Court ruling on the country origin of an income when being assessed for permanent residency

Overview

When applying for a permanent residence permit, an applicant was denied by the Migration Agency on the grounds that salary received from a Danish employer could not be considered when determining if the maintenance requirement was met, as the foreign salary received had not been taxed in Sweden. The decision was appealed and the case whether foreign income can be considered was tried by both the Migration Court and the Migration Court of Appeal. On December 9th, 2024, the Migration Court of Appeal issued their judgment, establishing an intriguing legal precedent on the origin of income as well as the purpose of the maintenance requirement in the assessment for permanent residence permit. 

The Migration Agency’s rejection & the Migration Court’s tax treaty awareness

A third-country national who had held a temporary Swedish work and residence permit since July 2019 based on her connection to a spouse, applied for a permanent residence permit in July 2023. Although the applicant was granted an extension of her temporary permit, the application for permanent residency was denied. Despite having a sufficient income that had been correctly declared but rightfully not taxed in Sweden, the Migration Agency’s rejection was based on the applicant's employment being in Denmark, and that the Danish salary had not been taxed in Sweden. The Migration Agency argued that this arrangement failed to satisfy the maintenance requirement to be granted a permanent residence permit as stipulated in the Swedish Aliens Act. Due to this, the applicant had not been able to demonstrate an ability to financially support herself nor that she had sufficient ties to Sweden.

The decision was appealed and tried by the Migration Court before being remanded to the Migration Agency for a new assessment. The Migration Court emphasized that the applicant had fulfilled their tax reporting obligations in Sweden and should not be penalized for the tax treaty between Denmark and Sweden (the Oresund Agreement). Moreover, the Migration Court noted that there is no legal basis for the Migration Agency's position that the maintenance requirement cannot be satisfied through foreign employment when the lack of Swedish taxation stems from a tax treaty.

The Migration Agency maintained its position, arguing that according to the preparatory work for the Aliens Act, foreign income must be taxed in Sweden to be considered. Additionally, as permanent residence serves as a steppingstone to Swedish citizenship, it should be evaluated in the context of integration into Swedish society and connection to the Swedish labour market. Once again, the Agency’s decision was appealed, and the case was brought before the Migration Court of Appeal.

The ruling of the Migration Court of Appeal: Precedence for international mobility

The Migration Court of Appeal agreed that, for a permanent residence permit to be granted, the applicant must demonstrate the ability to financially support themselves. They clarified that according to the preparatory work for the Aliens Act, the purpose of the maintenance requirement is to ensure that an individual’s income is sufficient to avoid the applicant becoming reliant on governmental financial support. 

The Migration Court of Appeal delivered its verdict by emphasizing that neither the Aliens Act nor the Aliens Ordinance stipulates that income must originate from Sweden or be taxed in Sweden to be considered. The applicant in the case had a sufficient income in Danish currency that allows her to provide for herself in Sweden. Consequently, the Migration Court of Appeal judged that the Migration Agency must consider the applicant’s Danish salary when assessing her eligibility for a permanent residence permit in Sweden and consequently remanded the case for reconsideration. 

Deloitte’s commentary

It is estimated that over 15,300 people commute daily between Sweden and Denmark for work. This flexibility has been a cornerstone of the Malmö-Copenhagen region since the 2003 establishment of the Oresund Agreement, facilitating cross-border economic integration and collaborations. Extending this flexibility and solidifying it as a benefit available also to third-country nationals is a development that Deloitte warmly welcomes, recognizing the importance of enabling all workers to participate in a dynamic labour market strengthens both regional competitiveness and international mobility.

It is worth noting a key distinction in the two courts’ verdicts: whilst the Migration Court directly referenced the Oresund Agreement and bilateral tax regulations in its considerations, the Migration Court of Appeal did not. By omitting specific references to such as the Oresund Agreement, the newly established precedent broadens its applicability. This means that the decision could extend to other scenarios where income originates from abroad, further supporting cross-border employment arrangements. To what extent and for which set-ups this could be applicable only future Migration Agency assessments and case law will tell. 

Moreover, this precedent underscores the importance of aligning migration policies with the practicalities of a globalised labour market. It highlights the need for legal frameworks that prioritise the reality of an applicant’s economic situation and contributions over rigid interpretations of tax or residency requirements. For policymakers and stakeholders, this case offers an opportunity to revisit and modernise legislation to better reflect the realities of international labour mobility.

The Migration Court of Appeal’s judgment also clarifies the need to separate the maintenance requirement from the integration to the Swedish society, and that the maintenance requirement should be evaluated independently of any integration criteria. This clarification is especially relevant in light of the 2022 legal updates, where the government made it clear that integration is intended to become a bigger part of the immigration landscape and assessments for both permanent residence and citizenship. 

As a closing remark, it should be noted that this is not the first instance where the Migration Court of Appeal has acknowledged and supported the realities of an increasingly global labour market. In 2020, the Court of Appeal ruled in favour of granting a continued temporary work and residence permit to an individual residing in Denmark while commuting daily to Sweden (MIG 2020:17, argued by Deloitte). The Court of Appeal did at this time underline that there is no requirement for labour immigrants to reside in Sweden or spend their daily rest there, emphasising the importance of regulations that accommodate modern workforce mobility.

If you have further interest in the Oresund Agreement or wish to read more about the upcoming changes to the agreement, please read the below or reach out to any of our in-article listed colleagues: 

Överenskommelse om ett nytt Öresundsavtal | Deloitte Sverige

Nytt Öresundsavtal undertecknat av Sverige och Danmark | Deloitte Sverige

If you have questions, you are welcome to contact us:

Martina Ogenhammar Conti
Director, Nordic Immigration Offering Lead - Global Employer Services
mogenhammar@deloitte.se
+46 70 080 21 60

Ivana Jaksic Bratel
Assistant Manager, Immigration - Global Employer Services
ijaksicbratel@deloitte.se
+46 70 080 35 21

Sofia Wennberg
Manager, Immigration - Global Employer Services
swennberg@deloitte.se 
+46 70 080 27 91

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