1. Swedish Reform to Reduce Informal Work
Conny Svensson
(National Compliance Coordinator)

2. Background
In most countries and also in Sweden there is a serious problem with grey economy in businesses selling goods and services in return for cash payment
One condition for a new legislation was the consensus that existed between the relevant trade associations and the Swedish Tax Agency (STA)
Together, we pointed out the need for new rules to combat tax evasion and unfair competition in the sector for cash trading

3. Our strategic direction
Support
and make it easy
Combat non compliance and tax fraud
Corrections

4. Right from the start – real time monitoring
The new focus
The old focus
Business
Bookkeeping
Tax return
Payment
Certified cash
registers
Staff ledgers
Right from the start = early measures

5. New powers for the Tax Agency
Cash sector
High-risk sector for non-compliance
Severe tax losses linked to small businesses; undeclared income and undeclared work
Lower incentive for sellers and buyers (consumers) to keep records
Measures:
Staff ledgers 2007
Cash registers 2010
New powers for the Tax Agency

6. Measures in the Cash sector
Staff ledgers
Restaurants, Hairdressers and laundries
Ledger kept at premises
Daily updates
Employees in/out
Cash registers
All cash trade (some exceptions)
Register with ”black box”
Debit/Credit cards included
New powers – field inspections
Check cash register and/or ledger
Penalty for misuse

7. Measures in the construction sector
From 1 January 2016 there
have to be electronic staff
ledgers (registers) at
building sites in Sweden

8. The purpose of the legislation
To counter black work and promote sound competition in current industries
There need not be any suspicions of crime to apply the legislation

9. Staff Ledgers - regísters

10. Staff ledger - ”Personal ledger”
All restaurants, hairdressers (2007) and
laundries (2013)
From 1 January 2016 the construction sector was implemented
Mission from the Swedish Government , propose more sectors
auto repair
food wholesalers
beauty care
(In april 2017 a draft law will be submitted to the Government)

11. Staff Ledger The Ledger can be a book or kept electronic
On daily basis include registration an entry for each employee and when the session ends
A person does not have to be paid for will be written into the ledger. It is enough that he is active in the restaurant

12. Staff Ledger
The ledger must be kept in the business premises and available tor the Tax Agency
The ledger should be kept for two years

13. Unannounced inspections
Check that everyone working that day are registered in the ledger
ID-control
Questions to the owner and employees
Limited audits

14. Staff Ledger - Fines There is a fine of 12 500 SEK (~ € 1250) if
- you don´t have a ledger
- the ledger is inadequate
- you haven´t kept the old ledger
- the ledger is not available at the inspection
There is a fine of 2500 SEK (~ € 250) for every person who is not noticed in the ledger
It may be a combination of fines above

15. Staff Ledger – most common errors
Employees has not registered in the ledger
The ledger has not been kept for two years
Information in the ledger has been changed
People (employees) runs away

16. (construction sector not included)
Staff Ledger - Impact
(construction sector not included)
Based on a effect evaluation in 2010
More than inspections since 2007
Staff Ledger have significant impact on reported salary , mainly in the restaurant sector
- 11 % increase of reported wages
- about new full time jobs
We have discovered unregistered businesses
More companies has registered as employers
Audits

17. Cash Registers
First a little about the rules on cash registers.

18. Short about Cash Registers
Why do I mention Cash Registers ?
- there is a correlation between income and expenses such sa salaries
- similar legislation based on unannounced inspections
- both type of controls performs simultaneously by STA

19. Cash register legislation – 1 Jan 2010
Certified cash registers for all cash trade
all traders selling goods and services paid in cash (means both cash and card payment)
About registered traders
Exceptions
General
Individual by application
Threshold (turnover ~ € )
Notification to the Tax Agency
Type of Cash register
Physical Address
~ 40 % of
all Swedish companies

20. Cash register - 3 actors in the process
Customer
Trader
Tax Agency
Cash register used
for all transactions
Must be offered a receipt
Unannounced inspections
Some are ”hidden”

21. New rights for the Tax Agency
Spot checks (unannounced)
The cash register is reported
works in Accordance with the law
Special measures
Count customers
Anonymous purchases
Receipt control (to observe that customers are offered a receipt)
Cash inventory
Non-compliance results in fine

22. The Customer Should always be offered a receipt
Campaign to increase awareness
”Support Fair Competition -Demand a receipt”

23. Measures in the construction sector
- From 1 January 2016 there have to be electronic
Staff registers at building sites
- The total construction cost must be more than SEK (~ € )

24. What does it mean for a developer?
The responsibility for the staff register is primarily by the developer A developer either build under his own management or order the work from a contractor. The work can, for example, involve constructing or modifying buildings, roads or other facilities. Repairs and maintenance are also included

25. What does it mean for a developer?
A developer have to report a new building site to the Swedish Tax Agency Also report when the construction work has been completed and if there is any change to the information that was compulsory when he reported the building site E-service to help to report the site. If someone is unable to obtain a Swedish eID, it is even possible to use a form

26. What does it mean for a developer?
The developer has to make sure that the necessary equipment to keep an electronic staff register correctly is in place at the building site It must be possible to show the whole staff register if the Swedish Tax Agency will visit the building site for an unannounced check A developer can transfer his obligations to a turnkey contractor through a written agreement

27. The Contractors obligations
The contractor have to enter information in the staff register using the equipment acquired by the developer
Enter the name and personal identity number or registration number of his own building firm and of everyone working in it on the building site
The contractor is also responsible for information being entered continuously about when everyone has started and ended their work each day on which are carrying out activities at the building site

28. Fines in the construction sector
SEK (~ € 2 500) if the building site has not been reported to the Swedish Tax Agency
SEK (~ €1 250) if the electronical register not been hand held at the site
2 500 SEK (~ € 250) for every not registered person on site

29. Key lessons learned
Cooperation with trade associations – success factor
Staff training – focus on respectful treatment
High initial focus to ”secure” the systems

30. Thank You !