Place of employment
The Swedish concept of a tax-related place of employment (“tjänsteställe”) has been around for quite some time, but it got more news coverage during the Corona pandemic and starting 2023 has become even more important for any company with employees.
What does “place of employment” mean, why is it important och what happens in 2023?
We write primarily with our clients in mind, i.e. companies that are employed in their own companies and/or have other people employed. So if you are alone in your business (aktiebolag), when we say “your employer” we thereby mean your company, and by “the employee” we mean, well, you. 🙂 Also, the employer’s place of business could be anything from an office to a store to a workshop, but below we say “office” to keep it simple. And yeah – is “place of employment” the best translation for “tjänsteställe”? No idea, but that’s the one I’ve used. 🙂
Most of the information can be found in Skatteverket’s legal guidelines on Tjänsteställe.
This was by the way quite a frustrating blog post to research, since I don’t think there are nearly enough guidelines from Skatteverket for making the kinds of judgement calls that small consulting companies need to make.
What is a place of employment?
From a tax point of view, the place of employment is a physical address where you do most of your work, so basically your workplace. It’s a “slow-moving” concept, so you normally don’t change places of employment very often.
It’s the employer who is responsible for deciding the place of employment for each of their employees.
We’re getting into details about how to decide the place of employment, rules of thumb etc further down.
Why is the place of employment important?
Above all the place of employment affects whether trips to/for work are classified as work trips (“arbetsresor”) or business trips (“tjänsteresor”).
These may sound similar, but by work trips we here mean trips between your home and workplace (place of employment). These are seen as private trips. You can sometimes deduct costs for this in your private tax return, but only under certain circumstances and only amounts above 11 000 SEK per year (2022). Read more (in Swedish) at Skatteverket.
A business trip on the other hand is a trip you do in the line of business, e.g. from the office to visit a client. And the costs for these can of course be covered by your employer, they can give you tax-free per diem, etc. So obviously, having travel classified as business trips is much more beneficial.
As an example, if you have your place of employment at your employer’s office, your trip between your home and the office is a private trip. If your employer pays for this travel cost, you pay taxes on this benefit, but you may sometimes deduct part of the cost in your private tax return.
While if you’re travelling from the office to a client, this is a business trip that your employer can pay for, whether you go by taxi or get mileage for driving your car.
And if your place of employment is in your home, all trips in your work will be business trips.
Another case is if you have a company car which you only use for work, and you normally don’t get taxed for this car benefit. Then it’s of course important that all your driving are business trips.
Why was the place of employment more important during the pandemic?
For many employees the place of employment has never been much of an issue. Most people have worked and had their place of employment in their employer’s office, period. Exceptions of course for businesses where people move around a lot.
But during the pandemic this started to change more rapidly, and more and more people shifted to working from home. Where were now their places of employment? For this reason Skatteverket made a statement that temporary changes of this type do not affect your place of employment, assuming that the idea is that you will return to your employer’s place of business as soon as it’s possible.
Why is the place of employment more important in 2023?
According to a recent law passed by Parliament, all employers need to report the places of employment for their employees each month starting in January 2023. Basically, in the monthly PAYE return, where you normally report paid out salary and withheld tax, two new fields have been added for the street address and city of the place of employment for each employee.
If you change places of employment during the month, you should leave these fields empty. Note that this is only when you have a place of employment and you change to another place employment during the month. Not situations where you move around a lot and have difficulties deciding your place of employment – then you need to use the Alternative Rule and the Exception Rule below to decide your place of employment.
The reason for this new rule is to make it easier for Skatteverket to audit and catch incorrect usage of place of employment and deductions for travel costs, whether it’s by mistake or intentional. And they seem mostly to focus on business trips vs private trips to work.
The Goverment notes in their proposal that this will mean increased administration for companies, but that the pros of better audit possibilities outweigh the cons. Sure, it’s easy to say it’s worth the extra admin and costs for someone else to make life easier for us. 🙂
Where is my place of employment?
This information can be found mainly in Skatteverkets legal guidelines for Place of employment, where there are a number of examples of different situations.
An employee can only have one place of employment at the time. If you have multiple parallel employers you have of course one place of employment per employer. Note that we mean employers where you are employed and get salary, not clients who may buy consulting services from your company.
The Main Rule (“Huvudreglen”)
First we check if the Main Rule is applicable. It says that your place of employment is the location where you perform the majority of your work.
