Plans by the Swedish government to reform its system of offering tax breaks for highly specialised overseas professionals could lead to an influx of expat banking talent.
To attract talent from abroad, the government’s Taxation of Research Workers Board (Forskarskattenämnden) has said it wants to overhaul special income tax breaks for foreign nationals with so-called “expert knowledge”.
Under current rules, a range of key foreign personnel with monthly incomes of more than SEK85,600 can be eligible for special tax relief of up to 25% of their taxable income.
Up to now banking professionals have not come up under its remit but, it is hoped, the government’s desire to make it less bureaucratic and subjective, including potentially extending it to cover anyone with a salary above a certain level, could change things, argues Katrin Fahlgren, a practice leader at auditing and consulting firm KPMG in Sweden.
“At the moment it is unclear whether or not financial services professionals will fall into the scope of the new proposed rules. The government’s focus has tended to be more on attracting expertise within areas such as engineering and manufacturing but in my view it is likely that the proposed change will broaden the current scope of the tax relief to include for example financial services professionals,” she says.
“As yet we don’t have the final text, and probably won’t know the fine detail until the autumn. But the wording seems to indicate it may be going to be based just on earnings or earning potential, in which case financial services professionals could be included. I think financial services professionals are much more likely to qualify for this than they have been in past.”
If financial services professionals do fall under the new rules, Sweden will become a more attractive destination for financial services professionals, she suggests.
As to whether attracting more high-skill, high-potential overseas workers will have an indirect, knock-on effect on Sweden’s already buoyant private banking and wealth management financial services sector, that is more of a moot point, Fahlgren cautions.