How to establish

your company in
Sweden
Many companies worldwide are looking to Sweden when they want to expand
their business and the reason is mainly that Sweden is one of the world’s most
high-tech and economically stable countries. For those seeking to expand
their business in Sweden, the right partner can determine how smooth
starting up and establishing will be.

Swedish regulations and taxes – A Swedish bransch

what do you need to know?
There are no rules without exceptions - but here is a
comprehensive summary of what you should keep in
mind when establishing your business in Sweden. How
the rules will apply, depends on things like company size,
if the initial establishment is within the EU or the bilateral
agrements between Sweden and the initial establishment.
1. The right legal form when
establishing
Depending on your company’s unique circumstances and
your intentions with the new establishment, it is important
that you choose the right legal form for your business in
Sweden. Foreign companies seeking to expand their bu-
siness here, basically have two options; a subsidiary or a
branch. The main difference between a subsidiary and a
branch is that the subsidiary is a separate legal entity and
a tax subject, while the branch is a part of your business at
home. The fiscal consequence is that the branch’s perfor-
mance is included in the foreign company’s accumulated
profit while a subsidiary results will not be part of the
foreign company’s results.
A branch is a local part of your business at home and
does not have its own share capital. The branch constitu-
tes a permanent establishment in Sweden and the foreign
company is taxable in Sweden for the income attributable
to the branch – the tax is 22%.
A Swedish subsidiary
By forming a new limited company in Sweden and having
your company in the home country own all the shares,
you have established a subsidiary – and your company in
the home country is the parent company. The subsidiary is
usually formed through the purchase of a stock company,
with a minimum share capital of SEK 50 000. The new
company is then registered with the tax authorities for
operations conducted in Sweden. A Swedish subsidiary
is liable to pay taxes
in Sweden for their income – with a corporate tax of 22%.
The Company is required to maintain ongoing accounting,
submit annual filings to the Companies Registration Agen-
cy, submit VAT returns and employer’s declarations mon-
thly and submit an income tax return once a year.

Request a quote by sending an e-mail to marknad@accountor.se

For inquiries, you are also welcome to call one of our business developers at +46 (0) 20-30 00 40
2. Rules on transfer pricing 5. Permanent establishment –
All cross-border transactions, between associated enter- dependent agent
prises, can trigger internal pricing issues. Rules have been
created to prevent companies from allocating profits to A permanent establishment, is a fixed place where
a country with lower tax rates. And these rules exist to business is conducted. It may be an office, a factory or
ensure that transactions within an organization must be a construction site. A permanent establishment can also
made at market price. Many countries require extensive be conducted through a so-called dependent agent. A
documentation from the companies to ensure compliance. dependent agent is a person who is in Sweden, operates
here and concludes contracts on behalf of the company.
3. Obligations concerning reporting Whether a company is to create a permanent establish-
ment in Sweden or not, is a complex issue and not entirely
Whether you conduct business in Sweden through a bran-
easy to determine. At the same time, the decision can lead
ch or a subsidiary, certain continuing obligations apply.
to major tax consequences. If your business in Sweden
You are expected to keep accounting records and sub-
is considered a permanent establishment, it means that
mit an annual report or annual accounts at the end of
the surplus from this business is subject to Swedish tax
the year. Income tax is paid monthly, during the tax year,
claims.
calculated on the company’s own estimates of the profit.
VAT and payroll taxes are reported and paid monthly to 6. Double taxation and tax treaties
the Tax Agency, the taxable amount for VAT of less than
40 million VAT return can be submitted monthly. Control There is a high risk that the business, through a branch,
data for employees is considered taxable both in Sweden and in the compa-
ny’s domicile. Such double taxation situations are solved
is given once a year. Tax returns are submitted the year af- through international double taxation agreements. Swe-
ter the income year. Depending on a company’s financial den has tax treaties with most countries in the world and
year, there are four different established times to submit the agreements are made to regulate which country has
an income tax return during the year (following the finan- the right of taxation of a company’s revenue. And thus
cial year). If the fiscal year coincides with the calendar eliminate double taxation. A Swedish subsidiary is gene-
year, income tax return should be submitted on 1 July rally not taxable for its income in the parent company’s
following the tax year.d. domicile. A tax liability, however, often occurs in the home
country when the profit from the Swedish subsidiary is
4. Am I obliged to pay taxes in
brought home.
Sweden?
Even if you choose not to register a
branch or subsidiary in Sweden, you may
be liable to pay taxes for the business
you are conducting here. If the tax
authorities decide that the company
in the country of origin, has a perma-
nent activity here, the surplus from
this activity will be taxed according to
Swedish income tax.
7. VAT and VAT registration
If you are subject to VAT in Sweden, your company must
also be VAT registered here. VAT registration can also be
required, even if you do not have a permanent establish-
ment in Sweden. VAT is generally 25%. A lower VAT of 12%
applies to food and restaurants while VAT is 6% for books,
newspapers and personal transport.

8. Employers’ contributions and tax

deductions / Taxation for staff
If you have employees in Sweden you need to register as
an employer with the Swedish Tax Agency.
As an employer you will report and pay withholding tax
monthly. The employees income tax rates are progressive
and range between 29-59 %. If the employee is a
non-resident they have a flat rate of 20%.
As an employer you will need to report and pay Swedish
social security contribution if the employee belongs to
the Swedish social security system. The social security
amount to 31.42 % of gross salary and benefits.
Once a year an annual income statement is to be filed
for each employee. The annual income statement is a
summary of the salary payments and tax withhold for the
employee.

9. Auditor or not?
Most companies can opt out of the requirement of au-
ditors. There is a requirement to appoint an auditor to
companies meeting two of the following criteria in each
of the two present financial years:
• More than three employees on average
• Balance sheet of more than SEK 1.5 million
• More than SEK 3 million in net turnover

10. Other permits

Depending on the business carried out in Sweden, it is
important to pay attention if there are other requirements
on registration or licensing.
ELLEN BERGSTEN
Tax Advisor at Accountor Stockholm
Ellen has worked several years for the Swedish Tax
Agency and has broad knowledge in Swedish tax
law and regulations. She is highly experienced in
helping both Swedish and foreign companies setting
up business in Sweden.
Do you need help with establishing
in Sweden?
With Accountor’s local expertise in tax, accounting and
salaries, we are a safe and competent partner when
establishing in Sweden.
We have our own lawyers and experts in startups, and
during this phase we can also assist you with all neces-
sary registrations such as those of a stock company and
with government contacts. Once the establishment is
completed, our accounting and salary consultants are
ready to take care of your ongoing commitments in
Sweden.

Request a quote by sending an e-mail to marknad@accountor.se

For inquiries, you are also welcome to call one of our business developers at +46 (0) 20-30 00 40