New inquiry into the taxation of directors’ fees

Background and current legislation

On 2 September 2026, the Swedish Government commissioned a special investigator to review the taxation of fees from board assignments and other assignments of a personal nature, with a report to be submitted by 31 October 2027 at the latest. The background to this is a presumption in Swedish case law: as a general rule, directors’ fees are to be taxed in the director’s personal capacity as employment income, even if the fee is invoiced via a separate limited company since, under the Companies Act, a directorship can only be held by a natural person and is therefore considered to be of a personal nature (RÅ 1993 ref. 104, HFD 2017 ref. 41 and HFD 2019 note 31).

This presumption may be rebutted only in exceptional cases, such as in the case of time-limited assignments relating to a specific task within the company. Other assignments of a personal nature are instead assessed through a holistic assessment in accordance with Chapter 13, Section 1 of the Income Tax Act (1999:1229). The Supreme Administrative Court considered the matter in plenary session in 2019 but chose not to alter the presumption, six of the sixteen participating Justices were fully of the view that the presumption lacked substantive grounds and should be abandoned in favour of a holistic assessment, whilst a further three dissented to a more limited extent.

In substance, there is therefore no clear reason why board fees in particular should be exempted from the holistic assessment that otherwise applies to remuneration for assignments, the presumption rests solely on the fact that, under the Companies Act, the position must be held by a natural person, not on an assessment of the degree of independence in the individual case.
 

The assignment

The investigator shall, amongst other things,

• review how remuneration from board assignments and other assignments of a personal nature is taxed,
• propose amendments to the Income Tax Act that ensure board fees are taxed on an equal basis as other assignments of a personal nature,
• in formulating these proposals, give particular consideration to the importance of uniform taxation and the need for companies to be able to attract and retain external board expertise, and
• submit the necessary legislative proposals.

The report on this assignment must be submitted by 31 October 2027 at the latest.
 

Deloitte’s comments

The Government’s decision to take a comprehensive approach to the taxation of directors’ fees is long overdue. The current arrangement is an exception with no clear equivalent in other areas of tax law: whilst most assignments of a personal nature are assessed through a holistic evaluation of independence, the content of the contract and the number of clients, in the case of board assignments it is sufficient to note that, under the Companies Act, the position may only be held by a natural person.

As stated above, six out of sixteen Justices of the Supreme Administrative Court, in the Court’s plenary ruling of 2019, fully concurred that this special treatment lacks grounds and pointed out that several other roles which may also only be held by a natural person such as bankruptcy administrators, liquidators, public defence counsel, and registered estate agents have never been subject to a corresponding presumption; a further three Justices dissented to a more limited extent. The majority nevertheless chose to refrain from altering the legal position and referred explicitly to the legislature. The inquiry is the Government’s response to that referral, and it is right that it should be undertaken.

The consequences of a reform depend on how it is designed, but three perspectives should be weighed up. Firstly, consistency argues in favour of change, for two reasons. On the one hand, the Supreme Administrative Court itself has established that not even a legislative reform intended to make it easier to conduct business through one’s own company has any impact on directors’ fees, in HFD 2017 ref. 41, a board member with a large number of appointments unsuccessfully invoked the 2009 legislative reform, as the presumption is based on the Companies Act’s requirement for a natural person and not on an assessment of independence.

Furthermore, the issue remains highly contentious within the court: in HFD 2019, note 31, a significant minority of six out of sixteen Justices of the Supreme Administrative Court held that a solicitor’s board remuneration should be taxed at the law firm’s level, as the assignment was carried out within the scope of the legal practice, whilst the majority nevertheless upheld the presumption. Taken together, these rulings show that the legal position is determined more by the form of the assignment than by its actual content.

Secondly, a more flexible system could strengthen companies’ ability to attract and retain external board expertise, particularly consultants and advisers who already carry out related activities in their own firms and who would otherwise be forced to deal with two parallel systems for otherwise similar assignments.

Thirdly, any reform must be designed in such a way that it does not allow board fees in owner-managed companies to be used to convert what is, in substance, salary into lower-taxed business income, a risk similar to that discussed when the independence requirement was amended in 2009. This argues in favour of restrictions linked, for example, to the absence of an ownership interest in the client company or a requirement for multiple independent clients, rather than a general free choice between employment and business activity.

It remains to be seen how the investigator will balance these interests against one another, and the timeframe is long, the report is not due until 31 October 2027. However, the direction is worth noting already now: greater consistency between how board assignments and other personal assignments are taxed would make the legal situation more predictable for both companies and board members. We are monitoring the inquiry’s progress and will provide further analysis when a report or a possible referral to the Council on Legislation is presented. 

If you have any questions about how the current legal situation affects your organisation, or would like to discuss how a forthcoming reform might affect board remuneration structures, please feel free to contact us.