The following criteria can individually trigger taxable residence and taxation on the individual’s worldwide income:
- Permanent stay/domicile.
- Continuous stay exceeding six months.
- Essential connection if the individual previously has been a Swedish tax resident.
Five-year rule
Swedish citizens, as well as foreigners who have been resident in Sweden for at least ten years, are deemed resident in Sweden for tax purposes until they can prove that all important ties with Sweden have been broken. Five years after a taxpayer leaves Sweden, the burden of proof is reversed and the tax authorities must prove that ties still exist between the individual and Sweden.
Six-month and one-year rule
Swedish residents who have been assigned to work abroad or who have taken up employment abroad with a planned duration of at least six months are not liable to Swedish income taxes on income from this employment, provided the income is taxed in the country of employment and the individual does not spend more than six days per month or a maximum of 72 days per 12-month period in Sweden. Part of a day counts as a full day in Sweden when counting the six days per month. Any income that is not taxed in the working country is normally taxed in Sweden. If the income is exempt from taxation in the working country under domestic legislation, the income can be tax exempt in Sweden if the stay abroad lastsfor at least one year.
The Supreme Administrative Court has recently made a statement regarding the possible tax exemption for non-residents. They decided on 25 October 2022 not to review dispensation to an appeal regarding a decision made by the Court of Appeal, which leaves the previous rulings fixed.
Previous case law has stated that EU-citizens that are non-residents in Sweden got to apply a tax exemption (six-month rule tax exemption) since the requirement on tax residency was in conflict with article 45 in the Treaty on the Functioning of the European Union and the concept of free movement of workers.
The question in the court case was if such rules where discriminatory against non-EU-citizens if they were to be treated differently, in accordance with double taxation agreements following the OECD guidelines. The ruling concluded that it was not on the basis of nationality but on non-tax residency and that such criteria were not directly discriminatory and not against the double taxation agreements. Non-EU-citizens were therefore taxable in Sweden from work earned through work abroad where the income was received after arrival to Sweden, such as with incentive disbursem*nts or bonus payments.
