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TAXES

Sweden acts to curb corporate tax-avoidance

Finance minister Anders Borg announced plans on Monday to close loopholes in the Swedish tax code following criticism that healthcare companies are using complicated schemes to avoid paying taxes in Sweden.

Sweden acts to curb corporate tax-avoidance

Health care company Carema Care AB as well as pharmacy operators have been criticized recently for avoiding taxes by relying on a scheme whereby the firms borrow money from a parent company headquartered in a tax haven.

The Swedish subsidiaries of the company reduce their tax burden in Sweden by claiming hefty interest payment deductions stemming from “loans” from their parent companies offered at internal, often inflated, interest rates.

At a press conference on Monday, Swedish finance minister Anders Borg revealed that the government plans to examine legislation to put a stop to the practice in the spring of 2012.

The new law will make it harder for companies to take advantage of “aggressive” interest payment deductions.

According to Borg, the new proposal could come into force as early as January 2013.

“We have no view regarding what sort of owner manages a certain type of company,” he said in response to a question about whether or not international companies would be allowed to conduct profit-making operations with the help of Swedish tax money.

“However, everyone should pay their fair share of taxes,” Borg added.

The law will apply to all commercial activity in Sweden, not just companies active in the education and healthcare sectors, something which Borg anticipated may rankle some in the business community.

“There may well be a bit of a hullabaloo about this from the private sector. But we’ve concluded that something has to be done,” he said.

Elderly care minister Maria Larsson was also asked about the government’s views on whether international venture capital firms should be allowed to conduct profit-making operations with the help of Swedish tax money.

She emphasized that, in the government’s view, it’s not important what sort of company conduct any given activity, but that what matters is that the quality of the service provided is good and that the profits stay in Sweden.

“These funds, which are taxpayer money, should be used in Sweden and that will happen with this sort of preventative legislation,” said Larsson.

According to Borg, the forthcoming legislation will stop “questionable and aggressive interest rate structures” within venture capital firms.

He said the Swedish Tax Agency (Skatteverket) shouldn’t hesitate to take companies with questionable interest rate structures to court in order to determine if they violate Sweden’s laws against tax evasion.

The Confederation of Swedish Enterprise (Svenskt Näringsliv) welcomed news of the planned legislation.

“It’s positive that the government is taking action against the tax problems associated with what we’ve seen recently,” Krister Andersson, a tax expert with the organization, told the TT news agency.

Public sector employees union Kommunal remained cool to the proposal, however, arguing that, while action is welcome, the government is focusing on the wrong problem.

“The main problem is that there is too little money,” Kommunal chairperson Annelie Nordström said.

Social Democrat head Håkan Juholt argued that the government’s proposal didn’t go far enough.

“It’s become clearer that an increasing number of the market-oriented experiments within schools, care, and healthcare currently being conducted in Sweden have gone off the rails,” he said.

According to Juholt, privatization of public services is costly for citizens and called for better, national guidelines.

“After these revelations, the government is now trying to plug a few holes in an experiment which actually has a number of huge shortcomings,” he said.

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TAXES

What freelancers in Norway need to know about tax

If you’re ready to venture out on your own as a freelancer, then it is essential to brush up on the tax rules and regulations in Norway.

People going over their taxes and finances.
Here's what freelancers in Norway need to know about taxes. Pictured are people going over their finances. Photo by Scott Graham on Unsplash

Are freelancing and being self-employed the same thing?

According to the Norwegian website for government dialogue, Altinn, “A freelancer receives payment for individual assignments without being a permanent or temporary employee of the organisation he or she is carrying out work for, but does not need to be self-employed.”

This is helpful to clarify. Because when you decide to work for yourself in Norway, you can do this in a matter of two ways. The two most common methods to register your freelance work or self-employed business is as an enkeltpersonforetak, or as an AS, which is an acronym for aksjeselskap. 

In English, an enkeltpersonforetak means “sole proprietorship”. And an aksjeselskap means “Private Limited Company”. 

Both enkeltpersonforetak and AS come with their own set of positives and negatives. Technically, you are NOT considered a freelancer if you have set up an AS. 

