Doing business in Sweden
If you are looking to start or expand your business in Europe, Sweden is a great place to consider. Sweden has a thriving startup and tech sector, and is home to some of the world's leading companies in a range of industries. Sweden also offers tax advantages for businesses, making it an attractive destination for entrepreneurs and investors. In this guide, we will take a closer look at doing business in Sweden, including the steps you need to take to get started, the best places to do business in Sweden, and how to hire employees in Sweden.
Sweden: Gateway to the Scandinavian market
Sweden is a great country to do business in if you want to expand to the Scandinavian or Nordic market. Sweden has a thriving startup and tech sector, and is home to some of the world's leading companies in a range of industries. Sweden has a well-developed investment landscape, with plenty of VC firms and business-minded banks. In this guide, we will take a closer look at doing business in Sweden, including the steps you need to take to get started, the best places to do business in Sweden, and how to hire employees in Sweden.
Company formation in Sweden
The first step in setting up a company in Sweden is to choose the legal form of your business. There are a number of different options, but the most common are:
First of all, the limited company (aktiebolag or AB). This is the most common and practical entity for foreign business with long-term plans in Sweden. It is very similar to limited companies in other companies.
Secondly, a partnership (handelsbolag or HB). This is a good option for small businesses, as it is simpler and cheaper to set up than a limited company. Partnerships are not as common in Sweden as limited companies, but they offer some advantages for very small companies that are primarily focused on the Swedish market. Partners are personally liable for risk and losses of the company, which makes it less appealing in many cases.
Third, the Swedish Limited partnership (kommanditbolag or KB) is a type of business entity that is similar to the HB but with a few key differences. The KB is formed by two or more partners, one of whom is the managing partner. The MP is responsible for the day-to-day operations of the company and has full liability for its debts. The other partners are called limited partners (LP), and they have no responsibility for the company's debts beyond the amount that they have invested in it. This makes the KB a good option for investors who want to be involved in a business but want to limit their financial exposure.
Finally, the branch office (filial). A filial is a good option for businesses that want to establish a presence in the country but are not ready to set up a full-fledged company. A branch office is a separate legal entity from its parent company and is taxed separately. It must have a representative in Sweden who is responsible for managing the office and filing reports with Swedish authorities.
The most common legal forms for businesses in Sweden are limited companies and partnerships. If you are unsure which form is right for your business, speak to an accountant or lawyer in Sweden for advice.
Registering a company in Sweden
Once you have decided on the legal form of your business, you need to register it with the Swedish Companies Registration Office ( Bolagsverket ). The registration process is relatively simple and can be done online. You will need to provide the following information:
- Company name and registered address
- Names and addresses of all company shareholders and directors
- The company's business activity and registered capital (although this can be changed later)
- Whether the company is private or public
The registration process usually takes around two weeks, and you will receive a confirmation letter from the Bolagsverket once your company has been registered.
You will also need to appoint a Swedish accountant to act on behalf of your company. This registered agent will be responsible for filing annual reports and paying taxes on behalf of your business.
Depending on your type of business you might need to obtain additional licences to start trading. Such application processes are generally very simple, and you can find more information on the website of the Swedish authorities or contact an expert.
Incorporating a subsidiary in Sweden
If you want to set up a subsidiary in Sweden, you will need to register with the Swedish Companies Registration Office as described above. You will also need to file a notification of establishment with the Swedish Business Register (Bolagsregistret). This can be done online in no-time or by a company formation expert. For more information, see the website of the Swedish Business Register or talk to an expert directly.
How much does it up to start a limited company in Sweden?
The cost to set up an Aktiebolag (AB), or a private limited company, in Sweden can vary based on a variety of factors including the method of incorporation, legal fees, registration fees, and potential fees for services like address registration or hiring a local director.
First of all, the Bolagsverket (Swedish Companies Registration Office) charges a registration fee of SEK 2,200 for electronic submission and SEK 2,900 for paper submission.
Legal fees can vary greatly but could potentially range from SEK 10,000 to SEK 40,000 or more. Additional costs might include hiring a local director if required, which could also vary greatly in cost depending on the specific situation.
Thirdly, you will need to have a registered address to register the business at. The cost of a virtual office in Sweden can vary depending on the provider and the specific services you require. You can expect to pay anywhere from around 500 SEK to 1000 SEK per month for a basic virtual office service in Sweden, which typically includes a business address, mail handling, and sometimes limited use of physical office space. Services like dedicated phone lines, call answering services, administrative support, use of meeting rooms, and more extensive use of physical office space would likely come at additional cost. Please note that prices can vary significantly depending on the city, the prestige of the office location, and the specific package of services you choose.
So, while it's difficult to provide a precise average cost, a rough estimate might be in the range of SEK 20,000 - 50,000 or more for the full setup of a Swedish AB, private limited company. However, this is a rough estimate and the actual cost could be higher or lower depending on the specific circumstances.
