Sweden warns of tax implications for misclassified self-employed workers

The Swedish Ministry of Finance has issued a warning regarding individuals misclassified as self-employed who are later recognized as employees. When the Swedish Tax Agency (Skatteverket) or the Swedish Work Environment Authority (Yrkesinspektionen) determines that an employment relationship existed, retroactive corrections to income tax declarations are required for non-expired years.

Under these corrections, amounts previously billed as business income are reclassified as employment income. This change affects tax deductions; for instance, costs for equipment such as phones, computers, or supplies can no longer be deducted as business expenses, though typical employee-related deductions may apply.

While returned social security contributions are not taxed as new income, the interest paid on those contributions is taxed as capital gains. Consequently, individuals may face increased personal income tax liabilities following these adjustments.