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Damalion Sweden desk 

Doing business in Sweden 

Sweden is a Scandinavian country in Northern Europe. It had a population of around 10.42 million, and its spoken language is Swedish and English. It is the largest market in Scandinavia and an excellent location for centralized operations in Northern Europe. 

Sweden has a reputation as a center of innovation, and this is evident in the high placement of the country in the Global Innovation Ranking, the Bloomberg Innovation, and Ranking the European Innovation Scoreboard. 

Sweden’s strong public finances, robust banking system, political stability, and well-performing economy make it an ideal place to run a business. According to the World Bank’s Doing Business report for 2020, the country ranks 10th out of 190 economies for ease of doing business. It also has the world’s largest free-trade Scandinavian market with access to the European Union. 

Bring a rich country with a competitive economy, Sweden offers many investment opportunities, and many corporations have chosen Sweden as their new destination because it is renowned for its strong market climate, international competition, and innovation dedication. 

Advantages of doing business in Sweden 

  • Sweden provides considerable effective methods that promote business creation and operations. 
  • Sweden is classified as a developed country with a frequently growing economy and this makes it a secure option for investors to invest their assets. 
  • Sweden has a dynamic open economy and it encourages innovation and competition in the market. 
  • Sweden has solid public finances, a stable financial system, political stability, and a well-performing economy, which make it a good place for a company to operate. 
  • It boasts a strong and stable economy, which offers some of the lowest corporate tax rates in the European Union. 
  • The Swedish government endorses innovation and growth through several agencies and investments in infrastructure. 
  • Sweden’s government also has many policies with the purpose of facilitating innovation and incentives for investments in entrepreneurial activity. 
LEGAL SYSTEM

Sweden is a constitutional monarchy with a parliamentary democracy form of government and a highly refined economy. Its legal system is based on statutory law, enhanced by case law and legislative history. Sweden has been a member of the European Union since 1995, and due to this, it is fair to say that EU law has a crucial influence on its legal system. Some EU legislation has an explicit effect and some are executed through Swedish legislation. 

Entity Choice 

Due to its size, Sweden is one of the world’s biggest beneficiaries of foreign investment, and its business climate is very favorable for foreign direct investments. 

Generally, Sweden is welcoming of direct foreign investments and it imposes no restrictions on foreign investments. However, in certain sectors, authorization is required before business activities can be carried out. 

For foreign investors looking to do business in Sweden, the most common legal forms to set up include the following: 

The limited liability company in Sweden (aktiebolag) 

This is a separate and different legal entity in Sweden 

Features 

  • It can be set up by one or more natural persons or legal entities. 
  • The minimum capital requirement is 25,000 SEK. 
  • It is managed by a board of directors. 
  • It can enter into agreements and debts in its name 
  • The liability of the founders is restricted to the amount they invest in the share capital. 
  • It must be registered with the Swedish Companies Registration Office 
  • It must also submit an annual report and appoints an auditor. 

Trading partnership in Sweden (handelsbolag) 

A trading partnership in Sweden is comprised of an agreement between two or more individuals or legal entities to perform business in the association. 

Features 

  • It requires at least two partners. 
  • There are no minimum capital requirements for creating a partnership in Sweden. 
  • Its partners are free to establish their relations as they see fit without the restrictions of a corporate form. 
  • It must be registered with the Companies Registration Office and the Tax Agency in Sweden. 
  • The partners are liable for the partnership’s agreements and debts. 
  • Its most frequent benefit is its flexibility. 

A limited partnership in Sweden (kommanditbolag) 

A limited partnership is a form of trading partnership and is quite similar to general partnerships in Sweden. 

Features 

  • At least two members must set up a partnership (one general partner and one limited partner). 
  • there is no required capital 
  • at least one member has to have general liability and one, limited liability, to the extent of their own contribution. 
  • The partnership’s biggest advantage is its flexibility. 
  • The Partners are free to establish their relations as they see fit without the restrictions of a corporate form. 
  • The partners are liable to tax on their profits. 

Sole proprietorship 

This is a form of business in Sweden that’s incorporated by only one person, who is the owner. 

Features 

  • It does not comprise a legal entity. 
  • It is run by a single individual 
  • The owner is personally liable for the company’s obligations. 
  • There are no minimum capital requirements 
  • It is taxed on its income from business 
  • Annual accounts are required 
  • There is no audit requirement. 

