplomacy. The search for consensus and agreement does not preclude the use of direct debate - in fact it makes it absolutely

• necessary. The result of this respect for plain speaking is that Swedes can be seen as rude or at least overly abrupt by

those cultures who place diplomacy before direct speaking. Cultures as diverse as the UK and Japan are often taken aback by the apparent contradiction of a culture which professes to seek consensus and negotiated compromise whilst at the same time following a seemingly confrontational path.

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Communication

• Swedes take into the second language their own approach to communication matters and as with many northern

European countries, directness is prized more highly than diplomacy

• The search for consensus and agreement does not preclude the use of direct debate - in fact it makes it absolutely
• necessary. The result of this respect for plain speaking is that Swedes can be seen as rude or at least overly abrupt by

those cultures who place diplomacy before direct speaking

• Cultures as diverse as the UK and Japan are often taken aback by the apparent contradiction of a culture which professes

to seek consensus and negotiated compromise whilst at the same time following a seemingly confrontational path

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Business Culture - Communication

• Silence is golden in Sweden. Many cultures find any level of silence intolerable and will rush to fill it. Swedes are more

comfortable than most with silence. If you don't have anything to say, why speak? In meetings, try to cope with these silences by respecting them. Anybody who feels the need to talk incessantly will not necessarily gain respect for his or her volubility

• Although Swedes have a good sense of humour, it is not necessarily appropriate in all business situations. Serious

business should be treated seriously

Source: http://www.worldbusinessculture.com/Business-Etiquette-in-Sweden.html

Employer high level overview of responsibilities

Swedish Tax Authorities

• Skatteverket = Swedish Tax Agency
• Website address: https://www.skatteverket.se/privat.4.76a43be412206334b89800052864.html
• Available in English and other languages
• HQ is in Stockholm, with offices in 100 locations across Sweden
• Was formed by the merger of The Swedish Tax Board & 10 regional authorities

Registering your business

Starting a new business in Sweden

• Different rules regarding taxes, charges and registration apply depending on the form of business you choose.

Sole trader

• Sole trader may be appropriate if you are going to start a business on your own. As a sole trader you are personally

responsible for all the company's obligations, such as liabilities and agreements. Limited company

• A limited company can be started by one or more individuals. When starting a limited liability company, you must have

at least SEK 50,000 in share capital. Personal responsibility for the company's debts is in principle limited to the share

• capital. However, there are situations where you personally can be held responsible for unpaid taxes and contributions,

etc.

Source: https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesandemployers/registeringabusiness/establishingyourforeignbusiness.4.12815 e4f14a62bc048f518d.html

Registering your business

Starting a new business in Sweden Trading partnership

• A trading partnership is an alternative if at least two individuals or legal entities wish to start a business together. There is

no requirement to invest capital, although the partners are personally, jointly and severally liable for the company's debts. Economic association

• Three people are required in order to start an economic association. An economic association must promote the economic

interests of its members. This means that the members should benefit financially from their participation in the association

Source: https://www.verksamt.se/en/web/international/starting/types-of-business

Registering your business

• The company is not considered as a Legal Entity until it is registered with the Swedish Companies

Registration Office

• Company formation in Sweden follows this 3-stage process:
• Obtain Certification from a Swedish bank that the total cash amount for shares has been deposited into

an account. This takes 1 day

• Submit an Online Application to the Swedish Companies Registration Office and obtain a Registration
• Certificate. This takes 14 days and costs approximately 2000 SEK
• Registration with the Swedish Tax Agency- this takes 1 day and can be done at the same time as stage 2.

