Sole operator working from Swedish home can create PE

A foreign company whose business is in practice run by one person working from a Swedish home can have a permanent establishment in Sweden even where there is no commercial reason for that location choice.Skatteverket Skatteverket has clarified that the commercial-reasons test does not apply when the individual is the only or the main person — the primary person — who carries on the company's business.Skatteverket

The clarification sits in the 2025 update of the OECD Model Tax Convention. Commentary points 18 and 19 to Article 5 were replaced by points 44.1–44.21 on cross-border working from home or another relevant place. Points 44.11–44.19 keep a commercial-reasons inquiry for ordinary remote work: whether the individual's physical presence in Sweden facilitates the company's business, for example through access to people or resources the company needs.Skatteverket Point 44.20 reserves other considerations for the primary-person caseSkatteverket, illustrated by a consultant who spends an extended period conducting most of the business of her own consultancy from an office set up in her home. Skatteverket reads that reservation as switching off the commercial-reasons requirement in primary-person situations.Skatteverket

Primary person normally means a person in a företagsledande ställning who mainly carries on the company's business by performing significant functions relevant for attributing risks and assets to a permanent establishmentSkatteverket — a key person. Where management is exercised jointly by two such key persons, both are covered. The existence of other employees who do not perform such functions does not affect the point 44.20 assessment, which targets situations where the business is in practice run by one and the same individual.

The rest of the main rule in 2 kap. 29 § first paragraph Inkomstskattelagen still applies: a fixed place of business — the home, a fritidshus, or a friend's or relative's home — from which the business is wholly or partly carried on, used on a permanent basis. A home or other relevant place is normally not the company's place of business where the individual works there for less than 50 per cent of total working time for the company over a twelve-month periodSkatteverket; at or above 50 per cent the permanent-establishment question is decided on the facts of the individual case. The assessment looks at actual circumstances during the period in question, not at how the business was run earlier or later.

This replaces the earlier line that the company's benefit or interest in the work being done in Sweden must always be weighed, including the owner's freedom to organise a closely held company. Advisers should re-test files previously cleared on no-commercial-reason grounds where the Swedish-based worker is the sole or dominant operator.

Where the home is a permanent establishment, only income from the business carried on there is taxable in Sweden, computed under the general näringsverksamhet rules of the Inkomstskattelag with profit attribution under the OECD attribution reports, which Högsta förvaltningsdomstolen has confirmed also guides domestic attribution. Keep separate establishment accounts on bokföringsmässiga grunder rather than a formulaic split of worldwide profit, and check the applicable treaty, which may restrict domestic taxing rights.

Legal basis is 2 kap. 29 § Inkomstskattelagen (1999:1229) with OECD Model Article 5 commentary points 44.1–44.21, Skatteverket's position 8-155706-2026 of 13 May 2026, and the computation rules in 3 kap. 18 §, 6 kap. 11 § and 14 kap. Inkomstskattelagen.