If you have set up an AS, then you are considered an employee of your own company. 

The two may often be compared to one another. But in the eyes of tax law and the rules that apply to your freelance work, they are very different. If you are setting up an AS, it is highly recommended that you hire an accountant as the tax rules are intricate and very specific to what type of business you run.

If you are a freelancer working as an enkeltpersonforetak 

For a sole proprietorship, you need to pay advance tax quarterly – or four times a year in Norway. This is done by the freelancer calculating how much profit they expect their work to earn within the taxing quarter. 

It may be difficult to predict, which is why you shouldn’t worry if you make more or less than your original registered claim.

For example: Let’s say freelancer Petter registered with skatteetaten, the Norwegian Tax Administration, that he would make 50,000 kroner in the first quarter of the year. Suddenly, Petter unexpectedly gets five new clients and happily makes double, earning 100,000 in the first quarter instead, all Petter has to do is log into his skatteetaten account and adjust his original tax claim so the amount he pays in taxes will be accurate. 

The Norwegian Tax Administration determines how much tax is to be paid based on the expected profit. 

In addition to quarterly registers, freelancers are responsible for sending invoices, keeping track of their accounts, and creating their own pension scheme. They are also responsible for the value-added services, or VAT.

What is VAT?

This is where it can get a little confusing with the terms. The Norwegian VAT officially uses the acronym MVA, for merverdiavgift. And if that wasn’t confusing enough, Norwegians have developed a slang word for this type of tax called moms

So, VAT = MVA = merverdiavgift = moms. All four terms refer to the same type of tax.

For freelancers that have earned more than 50,000 kroner over the course of a year, they need to register their VAT, which is the sales tax on goods and services.  

Again, this is when you should double-check to see if your line of work can be VAT exempt. Specific industries, such as education and arts and culture, are exempt from registering their VAT. This is because they don’t have to pay VAT. But most importantly, they are not allowed to charge their clients VAT for their services or goods.

However, freelancers who work in VAT exempt industries can electively register their VAT so they can both charge VAT and receive VAT deductibles. 

The VAT tax rate has held steady at approximately 25 percent over the past decade. When you have registered the tax on your goods and services, it is possible to request a VAT refund on purchases made up to three years back in time.

This is, again, a really good time to know what you can deduct or get back with VAT. 

For example: Let’s say Anna works as a freelance PR agent and takes a potential new client out for a “working lunch”. Unfortunately, she cannot register the lunch receipt as a work-related deductible as it is not allowed to apply for a VAT deductible on foods. 

However, let’s say Anna bought a printer that was necessary for her PR services. She could apply for a 25 percent VAT deduction on the printer’s costs as it is deemed necessary work equipment.

To register VAT for your goods and services, look here

Programmes and accountants can help with this.

Accounting programmes and actual accountants can help ensure you are managing the administration side of your business correctly. And even if you have both of these helpful options, you should still give yourself enough time each week, or month, to keep your accounts up to date if you are a freelancer. 

Managing your own accounts and taxes can be overwhelming. Luckily, there are some different options available.

Having an overview of your accounts with an accounting programme is cheaper than hiring an accountant and a great way to keep a 24/7 overview of your business.

If you are intimidated by the math side of things, or worse, making an honest tax mistake that is still illegal, don’t worry. The newest programmes have a reputation of being easy to learn and user friendly. 

Here is a list of the top accounting programmes recommended for small businesses in Norway. 

Remember, Google Docs and Word are not an option for creating your own invoices, as all invoices must be auto-numbered. 

There is peace of mind in letting a professional handle your accounts, but you will have to pay for it. The average price for an accountant in Norway is around 500 kroner per hour plus VAT (value-added tax). 

If you choose to hire an accountant to manage your firm’s books, here is a list of what the average accounting services can cost you. 

If you’re still unsure

Learning your adopted country’s tax laws is both time-consuming and filled with small intricacies and loopholes. If ever you come across a new billing or taxing situation you’re not completely sure about. You can reach out to the Norwegian Tax Authority for more clarity.

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