This is often your employer’s office. But questions arise when for example more and more people work from home.
If the employee has access to their employer’s office but still chooses to work from home more than 50%, the place of employment is still considered to be with the employer. On the other hand, if there’s a written agreement between the employer and the employee that the employee must work from home more than 50%, the employee’s home is the place of employment. See Skatteverket’s statement.
If the employee has a long-term, full-time assignment for a client, and spends the majority of their work-time with the client, the place of employment may instead be the client’s office. It’s not entirely clear how long such an assignment needs to be in order for the place of employment to be with the client. Skatteverket mentions in several situations that these situations should be looked at over a two-year time span. This can be interpreted as assignments for less than two years not changing the place of employment to the client. And that with open-end assignments (not limited in time) the place of employment changes to the client after two years. While an assignment for two years or more means the place of employment changes to the client from day 1. This is in line with some of the examples in Skatteverket’s legal guidelines for Tjänsteställe from 2021, that interestingly enough have been removed in the 2022 version.
With time-limited employments that concern only a certain client assignment, the place of employment can be with the client from day 1 even for shorter assignments. For example a temp agency that hires people for certain client assignments, but between assignments they are not employed and do not receive salary.
The place of employment being with the client would mean that travel between home and the client are private work trips, not business trips.
See below for the problems involved with making these judgement calls.
The Alternative Rule (“Alternativregeln”)
If we can’t use the Main Rule we’ll have to try the Alternative Rule. It could be if workplaces constantly shift or move around, e.g. a construction worker or a plummer. Then it’s said that the place of employment is where the employee picks up and leaves work material, as well as prepares and finishes up their work.
If the employee visits the employer’s office (or some other fixed location), for example to pick up and leave work material, more than once a week on average over the long-term, this is the place of employment. If there’s no such fixed location, or if it’s visited less often, the employee’s home is the place of employment.
The Exception Rule (“Undantagsregeln”)
And if the Alternative Rule doesn’t work either, we have the Exception Rule. It basically says that if the employee doesn’t work in a fixed location and rarely visits the employer’s office, it can be hard to point out a natural place of employment. Then the employee’s home is the place of employment.
How about your own company?
If you are employed in your own company, Skatteverket says simply that the same rules apply as with other employees and that each situation has to be handled on a case-by-case basis.
But in practice the judgement call may be more difficult. We can assume that many solo company owners want to have their place of employment in their home, so that the company can pay for all work travel. So there’s an obvious “best choice” here, and money to be made by having your place of employment at home. It’s also hard to say that the company owner and the company are two separate parties, so it’s not obvious that an agreement “between the employee and the employer” will hold up.
Problems making the judgement calls
In Skatteverket’s legal guidelines there are a number of examples, rules of thumb etc for the Alternative Rule and the Exception Rule. But not that much about the Main Rule. So when the work situation is fairly long-term and stable, but it’s just hard to say where to draw the line where your place of employment shifts to a client’s office, there’s not much to go on.
What happens with long consulting contracts?
The “two-year rule” mentioned above would mean that if I as a consultant (in my own company or as an employee) have a full-time contract with a client for 18 months, my place of employment still does not change to the client. Which means that all travel between my place of employment (e.g. my home or my employer’s office) and the client are business trips, even if I go back and forth between my home and the client every day, just like a normal job. One does think this feels a bit too good to be true, right?
No clear answers from Skatteverket
Unfortunately we haven’t been able to find any clear answers to this. And in our contacts with Skatteverket they say that it’s hard to give general guidelines and that it has to be looked at case-by-case. However, they do say that we should always look at things over a two-year period, to provide stability for the place of employment concept for employers and employees.
So what to do?
First of all, all employers need to decide on the place of employment for their employees – there’s no way around that.
If you want to “interpret to your advantage” you can always make an open statement in your tax return, i.e. describe what you have done and why. You’d of course increase the risk of Skatteverket having a look at the issue, but you wouldn’t get any penalty if they don’t agree with you.
If your place of employment is unclear, but you would in any case not claim any larger travel costs, maybe it’s not that important what you put down as your place of employment. But if you’re e.g. a consultant with your own company, live in Stockholm but have a long-term full-time assignment on site with a client in Uppsala – then it’s quite a difference if you can let your company pay for your travel costs or not.