Swedish tax law distinguishes between individuals who are resident and non-resident in Sweden for tax purposes. Residents are taxed on their worldwide income, while non-residents are only taxed on income from Swedish sources, such as salary for work carried out in Sweden. An individual becomes resident in Sweden for tax purposes if, for example, they live in Sweden or have a continuous stay there. This article concerns the latter situation.
The difference in tax can be considerable. For residents, salary is taxed at progressive rates, with marginal tax rates of approximately 29 to 56% depending on the municipality and income level. Individuals who have been granted expert tax relief, under which 25% of the remuneration is tax exempt, typically have a marginal tax rate of around 40%. Non-residents are generally taxed on their Swedish salary under the special income tax for non-residents (SINK) at a flat rate of 22.5% in 2026 and 20% from 2027.
In a TaxNews article in September 2026, KPMG reported that the government had submitted Government Bill 2025/26:306 to the Swedish parliament. If adopted, the bill would introduce a statutory definition of continuous stay in Sweden. The aim is to simplify the rules and make it considerably easier to predict whether an individual is resident in Sweden for tax purposes. Two questions have, however, become increasingly relevant: when will the new rules enter into force, and are there any transitional effects to prepare for?
Summary of the bill
Under the bill, continuous stay would exist where an individual spends more than 160 days in Sweden during a calendar year, or more than 120 days in each of two consecutive calendar years. In the latter case, the individual would only become resident for the second year, and any change would not be made to the tax liability of the individual in the previous year. Only days involving an overnight stay in Sweden are counted.
The bill proposes that the amendments enter into force on January 1 2027. Following the general election in September 2026, Sweden has had a transitional government since September 17. A transitional government mainly handles routine or urgent matters. On the Riksdag’s website, however, this bill is listed as being prepared for voting by parliament in December 2026. Therefore, although there is a transitional government, chances are that this bill will enter into force on January 1 2027. The proposal originates from a request by the Swedish Tax Agency and is assessed to have negligible effects on public finances, which suggests that the introduction of the new rules is not controversial.
When the new definition enters into force, it will apply going forward, while current case law continues to apply to earlier periods. Days spent in Sweden in 2026 will count when applying the supplementary rule for 2027. Although the rules aim to avoid repeated switches between resident and non-resident status, such switches may occur during a transitional period. This particularly concerns the many weekly commuters from the Nordic and Baltic region, such as employees with Nordic roles who live in Denmark or Norway but work a few days a week in Sweden.
Example
An individual living in Denmark starts working in Sweden three days a week in August 2026 and stays overnight in Sweden on working days. Under current case law, the individual is likely to have a continuous stay from the start of employment and is therefore resident in Sweden for tax purposes in 2026. In 2027, the individual spends around 135 days in Sweden, below the 160-day threshold. The employee had fewer than 120 days in Sweden in 2026. The individual would therefore be non-resident in 2027 but resident again in 2028, as the number of days then exceeds 120 in both 2027 and 2028. In practice, the individual may thus have to file a Swedish tax return for 2026, be taxed under SINK in 2027, and file a tax return again for 2028. This follows from the government bill, which states that days spent in Sweden in 2026 count when applying the supplementary rule for 2027, without any assessment of whether the stay in 2026 was continuous.
A shifting tax residency position may also affect the expert tax relief. The relief is applied for in connection with the start of employment, applies during the first seven years of the stay in Sweden, and is only available to residents. If an individual with expert tax relief becomes non-resident for one year – for example, 2028 – and resident again from 2029, it is unclear whether the year as a non-resident extends the seven-year period or whether the period continues to run. The individual can, of course, request to be assessed as a resident the year they are a non-resident. In the authors’ view, the more likely interpretation is that the period continues to run and is not extended. This could also imply a higher cost for the employer as the tax relief impacts the social security cost (which is reduced for individuals with the tax relief).
KPMG’s comment
It is welcome that the bill would make it easier to predict whether and when an individual becomes resident for tax purposes. Employers should identify employees who work in Sweden a few days per week, such as individuals with Nordic or regional roles, and prepare for the new rules to enter into force. The preparatory work includes assessing the cases, determining whether the new rules have any impact, and organising withholding compliance in good time. Depending on the situation, the tax to be withheld may be regular income tax, expert tax, or SINK. This includes identifying those eligible for expert tax relief and making sure the application is filed on time.
Employees should also be informed in good time, as the difference in tax may be significant given Sweden’s high marginal tax rates.
