PAYE tax returns per employee - It should be easy to do it correctly

On January 1, 2019, the PAYE tax returns on an Individual Level, AGI, starts to apply in Sweden.

What does this change mean for employers in Sweden?

Employers need to report exactly how much they have paid in salary and to whom the money has been paid, each month.

Will the PAYE tax returns per employee be sent out and be prepopulated?

No.

What are the benefits of this?

The purpose of introducing the rules is to reduce tax evasion and tax avoidance. The Swedish Tax Agency can more easily monitor which employees a company has and how large wage payments and tax deductions the company has made. The possibilities of finding people that get paid “cash in hand” also becomes easier when the conditions for finding unrecognized income are improved.

Are there any other benefits?

The individual gets the major benefit. This will give a better overview of the private economy. Once the employer has submitted the information to the Swedish Tax Agency, the employee or the retiree can see what information the tax office has received regarding them on “My Pages (Mina sidor)”. Then it is clearly visible if the employer has reported the salary received by the employee as well as the tax deduction that the employer has made on the employee's behalf. This means, among other things, that if you have more employers, it will be easier to see the total income and you as an individual can present this information as a certificate upon request. This has not been possible before.

Has there been a problem that employees have not been able to check what has been paid?

Yes. A clear example of this is for people having summer jobs. When it is time to declare the income, it has occasionally been found that the employer has not paid the employer taxes or deducted taxes for these people.
The ambition is that the monthly reporting should be of benefit also to other Swedish authorities. The Insurance Agency, the Swedish Enforcement Authority, the unemployment insurance and other authorities can with this new system throughout the year see people’s income instead of waiting for their declaration. There are many systems, from a societal perspective, which are managed electronically and this opens for opportunities to read current income and use this amount for calculations.
The service on the tax agency's website is digital, it should be easy to do it correctly.

Tips and trix

Report car benefits at the individual level

If you have employees with a car benefit, it is important to keep track of when during the month a new car is taken out. Even if the car is taken out at the end of the month, full car benefits should be reported for the current month, and immediately in connection with the monthly payout. If you only get the information later, the employer's declaration needs to be corrected afterwards.

No annual reporting needed

Now that you submit the PAYE tax return per employee in 2019, you no longer need to submit an annual report of the salary and tax deduction.

Report according to the cash principle

It is still the cash principle that applies. An allowance or benefit must therefore be accounted for in the accounting period for which the reimbursement or benefit was paid or could be disposed of by the recipient. This applies even if the work was carried out during another accounting period, with the exception of free fuel.

The correct permission is required

Agents and employees who will create and submit PAYE tax returns per employee need to have the proper permissions from the Swedish Tax Agency. Make sure this is organised well in advance.