Permanent Stay – a Definition

Current Definition of "Permanent Stay"

An individual can be considered subject to unlimited tax liability in Sweden based on three different criteria: (i) being domiciled in Sweden; (ii) staying permanently in Sweden; or (iii) having essential ties to Sweden and having previously been domiciled here. An individual subject to unlimited tax liability is taxable in Sweden on all of his or her worldwide income, while an individual subject to limited tax liability is taxable in Sweden only on certain income with a particular connection to Sweden.

There is currently no statutory definition of "permanent stay" under Swedish law. As a general principle, a continuous period of six months or more qualifies as a permanent stay. An overnight stay in Sweden is required for a stay to qualify; accordingly, an individual domiciled abroad who commutes daily to work or studies in Sweden is not considered to be staying permanently in Sweden, regardless of how long the commuting continues. Temporary interruptions in the stay are not taken into account, meaning that periods of absence abroad are included when calculating the total stay in Sweden. The assessment is currently made on a rolling twelve-month basis without regard to calendar year boundaries.

Case Law

Extensive case law has developed around the concept of permanent stay, but assessing whether a permanent stay exists remains complex in many cases, particularly where stays in Sweden are interrupted by periods abroad.

Case law confirms that a permanent stay may arise even where an individual spends recurrent periods in Sweden that are each shorter than six months. In such cases, the assessment takes into account the length, scope and regularity of the stays. An individual may therefore be considered to be staying permanently in Sweden even if the number of days spent in Sweden is fewer than the number of days spent abroad.

Two rulings illustrate the complexity of the assessment. In 2019, the Supreme Administrative Court held that approximately 127 days including overnight stays – comprising three months in summer, three weeks at Easter and two additional irregular weeks during the year – did not constitute a permanent stay, notwithstanding the recurring nature of the visits. In contrast, in November 2023, the Administrative Court of Appeal held that 79 overnight stays in Sweden spread throughout the year with a weekly frequency did constitute a permanent stay. These rulings illustrate both the importance of frequency and regularity and the difficulty of making the assessment in borderline cases under the current framework.

Proposed Definition of "Permanent Stay"

Under the Government's proposal, "permanent stay" is defined as a stay in Sweden that during a calendar year comprises:

1. more than 160 qualifying days; or
2. more than 120 qualifying days, if the number of qualifying days also exceeded 120 during the immediately preceding calendar year.

Only days involving an overnight stay count as qualifying days.

A qualifying day immediately before or after an overnight stay in Sweden counts as a qualifying day. Both the day of arrival and the day of departure are counted as qualifying days, provided the individual does not arrive and depart on the same day. Under the proposed definition, only actual days spent in Sweden are counted. It is therefore irrelevant how the qualifying days are distributed over the calculation period, and there is no need to assess whether an interruption is merely temporary or not.

Once the threshold for permanent stay is met during a calendar year, the stay is deemed permanent from the first qualifying day to the last qualifying day of that calendar year. If the conditions for permanent stay are met for two or more consecutive calendar years, the stay is instead deemed to run continuously from the first qualifying day of the first year to the last qualifying day of the last year.

The new definition will apply wherever the concept of "permanent stay" appears under Swedish law. This includes, for example, provisions relating to the assessment of essential ties to Sweden, the expert tax relief for foreign key personnel, certain capital gains provisions, and the determination of an individual's home municipality for those not registered as residents in Sweden.

The definition will also apply when assessing permanent stay within the European Economic Area (EEA). To apply a different definition depending on which country is concerned would risk a conflict with EU law. As under the current rules, the reason for the stay in Sweden is not taken into account. Overnight stays in Sweden will be counted regardless of whether the purpose is work, study, leisure or otherwise.

Entry into Force and Transitional Provisions

The legislative amendments are proposed to enter into force on 1 January 2027. Old rules will continue to apply when assessing whether a stay was permanent during any period prior to the entry into force date. The earliest calendar year to which the new definition can be applied is therefore 2027.

