1. General Information
The Swedish market offers great opportunities for investments and establishment of foreign companies. A company established in Sweden can easily do business within the European Union. Since Sweden is a member of the EU, a company established in Sweden gains access to the single market that ensures free movement of goods and services within the EU. To start a business in Sweden the company should apply for registration at the Swedish Companies Registration Office. VAT-registration at the Swedish Tax Agency is voluntary. Knowledge of the relevant tax- and business laws are crucial for doing successful business in Sweden. Especially important is knowledge about the special legislation regarding the signatory of the company. EKATERINA LAW CONSLUTING provides you and your company with qualified consultation and professional legal support.
2. Open up a business in Sweden
The Swedish Company Act stipulates several different forms of company construction. The most common company constructions are: the joint-stock company, the trading company, a business association and a sole trader. The choice of company form will depend on your interests, economy and position on the market. Before registration of the company can proceed you will have to put in writing a Memorandum of Association. Hereafter, the company should be registered in accordance with the Swedish business legislation. An abroad already existing company has the possibility to open a branch in Sweden. Even when opening a branch registration to the Swedish Companies Registration Office is mandatory. All application documents will normally be requested to be translated into Swedish. EKATERINA LAW CONSLUTING provides consultation in connection with business registration and in contact with governmental bodies. Further, we supply for translation and interpretation.
3. To run a business in Sweden
When your company is properly established in Sweden the yearly accounting has to be done in accordance with the Swedish legislation. Furthermore, a strategy for marketing and greater profit should be outlined. EKATERINA LAW CONSULTING will assist you in this process.
Bellow follows a short description of the different company forms:
Joint-Stock Company
A Swedish joint-stock company is a legal person where the owners have limited liability. A joint-stock company’s capital should be no less than 100 000 SEK. The Swedish joint-stock company can be constituted by one or more persons (physical or legal person). The joint-stock company is in itself an item of tax and is therefore obliged to pay income tax. According to Swedish law a joint-stock company is obligated to have an accountant. A Swedish joint-stock company can be established and owned by foreign owners, required however is that a representative of the company is a Swedish citizen.
Trading Company
A Swedish trading company is a legal person where the owners have a personal and loyal responsibility for the company’s obligations. The trading company can be constituted by two or more persons (physical or legal person). The Swedish trading company will be obligated to pay taxes if it holds real estate’s or have employees. Otherwise, the owners will declare the company’s profits and pay taxes through the owner’s personal declaration. An authorized accountant will normally not be required for a small to middle sized trading company.
Business Association
A Swedish business association is in itself an item of tax (see above under joint-stock company). The company construction is to be established by three or more persons, whom have limited liability. A business association shall according to law have at least one accountant.
Sole Trader
A sole trader is constituted by a physical person whom personally takes responsibility for the company’s obligations. Registration of the sole trader at the Swedish Companies Registration Office is normally voluntary. However, we would recommend that you register your company regardless. Person resident abroad that aim to operate business as a sole trader in Sweden shall appoint a representative, this representative must be resident of Sweden and have responsible for the business activities in Sweden. The appointed representative’s assignment and points of contacts shall be notified to the Swedish Companies Registration Office.
Branch
Starting up a branch is a good alternative if you have an abroad already established company and now would like to take the step into the Swedish market. A branch is not a legal person; instead it is incorporated in the legal person of the foreign company. By this follows that the branch does not have any own share capital. The formation of a branch is to be registered to concerned authority. The branch must have a CEO that is a resident of a country within the EES.
The Swedish based branch is obliged to follow Swedish legislation. The branch is to have separate accounting according to Swedish accounting legislation. All documents shall be translated to Swedish (or English in certain cases). An accountant is to review the statements.
4. Permission
Some businesses require the Swedish authorities’ permission to conduct their business. The food business is an example of such a business that requires a permit in Sweden.
5. The Swedish Tax System
The Swedish tax system is extensive and complex, therefore consultation by a professional is strongly to recommend. In some cases a penalty fee is charged for late or incorrectly paid taxes by the Swedish Tax Agency. EKATERINA LAW CONSLUTING can assist with qualified consulting and offers professional legal advice.
Bellow follows a summary of the most important taxes in Sweden:
Swedish Income Tax for individual
Each individual makes a yearly tax declaration to the Swedish Tax Agency. Taxes are to be paid for income as employee as well as for income as business owner.
Swedish Corporate Tax
Corporate tax in Sweden is 26.3 %. The tax is calculated from the business profit (difference between income and costs) and is proportional. A joint-stock company may deduct all costs they have to acquire and maintain income. The joint-stock company can pair up the results in different activities within the company; no division between activities is made within the same joint-stock company.
Value Added Tax (VAT)
The basic tax rate for VAT in Sweden is 25 %, some goods have a lower tax rate. The VAT is to some extent harmonized within the EU. The European Single Market for goods creates a free movement of goods and services. Establishing a business in Sweden opens for business opportunities in the whole EU area.
Unified social tax (payroll Taxes)
Unified social tax is to be paid by the employer according to Swedish law. The basic tax rate is 32 %. The tax rate is 15.5 % for employment of person under 26 years old.
6. Employment of foreign staff in Sweden
This section clarifies the situation with business visa and work permit for foreign staff that would like to work in Sweden.
Business visa
Each individual, resident of a country outside of the EU, which plans to travel to Sweden, shall apply for a visa. The application is to be handed in to the Swedish Embassy in Moscow, the consulate in Sankt Petersburg or the consulate in Kaliningrad. The following document shall be attached by Russian citizens that want to travel to Sweden in business: A written request from a host acting as legal person, passport, medical travel insurance, two newly taken color photographs and application fee.
Work permit
Individual that want to work in Sweden must have a work permit; the permit is to be introduced in the passport before entry into Sweden. If the period of employment is shorter than three months, visa and work permit are required. If the period of employment is for a longer period than three months, residence permit and work permit are required. Working for your own company requires no work permit, although visa and residence permit. EKATERINA LAW CONSULTING assists you with the application procedures and in contact with the authorities.
7. Rent of premises
Ekaterina Law Consulting offers our clients contacts and support in the search for the perfect premises for their business.
8. Protect your business interests
When making an entry on a new market, you would like to reduce your risk to minimum. Here follows some advice when doing business in Sweden. Sweden has a good and functioning system for credit checks of companies as well as private persons. It is also easy to find out the legal owner to real estates. This put together makes it safe and fairly predictable to do business in Sweden. One additional advantage for businessmen is that profit from sale of Daughter Company in Sweden is tax-free.
Good to know is that the Swedish legislation, in contradiction the Russian legislation, gives oral contracts legal binding force. The existence of an oral contract is however difficult to prove, therefore most business contracts are performed in writing. Letter of credit is the method of payment that we recommend for export transactions.
Finally should be mentioned that it is essential to have a comprehensive insurance for your company. EKATERINA LAW CONSULTING gives you and your company all the professional support and guidance when establishing your business in Sweden.
We hope that you find the information above useful and we wish you success and luck when doing business in Sweden.
For more information please contact EKATERINA LAW CONSULTING AB