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I have received a job offer in Stockholm for a Software Engineering position and have had a verbal discussion about the same.

What I have been informed is that I will receive 31000 krona (after tax) as my monthly salary. However, the catch is I will only receive 15000 krona in Sweden, and the remaining 16000 krona will be deposited to an account I specify back home in my own currency. From what I understand, this is most likely done as a workaround to reduce taxes (?).

I am happy with the offer (as accommodation and utilities are sorted) but I have serious concerns about this unusual breakdown of the salary. Is there anything I have to worry about or look into further before entertaining any thoughts of accepting this offer?

My main concern is if they have simply exploited some loophole in the system or if it is in fact tax fraud and what follow up questions do I need to ask them to ensure that I am not getting myself into trouble.

UPDATE

I had a discussion with the local proxy (my point of contact with the Swedish company) and raised the obvious tax concerns with regards to the unusual salary breakdown.

What I was informed is as follows:

  1. I will be recruited by the Swedish company at a salary of around 20000 krona (15000 krona after taxes).

  2. The owner of the Swedish company is an investor of the local proxy (which is a startup) and will provide the local proxy with funds on a monthly basis. (These funds are not specific to me and has taxes accounted for)

  3. A part of this investment will then be deposited by the local proxy on a monthly basis to my local bank account making up the remaining 16000 krona of my 'salary'. (again, any local taxes will be accounted for)

How would you guys evaluate this?

Priyath Gregory
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    What is the company that you have accepted the offer from? Is it a company you already work for, asking you to move? Is it a big multinational? Is it a startup? And have you actually visited the company and verified that they have offices and workers and stuff like that? – DJClayworth Oct 09 '18 at 17:45
  • It is a small company that has been established for around 4 years. My only correspondence with the company has been through a proxy within my own country (who happens to own a startup locally and one of its investors is the owner of the company in question) and a technical interview I had with two of their technical leads. I have not visited them. Btw, is there some sort of an online authority that I can look up the company to see if it is actually legit? – Priyath Gregory Oct 09 '18 at 18:19
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    Are you relocating to Sweden or working remotely? – DJClayworth Oct 09 '18 at 18:27
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    @DJClayworth I will be relocating if I accept this offer. – Priyath Gregory Oct 10 '18 at 03:23
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    This sounds a bit like a yin-yang contract... – Per Alexandersson Oct 10 '18 at 07:56
  • This could be an account for government subsidized pension savings.. one could call that "reduce taxes", since that's where the subsidy kicks in. – FooBar Oct 10 '18 at 08:22
  • And how would they account for these payments to you in their accounts? Would you need to invoice them? Would it be a salary? Or would be an altogether different company/person paying you? What would your formal written contract actually state? Do you live in a country with currency controls (i.e. you can't easily convert local currency to foreign currency)? It may also affect your contributions for sickness, unemployment and retirement, and thus the amount you would receive in those situations. And you may end up with both Sweden and your home country wanting to collect taxes. – jcaron Oct 10 '18 at 11:45
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    Yeah, wow, this is shady. I'm not surprised it's a small company trying this. A larger company would not dare trying. – pipe Oct 10 '18 at 14:13
  • @jcaron I have updated the question with some more information with regards to the offer. – Priyath Gregory Oct 10 '18 at 16:05
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    On what basis will the funds be "deposited" on your account in your home country? Will that be a salary? What company is employing you then? You would have two work contracts? What if the local startup dies? You will end up with both your home country and Sweden wanting to get taxes on the whole salary. Sweden because you live and work there. Your home country because the majority of your income is there. And you still won't get the full sickness/unemployement/retirement benefits. – jcaron Oct 10 '18 at 17:23
  • Another angle to consider is that your pension will almost surely be based on the 31000 paid to you in Sweden. – Eric Oct 10 '18 at 19:22
  • Hint: does it sound too good to be true? – Mawg says reinstate Monica Oct 11 '18 at 08:08
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    Doesn't seem to make much sense in that you could "reduce taxes" in any legal way. Normally, if you're a tax resident in a country, you need to pay the same taxes for all money you earned, regardless to what bank account it's deposited. There's no way taxes are not paid to the Swedish authorities just because the money is transferred abroad, unless it's a potentially illegal arrangement, or they're referring to something else. Don't seem to be necessarily a "scam", but it could be potentially troublesome? – xji Oct 12 '18 at 12:43
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    Or maybe they're trying to avoid paying social security contributions to the government or something, but still looks quite dubious whether it would violate the law. – xji Oct 12 '18 at 18:58
  • @xji thank you for the response. At a follow-up discussion with the company, I said I was uncomfortable with this arrangement citing the tax concerns that I had. They understood this and agreed to pay the full amount to me in Sweden under the company's payroll. However, they would have my gross salary at somewhere around 35k (before taxes) and make up the remaining amount via allowances that will add on to my salary. I think this is done to reduce the social security contributions, which I am okay with. Is there anything unusual about this? – Priyath Gregory Oct 14 '18 at 15:18
  • @fsociety Sorry I don't live in Sweden (though I might look for a job there some time) and I only answered based on what I know about tax laws in general. I think the best way to get precise answers would be post in a local forum such as https://www.thelocal.se/discuss/, where people might be more familiar with such situations. – xji Oct 15 '18 at 09:17

2 Answers2

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First off, for any questions relating to taxation in Sweden, it's a good idea to contact Skatteverket (the Swedish tax agency). The people there are generally happy to help, and also generally want you to get the paperwork right because it saves everyone a lot of trouble. They will also be more familiar with the details than the average random person on the Internet.

As I discussed somewhat in my answer to Do I declare money earned outside Sweden?, and as discussed by Skatteverket, it shouldn't matter to which account the money is deposited. Rather, the important issue is whether you are considered liable for taxes in Sweden, and whether the employer is established in Sweden. For example, from the latter linked page, my boldface:

If you reside in another country and work in Sweden, your employment income from work in Sweden will normally be taxed in Sweden. In most cases you will need to file an application for taxation in accordance with the Special Income Tax for Non-Residents Act. This is valid if you work for a Swedish employer or a foreign employer who is established in Sweden.

When staying [in Sweden] for at least six months, you are considered as resident in Sweden for tax purposes, and are liable for taxation in Sweden on all of your worldwide income. You must also file a Swedish income tax return. Your tax return must be filed no later than May 2nd of the year after the fiscal year.

So if you stay less than half a year in Sweden, it is likely that you will have to pay Swedish taxes on the full amount earned in Sweden, regardless of where it's deposited; and if you stay for more than half a year, you are liable for Swedish taxation on your full, worldwide income. Tax treaties makes this somewhat more complex, but those will depend very heavily on your specific situation anyway, so you're better off asking someone who knows the details there.

Again, contacting Skatteverket is a good idea.

user
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Where are you from/reside originally? Please note that some countries, notably the US, charge taxes on foreign income earned, if that income is above a certain threshold. Last I checked it was 80KUSD/Y. If you originally reside in one of these countries you may be taxed twice, and one may give a writeoff for the other.

Source: lived in Canada, and had to file/pay both CA and US taxes.

Tommy
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