How to start a company in Sweden?
How to start a company in Sweden? Can it be done easily? Yes, it can. For those seeking to expand their business in Sweden, the right partner can determine how smooth starting up and establishing will be. Whether you are considering opening a branch in Sweden or already have an existing operation, Accountor can assist you. We have helped foreign companies to find their way around Swedish regulations for many years. We can help you with everything from setting up a company and paying salaries, to making closing entries and consolidations. Accountor is a full service accounting firm that makes it possible to quickly start up and run an efficient business in Sweden.
International companies looking to start a company in Sweden
At Accountor we help international companies to start and to set up and create companies or branches/affiliates in Sweden. We can also help you with a Nordic solution.
The consultants working at Accountor are multilingual, can provide advice on an appropriate legal entity, act Tax Agents and also manage all contacts with government agencies, accountants and lawyers on location in Sweden. For tax issues Accountor has additional tax consultants and specialists with a long experience with the Swedish Tax Agency.
We work with international accounting, conversion to / from IFRS and U.S. GAAP and we are specialists in affiliates.
We can help with bank contacts in Sweden, set up reporting and explain the Swedish system for you. For those who manage accounting outside the country, we can help set up rules and procedures for reporting and carry out controls so everything is correct.
You can get help with administrative services such as address and mail management and specific recipient of service. If a Swedish subsidiary with a foreign parent company has no physical office in Sweden but still needs a registered address, Accountor can offer to act as the company's address. We can also handle the administration of incoming mail.
If a limited company or association does not have a board member or special signatory living in Sweden, the board must appoint and notify a special recipient of service. A special recipient is entitled to accept service on behalf of the company, is only responsible for this task and has no authority to represent the company otherwise. Accountor offers this service and assumes the role of being authorized to receive notifications and forward them to the company and its management.
Online tax return representatives
All businesses in Sweden must file VAT returns and payroll taxes monthly to the Swedish Tax Authorities. This can be done electronically by a Swedish tax return representative. We can take care of this for you as a part of our full financial service solution (including payroll, accounting, annual reports and corporate income tax returns).
Of course you can choose to do the book keeping in-house, and let Accountor handle the areas that have to follow Swedish GAP; VAT returns, annual reporting and corporate income tax returns. Whichever combination you choose Accountor offer well established routines and deep knowledge that make your business administration more effective.
HOW CAN WE HELP YOU START A BUSINESS IN SWEDEN?
- Advising on most suitable legal form, branch or subsidiary
- Supply a shelf company
- Filing registration with the Swedish Company Registration Agency
- Investigation of company's tax status and tax liability in Sweden regarding VAT and Employer contribution
- Filing registration with the Swedish Tax Agency
- Providing information on obligations following registration in Sweden such as annual filings
- Provide a transfer to our experts in accounting and pay roll
Swedish regulations and taxes – 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 agreements 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 business 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 performance is included in the foreign company’s accumulated profit while a subsidiary results will not be part of the foreign company’s results
A Swedish branch
A branch is a local part of your business at home and does not have its own share capital. The branch constitutes 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 Agency, submit VAT returns and employer’s declarations monthly and submit an income tax return once a year.
2. Rules on transfer pricing
All cross-border transactions, between associated enterprises, can trigger internal pricing issues. Rules have been created to prevent companies from allocating profits to a country with lower tax rates. And these rules exist to ensure that transactions within an organization must be made at market price. Many countries require extensive documentation from the companies to ensure compliance.
3. Obligations concerning reporting
Whether you conduct business in Sweden through a branch or a subsidiary, certain continuing obligations apply. You are expected to keep accounting records and submit an annual report or annual accounts at the end of the year. Income tax is paid monthly, during the tax year, calculated on the company’s own estimates of the profit. VAT and payroll taxes are reported and paid monthly to the Tax Agency, the taxable amount for VAT of less than 40 million VAT return can be submitted monthly. Control data for employees is given once a year. Tax returns are submitted the year after the income year. Depending on a company’s financial year, there are four different established times to submit an income tax return during the year (following the financial year). If the fiscal year coincides with the calendar year, income tax return should be submitted on 1 July following the tax year.
4. Am I obliged to pay taxes in 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 permanent activity here, the surplus from this activity will be taxed according to Swedish income tax.
5. Permanent establishment – dependent agent
A permanent establishment, is a fixed place where business is conducted. It may be an office, a factory or a construction site. A permanent establishment can also be conducted through a so-called dependent agent. A dependent agent is a person who is in Sweden, operates here and concludes contracts on behalf of the company. Whether a company is to create a permanent establishment in Sweden or not, is a complex issue and not entirely easy to determine. At the same time, the decision can lead to major tax consequences. If your business in Sweden is considered a permanent establishment, it means that the surplus from this business is subject to Swedish tax claims
5. Double taxation and tax treaties
There is a high risk that the business, through a branch, is considered taxable both in Sweden and in the company’s domicile. Such double taxation situations are solved through international double taxation agreements. Sweden has tax treaties with most countries in the world and the agreements are made to regulate which country has the right of taxation of a company’s revenue. And thus eliminate double taxation. A Swedish subsidiary is generally not taxable for its income in the parent company’s domicile. A tax liability, however, often occurs in the home country when the profit from the Swedish subsidiary is brought home.
6. 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 establishment 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 auditors. 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.
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 necessary 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.
Establishment of a UK business in Sweden
Our colleagues have contributed their knowledge when The British Embassy, BSCC and Invest Stockholm have produced a guide - Contributing to the Establishment Guide for UK business in Sweden.
