COUNTRY

Sweden is located in Northern Europe, between Finland to the east and Norway to the west, with the Baltic Sea to the south and the Arctic Circle to the north. Most of Sweden’s population of 10m live in the south of the country where climate is more temperate. Sweden has achieved an enviable standard of living under a mixed system of high-tech capitalism and extensive welfare benefits, although recently the Government has tried to reduce the size of the state. The country has a highly-skilled and educated workforce and excellent communications infrastructure. Sweden’s economy is heavily oriented to foreign trade, and privately-owned firms account for vast majority of industrial output, of which the engineering sector accounts for about 50% of output and exports. Sweden slipped into recession in 2009 as export demand declined. The economy bounced back strongly, but growth slipped to 1.2% in 2012, although the country has weathered the financial crisis better than most. Sweden joined the EU in 1995, but voters rejected a proposal to join the eurozone in 2003. The currency is the Krona (SEK), and USD1 = SEK6.4 in late 2013. The overall tax burden is high, and personal income tax reaches 57%, but corporate tax is comparatively low at 26.3%, and the regulatory environment is highly efficient. However, Sweden’s labour laws remain among the most rigid in Europe.

TAXATION

  • Headline tax rates: CIT 22%, PIT 0%-25%, VAT 25%
  • Treaty Jurisdictions: Albania, Argentina, Australia, Austria, Bangladesh, Barbados, Belarus, Belgium, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Canada, Chile, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Faroe Islands, Finland, France, Gambia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kenya, Korea, Republic of, Latvia, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico, Montenegro, Namibia, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Switzerland, Taiwan, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom, United States, Venezuela, Vietnam, Yugoslavia, Zambia, Zimbabwe
  • TIEA Jurisdictions: Andorra, Anguilla, Antigua and Barbuda, Aruba, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Brunei, Cayman Islands, Cook Islands, Costa Rica, Dominica, Gibraltar, Grenada, Guatemala, Guernsey, Hong Kong, Isle of Man, Jamaica, Jersey, Liberia, Liechtenstein, Macao, Marshall Islands, Monaco, Montserrat, Netherlands Antilles, Niue, Panama, Qatar, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, San Marino, Seychelles, Turks and Caicos Islands, Uruguay, Vanuatu

The current (2017) corporate tax rate is 22%. Sweden is not a territorial tax country. Worldwide income is included in their corporate tax rate.

Companies employing workers in Sweden must register them with the Swedish Tax Authority (Skatteverket). Companies paying social security taxes to Sweden by way of a reciprocal tax treaty between Sweden and the country in which they are working must also register with the Swedish Tax Authority.

Several tax authorities exist in Sweden depending upon a new company’s type of business and which tax authority it must register with. These include:

  • F-tax registration
  • Employers’ registration
  • VAT payer registration
  • Other tax registrations (RUT/ROT ombud, Personliggare, and MOSS registration, etc.)

BUSINESS

  • Suitable for: Wealth Management, Banking, Insurance, Fund Management, Shipping, Aviation, Yachting, Intellectual Property/Licensing, Holding Companies, E-commerce, E-gaming
  • Company Types: Limited liability companies, branches, sole proprietors, general partnerships and limited partnerships
  • Formation Cost: 4400 – 6800 USD
  • Formation Time: 14 – 20 days
  • Maintenance cost: 2400 – 3600 USD

INCORPORATION

Company law in Sweden allows for several kinds of businesses to be set up, the most prominent forms being a branch of a foreign company or a limited company. There are two subcategories of limited companies – public and private – where only public limited companies may raise capital through share or security issues and can be listed on a public exchange.

Branch

Foreign companies may elect to conduct their business in Sweden through a Swedish branch. This is not a separate legal entity, but rather an extension of the existing company. The foreign company therefore bears any rights and liabilities of the branch, but is subject to Swedish law and the decisions of Swedish authorities. A foreign company may only set up a maximum of one branch in Sweden.