Source: ActivPayroll

Registering your business

Establishing your foreign business in Sweden

• You need to register your foreign business in Sweden for taxation, including registering a Swedish branch or subsidiary of a

foreign company. You need to register if you are liable for any Swedish taxes; including income tax or VAT

• In Sweden, business operations may be conducted as a sole trader (a natural person), or through a corporation (a legal

person)

• Whether or not a foreign enterprise is liable to pay income tax in Sweden is determined by whether the company has a

permanent establishment in Sweden or not. If the enterprise has a permanent establishment in Sweden it will be taxed for business income

Source: https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesandemployers/registeringabusiness/establishingyourforeignbusiness.4. 12815e4f14a62bc048f518d.html

Registering your business

Establishing your foreign business in Sweden

• A foreign entrepreneur conducting business in Sweden, either as a natural or a legal person, may become liable to VAT,

employer´s contributions and/or income tax. The company should then apply for registration at the Swedish Tax Agency, and may apply for approval for Swedish F-tax (signifying that you are responsible for paying your own tax and contributions)

• Sole traders who have a Swedish ID number, as well as corporations that have a legal signee in possession of such a number,

may submit an electronic application on the verksamt.se website. The legal signee of a corporation must be authorized to sign on behalf of the corporation without co-signatories.

Source: https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesandemployers/registeringabusiness/establishingyourforeignbusiness.4. 12815e4f14a62bc048f518d.html

Registering your business

Establishing your foreign business in Sweden

• Details of the forms to be completed and guidelines on completion can be found at:

https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesandemployers/registeringabus iness/establishingyourforeignbusiness.4.12815e4f14a62bc048f518d.html

Source: https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesandemployers/registeringabusiness/establishingyourforeignbusiness.4. 12815e4f14a62bc048f518d.html

Registering your business

Starting a new business in Sweden

• You can register a Swedish business as a sole trader resident in Sweden (self-employed) or register a new Swedish

legal person for taxation

• If you are about to start up a business in Sweden, make sure you register your business on verksamt.se
• You can start a business in Sweden as:
• a sole trader (Swedish: enskild näringsidkare)
• through a limited liability company (Swedish: aktiebolag)
• a trading partnership (Swedish: handelsbolag)
• a limited partnership (Swedish: kommanditbolag), or
• an economic association (Swedish: ekonomisk förening)

Source: https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesandemployers/registeringabusiness/establishingyourforeignbusiness.4. 12815e4f14a62bc048f518d.html

Registering for Tax and Social Insurance

• In order to deduct A-Tax/Social Insurance Contributions the business needs to be registered with Skat
• The registration process with Skat takes 2 - 4 weeks
• Different registrations are required for Foreign entities and Swedish entities
• More information on how to register and the differences can be found at:

https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesandemployers/registeringabus iness.4.12815e4f14a62bc048f5179.html

Registering for Tax and Social Insurance

• Registering a business for tax purposes in Sweden differs depending on if you are currently operating a business

abroad that you want to establish in Sweden, or if you are starting a new business in Sweden

• For certain foreign companies who are not established in Sweden but sell goods to Swedish consumers or e-

services within the EU, special rules apply

Tax Representatives

• Skatt requires that tax return representatives are appointed
• Required when outsourcing payroll or when running it in-house
• Person must have an E-ID
• Appointment can be indefinite or for a fixed period
• Most foreign companies outsource day to day admin in Sweden

Tax Representatives

Duties of tax representatives

• Submit electronic tax returns, eg, tax returns (VAT, PAYE &

Corporate Tax return)

• Read information from the tax account, read information from submitted tax

returns as well as read information from tax assessment notices

• Supplement information already submitted on a tax return
• Request an extension on a deadline for submitting a tax return

Tax Representatives

How to appoint a Tax Representative?