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Business opportunities Sweden
Sweden is a great country to invest in, with a thriving startup and tech sector and a number of world-leading companies. If you're looking for business opportunities in Sweden, the five industries below are worth considering:
1. Cleantech
Sweden is a global leader in cleantech, with a number of world-leading companies in this field. If you're looking to invest in cleantech, Sweden is a great place to do it.
2. Healthcare
The country also has a well-developed healthcare sector, and is home to some of the world's leading medical device companies. If you're looking for healthcare-related investment opportunities, Sweden is a great place to look.
3. Food and beverage
Third, it is a major player in the food and beverage industry, with a number of world-leading brands in this field. If you're looking for food and beverage investment opportunities, Sweden is definitely worth considering.
4. ICT
Sweden is a global leader in ICT, with a number of world-leading companies in this field. If you're looking for ICT investment opportunities, Sweden is the place to be.
5. Sustainability
It has a well-deserved reputation as one of the most sustainable countries in the world. If you're looking for sustainability investment opportunities, Sweden should be your go-to destination.
Challenges of doing business in Sweden
There are a few challenges you will need to consider before doing business in Sweden. One of the main challenges is the Swedish business culture, which can be quite different from other countries in Europe. Sweden is also a very expensive country to do business in, and the tax system can be complex for foreign entrepreneurs. In addition, it can be difficult to find good employees in Sweden, and the country's labor laws are quite strict. However, if you are prepared for these challenges, Sweden is a great place to do business.
Business consultants in Sweden
Legal contracts and documents you need in Sweden
When doing business in Sweden, it is important to have a number of legal contracts in place. The most common of these are:
- Employment contract, which sets out the terms and conditions of employment for staff (and for yourself if you are employed by the company.
- Contract for services, which outlines the agreement between two businesses for the provision of services
- Terms and conditions, which outlines the general conditions that applies to doing business with you. This includes for example payment and delivery terms and liability.
- Purchase agreement, which specifies the terms and conditions of a purchase transaction
- Lease agreement, which sets out the terms and conditions for renting property
- Loan agreement, which defines the terms and conditions of a loan between two parties
If you are setting up an AB, limited company, with more than 1 shareholder, you should have a shareholders' agreement. This is a contract between the shareholders of a company that governs their relationships with one another. The agreement can include clauses on:
- The division of profits and losses
- How shares can be transferred or sold
- What happens if a shareholder dies or leaves the company
- How the company should be managed
- The procedure for making decisions by the shareholders
The shareholders' agreement is not a legally binding document, but it can be used in court as evidence of the intentions of the shareholders. It is advisable to have a shareholders' agreement drawn up when setting up a company in Sweden.
Legal advisors and lawyers in Sweden
Tax & accounting in Sweden
Sweden is a great place to do business, and there are a number of services that can help you get started. When it comes to bookkeeping, tax returns and company maintenance, it is important to choose a provider that has experience with Swedish legislation and is up to date with the latest changes. The most common services you should look for are:
- Bookkeeping and VAT returns
- Annual accounts and corporate income tax
- HR, wage tax and payroll solutions
Accountants and bookkeepers in Sweden
Tax advantages of doing business in Sweden
There are a number of tax advantages to doing business in Sweden
A large advantage is that Sweden has one of the lower corporate income tax rates (20,6%) in Western/Northern Europe. Furthermore, no withholding tax is collected on dividends or interest payments
Additionally, if you are a foreign business operating in Sweden, you can claim a tax credit for any taxes paid in your home country. This is known as the 'foreign tax credit' and it is designed to prevent businesses from being taxed twice on the same income. To qualify for the credit, you must:
- Be registered for business in Sweden
- Pay tax on your Swedish income in your home country
- Submit a copy of your foreign tax return to the Swedish Tax Agency
Unutilised foreign taxes may be carried forward for five years.
Income tax relief for key foreign staff in Sweden
If you are a foreign business operating in Sweden, you may be able to claim a tax deduction for the salaries of your key employees. This is known as income tax relief for key staff, and it is designed to encourage businesses to hire skilled workers from abroad. To qualify for the relief, you must meet the following conditions:
- The employee must be working in a specialist or managerial role.
- The employee must earn a salary above a certain threshold.
- The employee must be resident in Sweden for tax purposes and his/her stay must be limited in time.
The amount of relief you can claim depends on your employee's salary and the number of years they have worked for you. For more information, please contact an expert.
Read our full guide on tax for businesses in Sweden
Tax advisors in Sweden
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Open a Business Bank Account in Sweden
Opening a bank account in Sweden is a relatively straightforward process, and you can do so online or in person at any of the major banks. Note that it is NOT a legal or tax requirement to have a bank account in Sweden. Unlike many other countries, the Swedish authorities allow you to open a company bank account in another European country, as long as it is in name of the Swedish company.
To open a bank account for your Swedish company you will need to provide some basic information about yourself and your company, including:
- Your name and address
- The company name and registered address
- Your date of birth and national ID number (if applicable)
- You may also be asked to provide proof of identity and/or proof of residence.
Once your account has been opened, you can start depositing money and making transactions.
