The Cyprian Atlanco Rimec subsidiary should have submitted the payroll taxes for their Polish employees working at Filbornaverket in Sweden, and nowhere else. That is concluded by Skatteverket, the Swedish Tax Agency in their ruling of this tax dispute.
The story begins already in 2010 when the city of Helsingborg decided to hire NCC as the main contractor for the construction of a new combined heat and power (CHP) plant, Filbornaverket – an 300 million Swedish kronor investment by the municipality. NCC hired, as they have done several times before, a subcontractor from the Irish staffing company Atlanco Rimec Group. Hence, the official employer at Filbornaverket turned out to be the Cyprian Atlanco Rimec subsidiary.
The Cyprian Rimec, registered in Cyprus, in turn staffed the building project mainly with Polish workers. According to the investigation performed by Skatteverket, a total of 134 persons were employed during the period December 2010 – December 2012.
And just as Stoppafusket and other media had done before, Skatteverket almost immediately identified several irregularities concerning both the company and the workers. For instance, the Cyprian Rimec company did not have a class F tax certificate for contractors, nor was it registered for VAT in Sweden. And although the company was registered as an employer, they did not submit any payroll taxes here. The company was of the opinion that the social security contributions were not payable in Sweden, but in Cyprus (where the taxes are much lower).
The rules and regulations governing which country the social contributions are payable in are both very simple and extremely complicated. The basic rule states, however, that social security contributions are payable in the country in which the work is carried out. In this case, in Sweden. But, as with most rules, there are usually exemptions. And this one has two. The first excemption concerns posting, i.e. dispatching of work force abroad. The second excemption concerns work performed in two or more countries, and it is this second excemption that Rimec is referring to. In their motivation, the company highlights that the employment and work period in Sweden was completed with a couple days of employee training in Poland, including both a multiple choice test, as well as welding, and health and safety training. Skatteverket is, however, not in agreement and fails to understand the logic of this argument.
In their ruling Skatteverket writes: “The reason being that this work has not been performed in a logical temporal sequence. The employees would have prepared themselves for work in Sweden in retrospect”.
–The whole things is absurd, and their reasoning is backward, says Inger Herding from Skatteverket. You cannot prepare for a job when you have already have performed it.
An absolute requirement in order to be excused from paying payroll taxes in Sweden, is that the company or the posted worker has a so-called A1-certificate, a document proving that the worker belongs to another country’s social security system.
7.8 million Swedish crowns
In this case, Rimec Cyprus has only been able to produce A1-certificates for three out of the 134 workers formerly employed at Filbornaverket. For another eleven workers Skatteverket finds that the second exemption rule referring to work in two or more member states, is applicable without presenting A1- certificates. For the remaining majority , 120 workers, Skatteverket concludes that employment tax should be paid in Sweden. Hence, Rimec Cyprus is now required to pay their outstanding tax debts for the period December 2010 to December 2012, including tax surcharges, currently amounting to about 7.8 million Swedish crowns, give or take a few kronor.
Aware of the problems
At the end of the 18-page long ruling, Skatteverket writes:
“Our investigation shows that Cyprian law is not applicable. Since some of the employees have only worked in Sweden, the company should already from the outset have been able to predict that the exemption for work in two or more states was not applicable to them. Skatteverket believes that Rimec has tried to take advantage of the rule for regular work in several member states by having the employees undergo tests in their home country. These test have, however, no logical placing in the employment and work process, a fact that Rimec had knowledge of. Skatteverket believes that Rimec has tried to adjust both the employment contracts and work patterns of the employee’s in order to make the multi-state exemption apply. This has not been done in the way that the regulation requires. The procedure indicates that Rimec has been aware of the problems and complexity of the rule for regular work in two or more member states.”
Text by Oskar Sjölander
Translation by Cline Productions
More articles about Atlanco Rimec you will find here.