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Print articleIncreased Possibilities of Obtaining Registration as Self-employed Business Person
February, 2009 -
Effective January 1, 2009, the rules governing the right to obtain tax registration as a self-employed business person has been changed. Thus, it is now possible for non-executive directors to obtain registration as such.
The amendments are made by clarifying the term "business". This is achieved by introducing additional criteria when assessing whether an independently conducted business is at hand or not. When assessing whether a business is carried out independently it must in particular be taken into account whether the business person is integrated into the client’s business, whether the business person is dependent upon the client and what the parties may have agreed in this regard. The purpose is that a person conducting a business must also be able to have only one client and the new assessment rules are to be mutually equal.
In a statement the Tax Authority has provided examples of the kind of assignments which will qualify under the amended definition of the term business. For example, a person who is a consultant and when commencing business works on limited assignments for only a few clients and previous employers will qualify. Also a person who works as a non-executive director in more than three companies, in which he/she or closely related persons has no holdings, may also be deemed to carry on business independently after the amendment. It should be noted that the minimum requirement of three different companies is the view of the Tax Authority and not that of the legislator. Thus, non-executive directors can serve on several boards, without burdening each company with employer’s contributions.
The tax group’s comments
As always, one must act with caution. It is evident from the examples in the statement that the Tax Authority does not accept only one client as a qualification. This deviates from the arguments underlying the amendment which specifically emphasized that a business could be deemed an "independent business" also in cases where there is only one client/customer. Since integration and the degree of dependence on the client’s business as well as what the parties have agreed are of decisive importance the Tax Authority’s statement cannot be deemed to be exhaustive. Instead, it is ultimately up to the judiciary to ensure that the proposal is carried out in its entirety.
Furthermore, one can assume that the assessment will be different in cases where an ex-employee becomes a consultant as well as the cases where the consultant has only one assignment for the same client for a longer period of time.
For more information, please contact Emma Gillberg or Peter Utterström, Delphi Stockholm