• Application made on form SKV 4809B
• Skatt will verify the application/individual
• Check to see if the individual has a criminal background, is competent in the field of tax administration and will be

able to meet the duties required

• If the company wants to deregister a representative (which they must do once any arrangement ceases) submit form

SKV 4804 to Skatt

New Starters

• No special administrative process (unless the employee is a non-Swedish national)
• Employer should obtain the employees E-ID details
• These are used to submit a request to the Central Tax Register
• Reply received within 2/3 days indicating which tax table to use for the employee
• Without a tax table confirmation employers should use table 37 (resulting in the highest deduction)

New Starters

• What to do if no E-ID received or no reply from Central Tax Register?
• Use the published tables on the Skatt website to determine the likely tax table using the employees income level
• And the municipality where the employer is based
• Deduct 110% of this table value from the employee until the Central Tax Register reply is received

New Starters – non-Swedish nationals

• The Employee must visit a Tax Office and ask for a social security number and fill out an application form for SA-tax

registration

• You must obtain an A1 form (or equivalent if outside the EU) in order to not operate Swedish social security
• Information needed:
• Passport
• Work permit
• Contract
• A1 form (or equivalent if outside the EU in order to not pay Swedish Social Security)
• SINK decision (Special Income Tax for Non-Residents, staying for no more than 6 months and not pay full Swedish

tax)

• Tax Details

Leavers

• No formal reporting requirements to Skatt
• Final payments must be made in the month following the termination of employment
• Accrued holiday pay must be paid up
• Start and leave dates are confirmed to Skatteverket via the annual income statement

Reporting obligations PAYE

• Monthly return required from all employers who have deducted tax and calculated employers contributions
• Can be submitted electronically by registering at www.skatteverket.se and filing at

www.skatteverket.se/momsocharbetsgivardeklarationer

• For employers with tax base of up to SEK 40 million, return is submitted by 12th of following month (exact timetable in link

below) and payment made

• For employers with tax base over SEK 40 million payment made to above timetable, with returns due by 26th of following

month

• See Brochure SKV 409B in English for detailed instructions

https://www.skatteverket.se/download/18.5a85666214dbad743ff5247/1434548146233/vat-and-paye-returns-skv409b- utgava18.pdf

Reporting obligations - PAYE

• You will be able to access your return online (or will be sent it by post for paper returns)
• Complete the payroll and deductions sections (if you return online there are validation checks built in to

help validate the information)

• Only complete the sections you need to – leave all others blank, except…
• If you have no employer contributions to report, enter a zero (0) in box 78
• If you have no employees tax to report, enter a zero (0) in box 88
• Paper returns are scanned, so ensure you write numbers clearly, using blue or black ink

Reporting obligations - PAYE

• The filing deadlines and Company Registration numbers are pre-filled and should not be changed
• Pay and benefits for the month must be reported for all individuals whose annual income will exceed SEK 1,000
• There are separate boxes for gross salary, taxable benefits and expense deductions
• The boxes are split for employer contributions according to age groups:
• 26 to 65 (full contributions)
• Up to 25 (lesser contribution percentage)
• 66 and over (employer only pays the retirement pension fee)
• All boxes have the rates to apply next to them

Reporting obligations - PAYE

• You will need to include sick pay costs, for the authorities to decide whether they can be reimbursed (see the guide on

what to include)

• Penalties for late filing and/or payment vary from fines to up to 6 years imprisonment!
• You must notify the tax authorities if you are closing your business, or will be inactive for a period of time, in order to

avoid penalties for non-filing or non-payment

Reporting obligations - Annual Income Certificates

• Known as Kontrolluppgifter in Swedish
• Must be filed by all employers (Swedish or Foreign) who have deducted A-Tax from salary
• Also covers non resident EEA employers who have an obligation to pay Swedish social insurance contributions even if

they don’t have a PE in Sweden

• Also covers employers with an obligation to pay Swedish social insurance contributions whilst an employee is on

assignment to another EEA or Reciprocal Agreement country

• If the Swedish Tax Agency (Skatteverket) has issued a decision on special income tax, the income statement, KU 13,

SKV 2343, must be used instead

• If income statements are filed on paper forms they should always be accompanied by form SKV 2304, Sammandrag

av kontrolluppgifter, or SKV 2311, Summary, which can be obtained from the Tax Agency or from www.skatteverket.se

