Under European Community law, a person pursuing an activity as an employed or self-employed in a EU/EEA country shall be subject to the legislation of that EU/EEA country.

In order to encourage the movement of workers and services as much as possible in the EU, and to avoid unnecessary inconveniences which would not be in the interests of workers or companies, the European Community regulations allow for certain exceptions to the general principle referred to above.

The main exception to the general principle is the following:
An employee sent by an employer (or a self employed who pursues activities) in another EU/EEA country than the country where the employer (or self employed) usually carries out activities (the country of origin), continues to be subject to the legislation of the country of origin provided that:

• The anticipated duration of that work does not exceed 24 months, and
• For posted employees only:
• The employee is not sent to replace another posted person.

In order to be subject to the legislation of the country of origin, employees and self-employed persons to be posted to another EU/EEA country must be provided with an A1 certificate (formerly E101 certificate) from the competent institution before they leave. The A1 certificate is sent to the Swedish Tax Office for approval. Once approved, the employer or self-employed is exempt from paying social contribution in Sweden but continues paying social contributions in the country of origin. Posted employees and self-employed maintain all their social benefits in their country of origin. However, the withholding tax must be paid in Sweden.

An A1 certificate is usually granted for a maximum of 24 months. It is possible to derogate from the 24 months rule upon consent of the institutions of both the EU/EEA countries involved. The derogation can only be used in the interests of a person.

In addition to the temporary nature of the posting and the fact that it is not designed to replace another worker, there are several important points to note about this special rule:

• The employer must normally carry out its activities in the country of origin.
• Additionally, the rule that the worker pursues an “activity on behalf of an employer” means that throughout the period of posting there must exist a direct relationship between the posting employer and the posted worker.

A person normally self-employed in the posting EU/EEA country who pursues a similar activity in the EU/EEA country of employment continues to be subject to the legislation of the country of origin provided that the anticipated duration of that work does not exceed 24 months.

If an employee or self-employed is carrying business activities in two or more EU/EEA countries, the rule is that the person will be subject to the legislation of the EU/EEA country of origin if he/she works for one employer in different EU/EEA countries and pursues a substantial part of his/her activity in the EU/EEA country of origin.

When determining whether a “substantial part of employed activity” is pursued in a EU/EEA country of origin, the following criteria are taken into account:

• Working time
• At least 25% of the person’s working time is carried out in the EU/EEA country of origin, which represents approximately 93 days in a calendar year.
• Remuneration
• At least 25% of the person’s remuneration is earned in the EU/EEA country of origin.