How to get expenses and reimbursement correct.

PART 1

The two tax schemes

Sweden applies two main tax regimes to individuals working here, and the right one depends on residency and assignment length.

SINK (särskild inkomstskatt för bosatta utomlands)

is a flat withholding tax for non-residents on temporary assignments. It generally applies when the candidate stays in Sweden for less than six months and has no significant ties to the country. The rate is 22.5 per cent for income year 2026, dropping to 20 per cent in 2027.

SINK applies only after Skatteverket has issued a formal decision, which typically takes 8–12 weeks. Until then, employers normally withhold preliminary tax under ordinary rules, often around 30 per cent.

A-tax (ordinary income tax)

applies when the candidate is tax resident in Sweden, typically by staying around six months or more or by establishing significant ties. Tax is progressive: municipal income tax (varies by municipality) plus state income tax above certain thresholds.

A practical note: if there is a realistic possibility that an assignment will extend beyond six months, applying SINK at the outset carries risk. The tax treatment can reverse retroactively, with previously tax-free items becoming taxable.

Where the schemes differ on expenses

The headline differences sit on the most expensive items: accommodation and travel between the home country and Sweden.

Travel to and from the home country at the start and end of the assignment.

Under SINK, this is tax-free, provided the assignment does not exceed six months. Under A-tax, the same travel is treated as a taxable benefit if reimbursed by the employer.

Accommodation at the assignment location.

Under SINK, temporary accommodation in Sweden can be reimbursed tax-free for assignments up to six months. Under A-tax, the client site is treated as the candidate’s primary place of work (tjänsteställe), which means accommodation there is a private cost. Employer reimbursement is therefore taxable.

The candidate may, under certain conditions, be able to claim a double housing deduction in their annual tax return, but that is a personal matter handled directly with Skatteverket, not a route to employer-side reimbursement.

The case law that anchors this

Under A-tax, temporary accommodation cannot usually be reimbursed tax-free for assignments. The treatment under A-tax rests on settled case law. The Administrative Court of Appeal in Stockholm (case 7517–7518-17, judgment of 14 March 2019) concerned healthcare consultants placed on fixed-term assignments through a staffing company.

The court held that the consultants’ tjänsteställe was at the workplace specified in each individual employment contract, meaning the client site rather than the staffing company.

Travel and per diem reimbursements paid by the staffing company were therefore treated as salary and included in the basis for employer social security contributions. The Administrative Court of Appeal in Sundsvall reached the same conclusion in a 2006 judgment.

The practical implication for the EOR and staffing market is clear: for candidates on rotating client assignments under A-tax, tjänsteställe sits at the client site by default, an therefore accommodation cannot be used as a tax-free expense.

This is not an interpretation Cool Company has chosen to apply conservatively. It is the position Swedish courts have repeatedly held.

Items tax-free under both schemes.

Business trips beyond 50 km from the primary place of work qualify for tax-free accommodation and per diem, provided the trip meets the requirements for a business trip under Swedish tax rules.

Rented equipment used solely for business purposes (drills, measurement equipment, and the like) is tax-free, as is safety clothing.

— Axel Joelsson Heurlin, CFO, Cool Company

PART 2

What “tax-free” actually means.

This is the misunderstanding that comes up most often, especially in an employer of record setting, and it changes how the numbers should be read.

“Tax-free” does not mean the candidate receives the expense amount as additional net pay. The amount is excluded from the taxable salary base, which means the candidate saves the tax that would otherwise have applied to it. The benefit is the tax saved, not a cash top-up.

The benefit is the tax saved, not a cash top-up, unless agreed with the assignment provider to reimburse the full amount via a top-up.

Why correct classification matters

If a reimbursement is treated as tax-free when it should have been taxable, Skatteverket can come back with retroactive personal income tax claims (often several years back), tax penalties (skattetillägg), reassessment of prior tax returns, and corrections to official income records that can affect future credit decisions and social benefits.

A related point: paying accommodation costs outside payroll does not make them tax-free. Side payments, or payments routed through other parties, do not change the underlying Swedish tax position.

Swedish tax rules look at the substance of the payment, not the channel. This is an area that we will cover in an upcoming post.

How Skatteverket defines “benefit”, and why the scope is wider than agencies assume

A useful illustration of how broadly Skatteverket reads the concept of a taxable benefit is the treatment of loyalty points. When an employer pays for flights and hotel stays on business trips, the candidate may accumulate airline and hotel loyalty points.

If those points are later redeemed for private travel, the value redeemed is a taxable benefit, measured at what the candidate would otherwise have paid. The reasoning is that the points were earned on the employer’s spend, so private use of them is private consumption funded by the employer.

This is a useful test for whether something falls within the Swedish concept of a taxable benefit: if the candidate enjoys economic value because of the employment, Skatteverket’s default position is that the value is taxable, regardless of how indirect the route.

Deductions the candidate can claim personally

Even when a reimbursement is taxable through the employer, the candidate may still be able to recover part of the cost through deductions in their annual tax return. This is applicable for those taxed under A-tax.

The most relevant for cross-border assignments:

Double housing (dubbel bosättning).

When a candidate has moved for work and kept their original home, increased living costs may be deductible.

Conditions: overnight stays at the work location, the work location more than 50 km from the original home, the original home not rented out. Time limit is typically two years, extending to five years for candidates with a family.

Meals and small expenses.

If no per diem or free accommodation was received, deductions for meals and small expenses can be claimed for the first month at the new location, on overnight days only. 

Travel home.

One home trip per week may be deducted if the distance exceeds 50 km and the candidate stays overnight at the work location.

The deduction is limited to the cheapest reasonable option within the EU/EEA or Switzerland. A standard car deduction may apply if public transport is not available.

These deductions are claimed by the candidate directly in their annual Swedish tax return, not through the employer. The candidate should retain receipts and proof of payment, and be prepared to justify the deductions if Skatteverket asks for documentation.

The Cool Company view

Getting expense classification right from the start matters more than agencies typically expect. The downside of getting it wrong is borne mostly by the candidate, often years after the assignment has closed.

If you have a specific case where the tax treatment is unclear, send us the assignment details (location, duration, candidate residency, and scope) and we will confirm the treatment before the engagement starts.