The transport industry has reported problems with foreign drivers and staffing companies that are increasingly hired, which means that taxation is done incorrectly or not at all. Companies in the road haulage industry with employed drivers have reported that they are finding it increasingly difficult to cope with competition and to stay in the market.

The police have reported frequent violations of driving and rest periods, violations of cabotage rules (domestic transports by foreign lorries in Sweden), but also other crimes along the roads in the form of theft of both loads and diesel.

The Swedish Tax Agency has picked up signals about problems and tax evasion in the road haulage sector. Based on this the Tax Agency chose to look deeper into parts of the sector in order to map and correct errors that are detected and determine whether it is unconscious or conscious error as well as reviewing investigative methodologies, system measures and the need for regulatory changes.

The purpose of the initiative is to report on controls carried out on selected companies in the road haulage industry where there has been suspicion of errors in terms of taxes.

The purpose is to find methods and suggestions for regulatory change in order to:

• prevent and combat various forms of undeclared work in the road haulage industry including bogus self-employment and illegal and improper use of staff;
• disseminate information and knowledge of rules on taxes and social security contributions among the players in this market; and
• collect unpaid taxes and correcting tax rates for haulage companies / employers who unknowingly or deliberately fail to comply with taxes and social security charges, and in the same way to collect unpaid income taxes among drivers as well.

The project started on a broad basis. Initially, the Swedish Tax Agency looked at haulage companies in which the turnover had increased, at the same time as the employed labour force had been reduced.

Regarding foreign hauliers, the Swedish Tax Agency concentrated on hauliers who applied for large value added tax (VAT) refunds. In cases where the VAT for their diesel costs covered, in principle, their driving, the Swedish Tax Agency could assume that they had driven in Sweden only, and thus an inquiry was made whether they should have declared income taxes and/or VAT in Sweden. The control concerned whether or not they declared the workforce they used, and if so, whether they made tax deductions from the drivers’ remuneration, and paid payroll tax. Regarding companies registered abroad, which the Swedish Tax Agency considered as posted workers, the Agency checked if they were registered at the Swedish Work Environment Authority in accordance with the Swedish Act on Posting Workers (2013:351) and the so-called Enforcement Directive (2014/67/EU).

According to the Swedish Tax Agency, the project achieved its main objectives. It informed the hauliers about their legal obligations, as well as the drivers’ legal rights and obligations (for example the social rights that genuinely employed workers are entitled to).

The main outcomes of the initiative are as follows:

• The project revealed considerable problems with tax evasion. 39 of the 49 haulage companies that were subject to the special investigation and control failed the test. This meant that the Swedish Tax Agency had to increase the tax rate with 44 million SEK in total for these companies.
• The project spread information and knowledge in society about the problem of undeclared work in the road haulage sector, including various measures used to circumvent existing fiscal and social laws and regulations in order to reduce labour costs.
• It is reasonable to assume that the information and knowledge provided by the project may have contributed to a Government Bill in December 2016 on mandatory monthly tax declarations for employers for each individual employee (Governmental Bill 2016/17:58, cf. the Nacka Project).
• The project may also have contributed to a directive from the government to the Swedish Transport Administration (Trafikverket) to look at the possibilities to increase the purchasers’ responsibility for fair freight transport services. Has entailed a new law for foreign workers working for any Swedish contractor in any part. Income tax will then be paid from the first krona (SEK). The law will be introduced on 1 January 2019.