CONVINUS Global Mobility Insights - Sommer / Summer 2024 a Danish employer. If the employee instead rents a home in Denmark and start working, the employee will become fully tax liable in Denmark. If the employee still upholds his/her home in the home country, it should be considered where the employee has the centre of life interest, which is where the employee will be considered tax resident/domiciled. In addition, this country will be able to tax the world-wide income whereas the other country only can tax own sources. The double taxation treaty between Denmark and the relevant country will decide on the tax residency, the right for each country to tax a particular income and how double taxation is avoided. In all situations, the employee needs to file a Danish tax return. For Norway, an employee who stays in Norway for more than 183 days within any 12-month period, or more than 270 days within any 36-month period, will be considered tax resident in Norway under Norwegian domestic law. This means that the employee will be subject to general tax liability in Norway on income and wealth. If an employee exceeds these thresholds, the employee will be tax liable in Norway for its worldwide income, and must report all income and assets whether deriving from Norway or abroad. Even if the employee does not exceed the specified thresholds above, the employee may from a Norwegian perspective, still become subject to limited tax liability for salary income from work performed in Norway. The above entails that an employee working in multiple states should be aware of and ensure that they do not exceed the specified threshold to avoid becoming ordinary tax liable in multiple states. In a case where the threshold is exceeded the person is considered tax resident in another state under its domestic law, the question of tax residency will be resolved in accordance with any applicable tax treaty between Norway and the relevant state. The employee is required to file a Norwegian tax return in all situations. From a Swedish perspective, employees may have either unlimited or limited tax liability. Unlimited tax liability applies where an employee is domiciled in, stays regularly in, or has significant connections to Sweden. Having unlimited tax liability means being liable to pay taxes on the worldwide income. An individual with limited tax liability, receiving income from employment in Sweden, may apply for a final withholding tax of 25 % for foreign residents (socalled SINK). Where SINK applies, there is no requirement on the employee to 40
CONVINUS Global Mobility Insights - Sommer / Summer 2024 submit Swedish income tax returns. The employer withholds the SINK tax. An employee who moves to Sweden more permanently, will be considered a tax resident in Sweden from day one. If a Swedish employee is stationed abroad for a certain period, the employee’s tax liability will depend on the length of the stationing. In all cases, the relevant double taxation treaty between Sweden and the other relevant country must be assessed. 2.2. Withholding tax and reporting obligations for the employer Only a Danish employer or a foreign employer with a permanent establishment in Denmark, is obliged to withhold tax and report the employee's income to the Danish Tax Agency. However, obligations on foreign employers to report might be introduced very soon if passed by Parliament. Furthermore, if the employee is covered by the Danish social security regime, the foreign company is always obliged to register as an employer, report, and pay social security contributions. When an employee is liable to pay taxes in Norway, the foreign employer is responsible for reporting and withholding taxes in Norway. From a non-Norwegian employer's point of view, it should be noted that having employees in Norway results in registration and reporting obligations. When sending employees to Norway or conducting business operations in Norway, there is an obligation to report all work performed in Norway. This applies regardless of whether the employee is liable to pay taxes in Norway or not. In Sweden, both Swedish employers and foreign employers are generally liable to register as an employer, withhold tax and report the income to the Swedish Tax Agency, if the relevant employees are performing work in Sweden for which they are tax liable. This applies also where the foreign employer does not have a permanent establishment in Sweden (see below under 2.5 regarding permanent establishments), in which case income tax shall be withheld at a flat rate of 30 % (unless the Swedish Tax Agency has decided otherwise). 41
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