Starting A Business In Sweden

Business Opportunities in Sweden

Sweden is a highly competitive economy with numerous business opportunities for foreign investors. It is the 4th most competitive market in Europe, making it one of the highest-functioning economies globally. 

Sweden boasts a free-market environment, high literacy rate, competitive business environment, variegated language skills, and a thirst for innovation. So, if you want to expand in Sweden to access the European market,  it’s essential to know the fundamental principles of setting up a company in Sweden, like company registration, hiring practices, etc.

Sweden is an early adopter of innovative technologies and ideas. Some of the best business opportunities in Sweden for foreign entities are –

  • Engineering & manufacturing: Sweden has immense expertise in engineering and manufacturing and related sectors such as shipbuilding, mining, and life sciences. Over the years, Sweden has made a considerable global impact in its developments in alternative energy, smart grid, e-health, and online security, making it one of the most lucrative markets for innovation. Therefore, foreign employers can reap significant benefits from company incorporation in Sweden.
  • Software and digital technology: As a productivity hub, the Swedish market readily adopts digital technologies to improve connectivity, productivity, efficiency, and cost reduction. No wonder it is an early adopter of innovative technologies. Therefore, business owners willing to experiment with their ideas and incubation programs can launch them in the Swedish marketplace. 
  • Sustainable energy efficient ideas: Sweden is focused and committed to making its industrial sector sustainable and green. Naturally, there’s a high demand for products and services specializing in renewable energy, green technologies, low/zero carbon, and energy efficiency.
  • Teaching English: English is a widely spoken language in Sweden for business communications. This makes it the ideal market for Edtech platforms. 

Benefits of Starting a Business in Sweden

It is easy to set up an offshore company in Sweden because of its laws that are comparatively business-friendly to other countries. 

The perks of doing business in Sweden are:

Ease of conducting business

Sweden is in the top 10 of 190 economies, making it an attractive market for startups and foreign investment. With several online filing platforms to meet the prerequisites of a business establishment, such as incorporation, property transfer, taxes, permits, etc., foreign businesses can smoothly set up their ventures here. 

Additionally, Sweden offers the lowest corporate taxes, allows a total tax deduction for interest, and does not have formal capitalization rules. Therefore, the risks of doing business in Sweden are comparatively lower.

Innovation hub

Sweden is a reputed innovation hub and holds a high place in the Global Innovation Index, Bloomberg Innovation Index, and the European Innovation Scoreboard. The government supports innovation in every sector through various investments in infrastructure and agencies. 

The country spends over 3% of its gross domestic product on R&D and even participates in collaborative research with foreign countries. It is the epicenter of development in pharmaceuticals, biotechnology, medical imaging & visualization, orthopedic implants, regenerative medicine, and digitalization. 

Open economy

Sweden’s open economy encourages foreign investment. The government’s active investment in promoting development in sectors like food processing, biotechnology, medicine, and digital technology makes it one of the best markets. Moreover, the government supports the growth of the global marketplace focusing on the Baltic countries, Brazil, and India. Its main exports are automobiles & automobile parts, petroleum products, medicine, and communication devices.

Start-up nation

Sweden is an excellent destination for startup founders. In fact, two of the largest cities—Stockholm and Gothenburg—house some of the biggest tech companies. Falling second place only to Silicon Valley, it was the birthplace of some of the top companies like Spotify and Skype, initially established in Sweden as startups. It is a haven for experimentations and product testing before launching them in larger markets.

Requirements for Starting a Business in Sweden

Employers expanding to Sweden must know how to set up a business in Sweden. Additionally, we recommend hiring legal consultants and PEO firms that can streamline the processes like offshore company registration in Sweden and other procedures for incorporation of a company in Sweden.

The crucial requirements for company incorporation include:

Business name registration

This is the first step to incorporate a company in Sweden. Before establishing your company, you must choose a suitable name. After choosing an appropriate business name, you must fill out an application and submit it to the Swedish Companies Registration Office. 

The company registration process in Sweden takes approximately two weeks. Ordinary filing costs around 2,200SEK, whereas electronic filing costs around 1,900SEK. You must also register the business name with the Swedish Tax Agency. 

Swedish F-tax approval

This is a mandate in Sweden’s business incorporation. Most active Swedish businesses have applied for Swedish F-tax approval before formally establishing the business.

Tax registration

After registering your business with the Swedish Companies Registration Office (Bolagsverket), you must apply for tax registration with the Swedish Tax Agency. If you possess a Swedish electronic ID, the registration process becomes easier. However, people without an electronic ID can directly register with the Swedish Tax Agency with paper forms. 

Registration for VAT (Value Added Tax) and PAYE depends on the nature of your business. If your business qualifies for VAT, you must register for VAT. If your company is an LLC, you must register for PAYE (Pay As You Earn).

Business permit

Sweden has several business types that require special permits for conducting business operations. As an employer, you must be aware of the different trades, businesses, and professions that demand such permits and how to contact the relevant authorities that legally issue them.

