Sweden is a country that ranks 11th in the ranking of states where it is easy to conduct business. The jurisdiction actively supports innovative developments of companies and is known for being the leader among international ratings in the field of new developments. Opening firms in Sweden would be the right solution for information technology startups.
For those planning to open a company in Sweden, the country offers the following advantages:
- high level of economic development;
- the most flexible tax regime in Western Europe;
- clear system of legal entity registration;
- reliable banking system;
- competitive market;
- low level of corruption;
- preferential receipt of a residence permit;
- clear legislative base;
- fast work of the bureaucratic machine;
- governmental support.
The last aspect is most important for those who are just planning to register a company. The kingdom has developed many special programs:
- compensation to organizations for half of the costs of paying wages in the employment of socially unprotected citizens of countries;
- grants for promising inventions;
- providing loans at 9-12%;
- free consultations in the communes.
The most promising industries in Sweden are:
- IT technologies;
- transport services.
Before starting a business in Sweden or registering a company in Sweden, you need to decide what type of organizational and legal form to open. Depending on the form of business chosen, different rules apply regarding taxes, fees, and authorization. Below are the common organizational and legal forms of enterprises.
One of the types of organizational and legal forms in the country is an individual entrepreneur. It means that you, as an individual, own, manage, and are in charge of the business. You will be personally liable for all of the company’s liabilities, taxes, and social security contributions, which are known as “personal contributions”. Establishing a company in Sweden as a self-employed person may be suitable if you intend to start a business on your own.
Depending on the nature of your business, it may be necessary to register as a VAT payer (value-added tax, Swedish: Mervärdesskatt, Moms). If you plan to hire employees, you will need to be authorized as an employer for PAYE.
Companies with a turnover of over SEK 80 million (EUR 7 732 434) must be audited annually. Both individuals and legal entities have the right to open a joint-stock company in Sweden. The authorized capital of a Swedish joint-stock company cannot be less than 500,000 SEK (48,103 EUR).
To open an LLC in Sweden, the authorized capital must be 50,000 SEK (4,832 EUR). The limited liability company must appoint a board of directors. If it is public, it is managed by the director of the company. LLC in Sweden can be created by one or more individuals. Personal liability for the company’s debts is, in principle, limited to the authorized capital. However, there are situations where only one member of the company may be liable for unpaid taxes, fees, etc.
A commercial partnership is an alternative if at least two natural or legal persons wish to set up a company in Sweden together. There is no need to invest capital, although partners are personally, jointly, and individually responsible for the company’s debts.
To register a company in Sweden, the director of the company needs to obtain the right to work in the territory of the jurisdiction. Such a document is issued by the National Register. The founders of Swedish partner companies can be residents of any country, provided that at least one of the partners is an EU citizen.
If you are going to work as a sole proprietor, you do not need to be authorized by the Swedish Registrar of Companies. But it should be noted that the registration of a company in Sweden protects the name of the company.
However, if you intend to establish a limited liability company, trading partnership, or limited liability partnership in Sweden, you must apply to your local company registration office.
- Income tax – 22%;
- VAT – 20.6%.
Despite the global financial crisis over the past few years, the government has managed to maintain its economy and cut the unemployment rate. Opening a company in Sweden is an opportunity to bring your business to the international arena in an economically stable country. Entrepreneurs who own at least 50% of the shares of a local Swedish company have grounds for obtaining a residence permit in Sweden.
From 2019, the corporate tax rate in Sweden is 21.4%. From 2021, taxation will be lowered to 20.6%. The standard flat rate of 21.4% applies to all income of legal entities. At the same time, resident legal entities are responsible for taxing their income worldwide unless special incentives or tax treaties apply. Non-resident legal entities are taxed on income that comes from Sweden.
When setting up a company in Sweden, the standard VAT rate is 25%. A 12% rate applies to certain food items, hotel, and restaurant accommodations, and a 6% reduced rate applies to inland transport, books, and entry fees for cultural and sporting events. There is tax exemption on medical supplies, financial services, education, and international travel. Sales of goods to consumers are always required to register for VAT in Sweden.