Tow bar, Tow hitch 850

The only thing you need to worry about is the bulb failure warning unit which will get upset if it senses extra current taken by running the trailer lights in parallel with the car lights. There are two possible solutions:

(a) make the connections on the battery side of the warning unit - which is what happens if you buy the official (expensive) Volvo trailer wiring kit. You can do it without the kit if you locate the unit[1] and splice into the relevant wires on the input side.

(b) Buy a trailer lighting relay unit such as a PCT ZR1328A

takes only a miniscule current from each lighting circuit - which doesn't upset the bulb failure unit, and requires a heavy-duty feed from the battery to *actually* power the trailer lights. If you're towing a caravan which requires a feed via a 12S socket for fridge, battery charging etc., there is another relay unit (ZR1220) which will handle that. [1] ISTR that on my 1999 V70 (which is basically the same car) the unit is under the luggage compartment floor on the LHS (when facing forward). I don't have the car any more so I can't go and look at it, but I think it is a grey box about as big as a 20 pack of cigarettes, with lots of wires going in and out - with a flat multi-pin plug on the input side (possibly another on the output - can't remember). the Volvo kit has a plug and socket which sandwiches between the input harness and the unit.

HTH!