Reporting obligations - Annual Income Certificates

Example

• The London Times hires Sven to act as its local reporter in Gothenburg with responsibility for news reporting for the whole
• f Sweden
• No premises are rented, Sven simply works from home or in hotels as he travels around Sweden gathering news stories
• As there is no PE of the Times in Sweden, there is no obligation to operate A-Tax deductions – Sven remains responsible for

paying his own tax bill But…

Reporting obligations - Annual Income Certificates

Example

• EEA law requires non resident foreign employers based in another EEA country to register and arrange deduction of

employee and employer social insurance contributions in the country where work is performed

• The Times will have to file an annual income statement for Sven reporting these contributions
• If they don’t, Skatt are entitled to contact HMRC and ask them to undertake enforcement action

Reporting obligations - Annual Income Certificates

Issued by all employers to employees

• Annual exercise done once a year
• Covers both current staff and leavers within year
• Must be filed at Skatteverket and copy given to the employee by 31st January
• Skatteverket receive similar income statements on an individual from all other sources of income (second job, interest on

bank savings, company dividends etc)

• Skatteverket send the employee their completed tax return based on the information in the income statements
• Employee then only need sign it if it is correct and return by the deadline (2nd May)

Reporting obligations - Annual Income Certificates

To meet this obligation employers give employees form KU10 http://www.skatteverket.se/download/18.71004e4c133e23bf6db800088860/1359707436746/230111.pdf

• Box 1 – Tax deducted from employee
• Box 11 – Gross pay consisting of all cash paid to the employee
• Box 25 – Reports cash where the employee has earned under SEK 10,000
• Box 31 - Gross pay that is not subject to social insurance in Sweden
• Box 93 – checked to indicate an A1 or Certificate of Coverage held for foreign assignee who is exempt from Swedish

social insurance contributions.

Reporting obligations - Annual Income Certificates

• Box 41 – cash value of BIK
• Boxes 41 – 49 – check boxes indicating which types of BIK have been provided
• Boxes 13-18 Details on company car provided as BIK
• Boxes 08 & 09 – used for those who have not worked for the whole year to indicate the months of starting and leaving e.g. a

leaver in September would have a value of 01 in box 8 (for January) and a value of 09 in box 9 (for September).

• There is no requirement to file a specific date, as the information is used by the Government Central Statistics Board for

employment statistics

Reporting obligations - Annual Income Certificates

• Box 60 – The worksite number where the employee usually commences their working day (even if it is only to collect

tools etc). Employers with multiple sites will be given individual site numbers by the Statistics Board

• Boxes 50-55 – check boxes to indicate what type of business expenses have been reimbursed to the employee
• Box 20 – cash value of any expenses reimbursed to the employee not covered by boxes 50 -55
• Box 21 – Cash value of any house cleaning (cleaning, washing, au pair services etc) eligible for tax relief
• Box 22 – Cash value of any house maintenance services provided to employee (repairs, external maintenance etc)

eligible for tax relief.

Reporting obligations - Annual Income Certificates

• Form KU13 used where SINK has been applied
• Special income tax for non resident foreigners
• Identical boxes and box numbering to the KU10 with the following key additions:
• Box 76 – Payees foreign tax identification number and also the country code of the issuing country
• Box 81 – The citizenship of the payee including the 2 letter country code specified by the Tax Agency in brochure SKV 304

(the UK is GB)

Reporting obligations - Annual Income Certificates

• Most companies file electronically
• Annual technical specification produced by Skatt, available in English
• File can be tested on tax website before transmission (Testa File)
• When the real file is sent make sure file value #test is set to “N”
• Testing program also available for downloading from website

Reporting obligations Annual Income Certificates

• KU’s can be provided on final payslip of the year or by a separate document to employee
• No strict statutory requirement on how the information is presented, simply what information must be given
• However it is recommended you follow the Skatt model, as it resembles the employee’s tax return
• Income statements must be filed by 31st January – email receipt will be issued
• Corrections issued by 1st March will be included in employee’s tax return
• File can be sent electronically or on media such as CD, DVD or USB stick
• Large files must be sent electronically and must contain an e-transport Steria certificate

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