Similar to other EU countries, it can take relatively long to get through the bank's KYC procedures. Especially for foreign founders, if can take many weeks or even more.
Business banks in Sweden
Visa and relocation to Sweden
Because Sweden is part of the EU, citizens of member states have the right to work and live in Sweden. Normally you should register if you are staying for longer than 3 months, which is just a formality.
If you are a highly qualified person looking to start a business in Sweden, you may be able to apply for a residence permit. The permit may be granted for a minimum of three months and for no more than nine months while you look for work or set up a business. During the period that you have this residence permit, your family cannot move to Sweden to live with you.
To qualify, you must meet the following criteria:
- have completed studies corresponding to an advanced level degree
- plan to seek employment or explore the possibilities for starting your own business
- be able to support yourself during the period for which you are applying for a permit and have money to cover the cost of your journey home
- have comprehensive health insurance valid for care in Sweden
- have a passport valid for the entire period you intend to be in Sweden (if your passport is about to expire, you should extend it because you cannot get a permit for longer than your passport is valid)
- currently be located outside of Sweden.
For more information, please contact an expert.
Relocation agents in Sweden
Office space, virtual offices and real estate in Sweden
The office market in Sweden is booming, with a wide range of options to choose from. Whether you're looking for a traditional office space, or something more flexible like a virtual office or co-working space, you'll find what you need here. And if you're looking for property, there are plenty of options available too.
If you're looking for a flexible and cost-effective option, a virtual office in Sweden could be the perfect choice for you. A virtual office allows you to work from anywhere in the world, while still maintaining a presence in Sweden. Services typically include mail handling, telephone answering and meeting rooms. You can choose from a range of packages to suit your needs, and most providers offer a free trial so you can test out the service before you commit.
(Virtual) office providers in Sweden
Fund your company in Sweden
When starting a business in Sweden, there are a number of options for funding your company. Here are some of the most popular methods:
1. Self-funding - This is the most common method of funding a company, and it involves using your own money to finance your business. You can use personal savings, loans or investments from friends and family to get started.
2. Venture capital - Venture capitalists are investors who provide money to early-stage or high-risk businesses in exchange for a share of the company. If you're looking for outside investment, venture capital is a good option to consider.
3. Government grants - The Swedish government offers a range of grants and subsidies to help businesses start and grow. Grants are available for a variety of purposes, such as research and development, export promotion and job creation.
4. Bank loans - Banks are a common source of funding for businesses, and offer a wide range of loan products to suit different needs. To be eligible for a bank loan, you will typically need to meet certain criteria, such as having a good credit history and sufficient collateral.
5. Crowdfunding - Crowdfunding is a method of raising money from a large number of people online. It's an increasingly popular way to fund projects and businesses, and there are several crowdfunding platforms available in Sweden.
Investors and lenders in Sweden
How the Swedish government helps (foreign) businesses
There are several incentives for foreign businesses that operate in Sweden. These include:
1. Tax breaks. Sweden offers a wide range of tax breaks for foreign businesses, including exemptions from corporate taxes and value-added taxes.
2. Reduced red tape. The Swedish government is committed to reducing the bureaucratic burden on businesses, so you can expect to encounter fewer delays when starting or operating a company in Sweden.
3. Training and support. The Swedish government offers a range of training and support programs for foreign businesses, including help with setting up a business and finding employees.
4. Improved access to finance. Sweden has a well-developed financial infrastructure, which makes it easier for businesses to access capital.
5. A skilled workforce. Sweden has a highly educated workforce, which means you will be able to find qualified employees to staff your business operations in Sweden.
Employment in Sweden
When hiring employees in Sweden, you need to be aware of the country's strict employment laws. The main regulations to be aware of are:
- Employees must be paid at least the minimum wage, which is set by the government and varies depending on age and occupation.
- Employees must receive at least five weeks of paid vacation per year.
- Employees are protected by labor laws, which include provisions against discrimination and unfair dismissal.
Business culture in Sweden
When doing business in Sweden, it is important to be aware of the country's unique cultural norms and customs. Some things to keep in mind include:
- Swedes are known for being direct and honest in their communication, so don't be surprised if they tell you what they think even if it's not what you want to hear.
- Swedes place a high value on teamwork and cooperation, so try to build consensus before making decisions.
- Be prepared for long meetings - Swedes often like to discuss issues in depth before reaching a conclusion.
Where in Sweden should I start a business?
There are several locations in Sweden that are ideal for starting a business. Some of the most popular destinations include:
1. Stockholm. As the capital city, Stockholm is home to a large number of businesses and offers a wide range of support services for entrepreneurs.
2. Gothenburg. Gothenburg is Sweden's second-largest city and is home to a thriving startup scene. It is also well-connected to the rest of Europe, making it a convenient location for businesses looking to expand into other markets.
3. Malmö. Malmö is located in southern Sweden and has a vibrant economy, thanks to its strong manufacturing sector. It is also well-connected to the rest of Europe (just 1 hours to Copenhagen), making it an attractive destination for businesses looking to expand their operations.