Types of Business Structures in Sweden

There are several business structures in Sweden. Knowing about these structures before company incorporation in Sweden is crucial. 

  • Sole Trader (Enskild Näringsidkare): This business is run by single owners, solely responsible for every company obligation, such as taxes, agreements, and liabilities.
  • Limited Company (Aktiebolag): A limited company is usually run by two or more individuals where the division of responsibility is based on the amount of shares each shareholder owns. To start a limited company, the minimum share capital requirement is 25,000SEK.
  • Partnership (Handelsbolag): A partnership business is run by two or more individuals who are equally responsible for every business obligation. However, since the partners are not shareholders, there is no requirement for investment capital.
  • Limited Partnership (Kommanditbolag): This partnership is usually established by two partners. One member should have general liability, whereas the other must be the limited partner. The limited partner’s liability is based on the size of their capital share.
  • Foreign Branch (Filia): Like a limited partnership company, a foreign branch does not require a share capital. However, the liabilities and assets belong to the total assets owned by the foreign establishment. The branch must maintain a separate accounting record from the parent company. In Sweden, a company can set up only one branch.

Company Registration Process

If you are a sole trader, your establishment will have a personal identity number (personnummer) allocated to you by the Swedish Tax Agency (Skatteverket). 

  • To establish your business as a sole trader, you must register for ‘F-skatt’ or ‘F tax’ (‘F’ is short for företagare, which means entrepreneur). To define F-Skatt, it means to participate in work not as an organization’s employee but as an entrepreneur. Once you register for the F-tax, agencies contracting you will not supervise your social security payments or taxes. The entire administration is your sole responsibility.
  • The Swedish Tax Agency’s official web page has a detailed account of the application process for the F-tax certification. The forms are available only in Swedish. Therefore, you might need to enlist an accountant to help you fill out the forms correctly. Moreover, you can book a personal appointment with the Tax Agency to guide you. The Tax Agency also holds free information meetings in English and Swedish languages—you can receive step-by-step guidance on how to set up a business in Sweden.
  • Sweden has several mandatory rules concerning residence requirements, especially for individuals planning to move into Sweden to start a company. However, individuals with Nordic citizenship (from Denmark, Norway, Finland, and Iceland) need not register with the Swedish Migration Agency or Migrationsverket. They also do not have to apply for a residence permit. 
  • Citizens from the European Economic Area (EEA) or the European Union (EU) can have a Swedish residence without registering with the Swedish Migration Agency. Instead, they can apply for a personal identity number.

However, if you are an EU/EEA/Switzerland citizen planning to launch a business in Sweden and your duration of stay exceeds three months, you need a residence permit to stay in Sweden. The details and mandates are all mentioned on the Swedish Migration Agency website. As a temporary Swedish resident, you must apply to the Tax Agency to obtain a coordination number, which is a replacement for your personal identity number. This permits your application for F tax status.

How Much Does it Cost to Incorporate a Company in Sweden?

If you want to register as a company or a business entity in Sweden, you must follow the application process and submit the necessary forms directly at the Swedish Company Registration Office. 

The cost of incorporating a company in Sweden is between 1,900SEK to 2,200SEK, based on your business structure and application process.

Are Foreigners in Sweden on Certain Passes Allowed to Start a Business in Sweden?

Being an open economy, Sweden allows foreigners to establish their companies here. However, they must first obtain a grant for starting a business in Sweden. 

As mentioned earlier, a non-Swedish citizen outside the EU/EEA/Switzerland planning to work for more than three months requires a residence permit. Expats can apply for a residence permit, at the Swedish Migration Agency (Migrationsverket).

Government Assistance for Foreign-owned Businesses

Sweden has no laws that prohibit or discriminate against foreign investors from entering any industry, apart from defense and a few other sensitive fields like accountancy, legal services, maritime services, and air transport. 

Furthermore, the country places minimal restrictions on how foreign investors can invest. It mandates no equity caps, joint-venture requirements, or specific regulations to restrict foreign business owners from accessing the Swedish market. 

The Swedish Government believes in creating a conducive business environment for investors, business owners, and startups. Hence, it has launched numerous initiatives and reforms to attract foreign investment. 

How Multiplier Can Help

Multiplier is a reputed global PEO that offers multiple benefits to foreign investors setting up shop in different countries. Our experts can handle numerous business operations, from employment contract generation, payroll management, insurance and benefits, multi-currency payments, etc. By outsourcing these responsibilities to us, you can focus on devising business growth strategies for your global expansion!

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Frequently Asked Questions

One of the major challenges faced in starting up a business abroad is talent recruitment due to individual and high tax rates and living costs. There are also many complex labor laws to keep in mind and require local expertise.

Sweden is renowned for its business-friendly environment. It supports innovative and foreign investment with many growth-oriented government initiatives. 

Sweden’s corporate tax rate is 21.4%, and the VAT rate is 25%.

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