Two interesting rulings from the Supreme Administrative Court on whether or not to be liable for tax in Sweden.

On May 30, 2018, two guiding decisions were issued regarding permanent residence. Both rulings concern Portugal but should also apply to Spain.

Who is liable for tax in Sweden?

There are a couple of different groups. One is that the person permanently resides in Sweden and the other group is that the person has a substantial connection to Sweden.

What does it mean that the person permanently resides in Sweden?

Among the general public, it is probably considered as simply living in Sweden. One has their residence in Sweden and lives a normal life in Sweden. Naturally, one is then registered for tax in Sweden.

Having a substantial connection to Sweden
For the second group, having a substantial connection to Sweden, a variety of factors are taken into account. These are combined, with some points being more important than others. Among the more important points to determine if a person has a substantial connection are ownership of a permanent residence in Sweden, if the person conducts business activities in Sweden, and if parts of the family remain in Sweden after moving. Points that normally have less significance are if the person owns a vacation home in Sweden, if the person owns publicly traded securities, or if the person has a large bank account in Sweden. Keep in mind to never register yourself at the vacation home. It then normally gives a substantial connection to Sweden. It can even be the case that if one stays overnight in the vacation home after selling the permanent residence but before moving out, it can give the vacation home the character of a permanent residence.

What are the rulings based on?

One ruling concerns a person who wanted to know if he permanently resides in Sweden if, after moving abroad, he will be in Sweden from May 1 – September 30 (i.e., 5 months) and also three weeks around Christmas, as well as two visits of 4 days each. The Supreme Administrative Court has now decided that such length and regularity of visits should be seen as permanently residing in Sweden. And he is therefore considered fully liable for tax in Sweden.

The other ruling concerns a person who, after moving abroad, stays in Sweden June-August (i.e., three months) and also makes shorter visits to relatives in Sweden for about 30 days per year.

In this ruling, the Supreme Administrative Court considers that the person does not permanently reside in Sweden.

In summary, it can be established that the Swedish family who moves to Spain and sells their Swedish residence and does everything to move out of Sweden but wants to live five consecutive months per year in Sweden will not be considered as having moved out. They become fully liable for tax in Sweden despite perhaps living longer in Spain per year compared to the time they live in Sweden. If the stay in Sweden only covers three months, one is not considered permanently resident in Sweden.

If you have any questions about this, you are welcome to contact us.

We would also like to wish our clients a very pleasant summer!