The supplementary rule (the 120-day threshold) may, when assessing the 2027 tax year, take into account the number of qualifying days spent in Sweden during 2026, even though the new definition cannot be applied to determine whether a stay was permanent during 2026 itself.

Where an individual is already in a period of permanent stay at the end of 2026, and the conditions for permanent stay under the new rules are also met during 2027, the stay under the new definition will be deemed permanent from 1 January 2027, rather than from the first qualifying day of 2027.It is also noted that the Special Income Tax for Non-Residents (SINK) rate will be reduced from 22.5% to 20% as of 1 January 2027, coinciding with the proposed entry into force of the new definition.

Deloitte Comments

There is a clear need for a distinct and simple definition of when physical presence in Sweden gives rise to unlimited tax liability, and the statutory definition now proposed is therefore welcome from many perspectives. Basing the definition on actual qualifying days spent in Sweden, without the need to assess whether interruptions are merely temporary, will make the assessment materially simpler than the current framework. The threshold-based approach will bring foreseeability for taxpayers, employers and the relevant authorities alike.

Calendar year vs. rolling twelve-month period

One important practical consequence of shifting from the current rolling twelve-month assessment to a calendar year-based assessment concerns individuals who are emigrating from Sweden or repatriating to Sweden. Under the proposed rules, once the threshold is met during a calendar year, the period of permanent stay extends to the last qualifying day in that calendar year. This means that if an individual has already accumulated more than 120 or 160 qualifying days during the calendar year of their intended exit from Swedish tax residency, any further overnight stay in Sweden in that same calendar year – however brief – will extend his or her period of unlimited tax liability to the date of that last overnight stay. Unlike under the current rolling twelve-month framework, it is therefore not sufficient merely to count days on a cumulative basis; individuals must plan their departures and any subsequent return visits with the calendar year as the relevant reference frame.

Tax neutrality

The proposed definition raises certain considerations from a tax neutrality perspective. The new rules create a binary, threshold-driven outcome: an individual either meets the definition of permanent stay and is subject to unlimited tax liability under the Income Tax Act, or does not and is typically taxed under SINK. These two regimes differ markedly: SINK currently applies at a flat rate of 22.5% (being reduced to 20% as of 1 January 2027) with no deductions or tax reductions available, while taxation under the Income Tax Act is based on progressive rates but allows for certain deductions and tax reductions. Whether SINK or the Income Tax Act is more favorable depends on the individual's income level and personal circumstances; as a general rule, the advantage of SINK increases with income.

The hard threshold at 160 (or 120) days means that individuals with marginally different stay patterns – for example, 160 versus 161 qualifying days – may face materially different effective tax burdens on the same income. This "cliff-edge" effect raises questions about tax neutrality, in particular for high-income individuals for whom SINK tends to be the more favorable regime. Over time, individuals are likely to adapt their behavior in Sweden in response to the new rules, and the clearer framework may make it easier than under current law to plan stays so as to remain outside the definition of permanent stay. The concurrent reduction of the SINK rate to 20% from 1 January 2027 increases the financial benefit of remaining below the threshold for high-income earners, which may further intensify the incentive to actively manage stay patterns with tax planning objectives in mind.

Furthermore, since the new definition applies wherever "permanent stay" is relevant under Swedish law – including provisions on expert tax relief for foreign key personnel, certain capital gains and the determination of home municipality – the consequences of crossing the threshold extend beyond the applicable tax rate. Employers and mobility managers should ensure that a comprehensive review of all relevant consequences is conducted for individual assignees, particularly in cases where stays are close to the applicable threshold.

The Government notes that the proposal is expected to simplify matters for employers seeking to determine which tax rules apply to staff domiciled abroad, and may thereby also facilitate cross-border recruitment.

Deloitte will continue to monitor developments in the legislative process closely. Please do not hesitate to contact us should you require assistance or have any questions regarding the proposed changes and how they may affect your organization or your assignees.

Authors: Alexander Strandberg, Cecilia Vegelius & Elmer Wallhult