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No PE – no problem? - A study on the Swedish preliminary income taxes for foreign companies without tax liability in Sweden

Mauritzson, Ossian LU (2021) JURM02 20212
Department of Law
Faculty of Law
Abstract
New obligations for foreign companies operating in Sweden have been introduced on 1 January 2021. Despite the absence of a Swedish PE or other tax liability, payments for work performed in Sweden by foreign companies is subject to a requirement of withholding preliminary income tax. A refund of the withheld amount can be granted, but only once a final tax assessment has been completed after the end of the fiscal year.

A fundamental principle of the Swedish system of preliminary income taxes is that preliminary taxes should be levied to an amount corresponding to an estimate of the final taxes. Yet, a foreign service provider without Swedish tax liability will have to abide with not getting paid in full, unless an administrative... (More)
New obligations for foreign companies operating in Sweden have been introduced on 1 January 2021. Despite the absence of a Swedish PE or other tax liability, payments for work performed in Sweden by foreign companies is subject to a requirement of withholding preliminary income tax. A refund of the withheld amount can be granted, but only once a final tax assessment has been completed after the end of the fiscal year.

A fundamental principle of the Swedish system of preliminary income taxes is that preliminary taxes should be levied to an amount corresponding to an estimate of the final taxes. Yet, a foreign service provider without Swedish tax liability will have to abide with not getting paid in full, unless an administrative requirement involving registration or application for exemption is fulfilled prior to the payment. Additionally, new obligations have been introduced for these foreign companies opting for registration in Sweden.

The purpose of this thesis is to describe and to critically analyse these changes by comparing the motives for the original rules to the presented objectives for the new rules. Moreover, the thesis evaluates whether the new measures on the withholding of income taxes might cause an incompatible restriction with the fundamental freedoms of EU law.

The thesis presents the findings that the implemented changes are not compatible with EU law and that the new rules do not meet their purpose. The changes cause new difficult administrative and legal challenges and could have been designed differently for a more efficient and less restrictive outcome. (Less)
Abstract (Swedish)
Nya skyldigheter för utländska företag verksamma i Sverige infördes den 1
januari 2021. Trots frånvaron av ett fast driftställe i Sverige eller annan
skattskyldighet, ska skatteavdrag för preliminär inkomstskatt göras från
betalningar för arbete som ett utländskt företag utför i Sverige. Den innehållna
skatten kan återbetalas, men tidigast efter att ett beslut om slutlig skatt har
fattats efter räkenskapsårets slut.

En grundläggande princip för det svenska preliminärskattesystemet är att
preliminär skatt ska betalas till ett belopp som kan antas motsvara den slutliga
skatten. Trots det behöver ett utländskt företag utan skattskyldighet i Sverige
finna sig i att inte erhålla full betalning, såtillvida att man inte uppfyllt
... (More)
Nya skyldigheter för utländska företag verksamma i Sverige infördes den 1
januari 2021. Trots frånvaron av ett fast driftställe i Sverige eller annan
skattskyldighet, ska skatteavdrag för preliminär inkomstskatt göras från
betalningar för arbete som ett utländskt företag utför i Sverige. Den innehållna
skatten kan återbetalas, men tidigast efter att ett beslut om slutlig skatt har
fattats efter räkenskapsårets slut.

En grundläggande princip för det svenska preliminärskattesystemet är att
preliminär skatt ska betalas till ett belopp som kan antas motsvara den slutliga
skatten. Trots det behöver ett utländskt företag utan skattskyldighet i Sverige
finna sig i att inte erhålla full betalning, såtillvida att man inte uppfyllt
administrativa krav så som registrering eller ansökan om befrielse innan
tidpunkten för betalningen. Dessutom har det tillkommit nya skyldigheter för
utländska företag som valt att registrera sig i Sverige.

Syftet med denna uppsats är att beskriva och kritiskt granska dessa
förändringar genom att jämföra motiven för de ursprungliga reglerna med
syftet bakom de nya reglerna. Vidare undersöker uppsatsen om de nya
reglerna om skatteavdrag för preliminär inkomstskatt kan medföra en
otillåten restriktion av de grundläggande friheterna från EU-rätten.

Uppsatsen kommer till slutsatsen att lagändringarna varken är förenliga med
EU-rätten eller uppfyller sina syften. Förändringarna orsakar nya svåra
administrativa och juridiska utmaningar och kunde ha utformats annorlunda
för ett mer effektivt och mindre restriktivt utfall. (Less)
Please use this url to cite or link to this publication:
author
Mauritzson, Ossian LU
supervisor
organization
course
JURM02 20212
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Tax law, EU law, skatteavdrag, withholding tax, economic employer, F-skatt, F-tax, freedom to provide services
language
English
id
9069924
date added to LUP
2022-01-26 00:15:53
date last changed
2022-01-26 00:15:53
@misc{9069924,
  abstract     = {{New obligations for foreign companies operating in Sweden have been introduced on 1 January 2021. Despite the absence of a Swedish PE or other tax liability, payments for work performed in Sweden by foreign companies is subject to a requirement of withholding preliminary income tax. A refund of the withheld amount can be granted, but only once a final tax assessment has been completed after the end of the fiscal year. 

A fundamental principle of the Swedish system of preliminary income taxes is that preliminary taxes should be levied to an amount corresponding to an estimate of the final taxes. Yet, a foreign service provider without Swedish tax liability will have to abide with not getting paid in full, unless an administrative requirement involving registration or application for exemption is fulfilled prior to the payment. Additionally, new obligations have been introduced for these foreign companies opting for registration in Sweden.

The purpose of this thesis is to describe and to critically analyse these changes by comparing the motives for the original rules to the presented objectives for the new rules. Moreover, the thesis evaluates whether the new measures on the withholding of income taxes might cause an incompatible restriction with the fundamental freedoms of EU law.

The thesis presents the findings that the implemented changes are not compatible with EU law and that the new rules do not meet their purpose. The changes cause new difficult administrative and legal challenges and could have been designed differently for a more efficient and less restrictive outcome.}},
  author       = {{Mauritzson, Ossian}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{No PE – no problem? - A study on the Swedish preliminary income taxes for foreign companies without tax liability in Sweden}},
  year         = {{2021}},
}