SINK Tax

SINK stands for “särskild inkomstskatt” or “special income tax” and is an alternative form of private income tax available for non-residents working in Sweden on a temporary basis.

Employees who habitually reside outside Sweden and who will be in Sweden for less than six months in order to perform an assignment that gives rise to a taxable income can choose to pay the SINK tax instead of the usual employment taxes.

A SINK registered employee only pays 25% in Swedish income tax, which is generally administered by their employer, instead of the average 30%. They are also freed from the obligation of filing a Swedish tax declaration, but can on the other hand not qualify for any income tax returns. In many cases SINK registered employees will also need to pay tax on their Swedish income in their country of origin, but thanks to the extensive double taxation avoidance agreements Sweden has with more than 100 other jurisdictions any SINK tax paid in Sweden generally generates a tax credit in the employees home country.

If a SINK registered employee is habitually staying in Sweden for a period longer than 6 months, the Tax Authority may consider the employee resident in Sweden for tax purposes even though they are living abroad, and this can unfortunately lead to very significant retroactive taxes for the individual.

KagNag can offer advice regarding SINK tax registration, and coordinate the application for SINK Tax between the employer, the employee and the tax authority to help you achieve the best possible tax setup.