The initial registration procedure for establishing a foreign company branch is as follows.

An application is submitted for registration to the Swedish Companies Registration Office. The application form must include details of both the foreign company and the branch that the company is seeking to register in Sweden, as well as the proposed name of the foreign branch and details of any individuals who are authorised any claims related to the branch and are able to represent the foreign company when associated matters of business arrive. The application must also state the nationality of the company, its legal form, registered office and postal address. Proof of non-bankruptcy and the most recent two annual reports are also required documentation. The application fee of SEK 2,000 must be paid upon submission of documents, and is not subject to VAT. If the application is complete, the Swedish Companies Registration Office will usually complete the process in two weeks from when the application is made – this may, however, take longer depending on the circumstances.

Upon completion of the registration process, the branch will be given a ten-digit registration number that serves as the identification number of the branch for the entirety of its existence. Once the registration number has been received, the branch may commence business operations.

The accounting records of a foreign branch must be kept separate from those of the company. The annual accounts of the foreign company and branch may need to be regularly submitted to the Swedish Companies Registration Office depending on the circumstances.

Public Limited Company

To establish a limited company in Sweden, the options are to either incorporate a new limited company, or buy an existing limited company. The latter option is usually the easiest way and can be completed in a day or two. Limited companies can be either public or private, although the registration processes are very similar excluding issues like fees, the board of directors and company name.

Public limited companies are required to have a minimum starting share capital of SEK 500,000, which can be denominated in either Euros or Swedish Krona.

To register a new limited company, there are several documents and forms which must be lodged with the Companies Registration Office. Prior to registration, the company is not allowed to undertake any legal acts or start any business activities.

The fee for registering a limited company is SEK 2,200. In addition to the registration form, a memorandum of association and articles of association must be included in the application, as well as either a bank statement of the share capital, if the shares have been paid for in cash, or a statement for the auditor, if the shares have been paid for with any asset other than cash.

Registration is usually completed within 2-3 weeks of the application being lodged to the Companies Registration Office. This may take longer if there are restrictions in regards to the company name, which must distinguish the company from any other companies in the market. Once registered, the business will receive a registration number and may commence business. Businesses are advised to ensure their name is original and not already in use before applying. If the limited company is public, this is to be indicated in the company name.

Public limited companies must have at least three directors – if more, one must be appointed chairman. If none of the aforementioned individuals are Swedish residents, the board must appoint a Swedish resident to act as an agent for service of process on the company’s behalf.

To close a public limited company, there are five options:

  • Selling: selling all shares.
  • Liquidation: may be voluntary (action taken by shareholders at a general meeting) or compulsory (when the Companies Registration Office or a court orders the limited company must go into liquidation)
  • Bankruptcy: an application for bankruptcy can be made either by the company or a creditor, filed to the district court.
  • Merger: This can be either through absorption of a wholly owned subsidiary, absorption, or formation of a new company.
  • Division: This can be either a complete or partial demerger.

Private Limited Company

Whilst very similar to the process of setting a public limited company, there are some differences with regards to fees, directorial boards and the naming of companies.

Private limited companies are required to have a minimum starting share capital of SEK 50,000.

The board of directors for a private limited company may consist of 1 or more directors; if there are more than two ordinary directors, then one deputy director must be appointed. If none of the aforementioned individuals are Swedish residents, the board must appoint a Swedish resident to act as an agent for service of process on the company’s behalf.

To close a private limited company, there are five options:

  • Selling: selling all shares.
  • Liquidation: may be voluntary (action taken by shareholders at a general meeting) or compulsory (when the Companies Registration Office or a court orders the limited company must go into liquidation)
  • Bankruptcy: an application for bankruptcy can be made either by the company or a creditor, filed to the district court.
  • Merger: This can be either through absorption of a wholly owned subsidiary, absorption, or formation of a new company.
  • Division: This can be either a complete or partial demerger.