Flex informs

Cheaper to hire young people, newly arrived people and people on sick leave

<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >Cheaper to hire young people, newly arrived people and people on sick leave</span>

From July 1, it will be less expensive to hire persons who are not established on the labour market, provided that the proposal is ratified.  The so-called entry deduction (ingångsavdrag) entails the following:

  • About two thirds of the total employer’s contributions are removed.
  • The reduced contributions will apply for wages up to 23 500 SEK per month.
  • To be entitled to the deduction, the person’s’ income may not exceed 100 000 SEK the past five years.

The objective of this proposal is to make it more attractive to hire persons who are far from the labour market, for instance young people without higher education, newly arrived people and people on long term sick leave, thereby getting more people into work. The proposal, that originates from an agreement between the parties in the Swedish parliament, the Center party and the Liberal party is now sent for consultation and is anticipated to enter into force on July 1, 2020.  

...and persons working with research and development

Is your company active in the field of research and development? Congratulations, we have good news for you – from April 1 this year, the employer’s contributions for companies with employees in this sector will be reduced. There is already a tax reduction for these sectors; however, with the new rules the costs will be additionally reduced. These rules begin to apply in the spring of 2020:

  • Companies will be able to make deductions of up to 450 000 SEK per month for their entire staff, compared with 230 000 SEK today.
  • The general employment tax is reduced with ten percentage Points.
  • All sectors that engage in research or development with a commercial purpose are affected by the new rules.

This tax deduction is considered as a strategy to make it easier to conduct research in Sweden and is an important part in the attempt to increase the attractiveness of Swedish companies. As another part of this strategy new and more generous rules concerning residence permits for foreign researchers and students are introduced. Persons who have finished their research or university studies in Sweden will be given permission to stay here for one year to look for a job or to conduct business.  

Worth to know about the employer's contributions

31,42 percent, calculated on the employee’s gross wage. This is how much the employer normally pays to the Swedish government for each employee. The employer´s contributions were implemented in 1960 and was only a few percent to begin with. Over the years, the fee was successively raised. In 1991 the tax rate was nearly 40 percent; however, in the following years the fee was reduced and since then it has remained relatively steady, even though several redistributions of the total amount were made. For labour market policy reasons, there have been also been easings for certain categories of employees from time to time. For an employer, the employers’ contributions are of high importance, as it, together with the wage and the social charges, determine the costs for hiring a person. Over a quarter of the public sector’s tax income is generated by employer’s contributions, thus, they have considerable importance for government finances. Sources: Regeringen.se Ekonomifakta

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