Branch office (filial) 

A branch office is a segment of a foreign company with separate management. 

Features 

  • It is not a separate legal entity. 
  • Its assets and liabilities are a part of the total assets of the foreign mother company. 
  • It must have a director who should be resident of an EEA country 
  • It is taxed on its profits as if it was a limited company 
  • It is required to file annual accounts of the mother company 

Regardless of the business form you choose to register, our team can help you open a company in Sweden. Just contact your Damalion expert now. 

BANKING

Sweden is ranked as one of the most productive and globalized countries in the world, and in addition to this, it has a robust and large banking system that is concentrated around a few interwoven major banks. 

Swedish banks represent the larger part of the Swedish financial market and provide all kinds of financial services. 

The primary regulatory authority responsible for overseeing banks in Sweden is the SFSA (Swedish Financial Supervisory Authority), and its goals are to take part in a stable financial system that is depicted by a high level of well-functioning markets that meet the requirements of firms and households for financial services. 

Whether you presently live in Sweden or plan to move there, either to experience its quality of life or to study, you will require a Swedish bank account. A Swedish bank account will help in organizing private finances. You can also deposit money, withdraw money, and pay bills. In addition, it will save you money on international fees. 

How to open a bank account in Sweden 

With the right firm, eg. Damalion, by your side, the process to open a Swedish bank account will be straightforward. The requirements as a non-resident in Sweden will vary depending on whether you are already an EU/EEA national or not. 

But in general, it involves visiting a bank branch in person and presenting documents such as proof of address, and your passport or Swedish ID card. Also, keep in mind that most banks will require a Swedish personal identification number when opening an account. 

To save yourself from the stress and rigorous process involves in opening a bank account, contact your Damalion expert now and let us help. 

IMMIGRATION

Sweden is full of opportunities in terms of business, jobs, and healthcare. It is a global leader in innovation with a stable economy and world-class infrastructure. Sweden is one of the most stable places politically & economically in the world, and living in this country is no less than a luxury. A foreigner looking to live in Sweden will require a residence permit. Residence permits in Sweden are issued for individuals who wants to work, study, or stay in this country for more than three months. 

Types of Sweden residence permits 

There are various residence permits in Sweden that you can apply for and the main ones include the following: 

  • Residence permit for marriage: this applies to individuals who can marry a Swede. This generally takes years of courtship. 
  • Residence permit for work: this residence permit is issued for individuals looking to work in Sweden 
  • Resi¬dence permit for studies: this is issued for individuals who are admitted to a higher education institution in Sweden. 
  • Residence permit for family reunification: this residence permit is issued for citizens outside of the EU who want to reunite with their family in Sweden. 
  • Residence permit by investment: this is issued to individuals who contribute to the country’s development through investment. 

Sweden residency by investment 

Sweden Residency by Investment is a scheme that welcomes investors into Sweden. Sweden Residency by Investment gets an investment visa issued to high-net-worth individuals, and it is sometimes referred to as a Golden visa. This Investment visa will grant the investor a residence permit without being expected to live in Sweden. 

Sweden doesn’t have a simple residence-by-investment program where multiple pathways exist to complete investment and obtain a residence permit, but, an investor can acquire a visa as a self-employed person who owns a business or will operate a new business in Sweden. 

A benefit of this program is that it is open to investors from all over the world, as long as they verify they have the knowledge and the minimum amount of money to start a business. 

Golden Visa requirements in Sweden

The primary requirement for obtaining the investor visa in Sweden is to register a company, but the foreign applicant must also meet certain criteria: 

  • the investor must be at least 18 years. 
  • he/she must have a clean criminal record and evidence of good morals 
  • the least amount to be invested must be 100,000 euros 
  • he/she must know about running a business, and must also have good knowledge of English 
  • he/she must show evidence they have sufficient money to support themselves and their family members. They must also own at least half of the business. 

Once approved, a Sweden Investment visa will be valid for a year with the possibility of an extension. 

Sweden permanent residence 

A Sweden residence permit is valid for three years with the option of extending to a maximum of five years. After five years of continual residence in Sweden, an applicant can apply for citizenship. 

If you are contemplating immigration to Sweden to acquire citizenship by investment, your Damalion expert is here for you. Contact us now and let us help. 

TAX REGIME

In Sweden, taxes are charged, depending on residency. A foreigner will not be taxed the same as a native Swede. Swedes are taxed on their global income, implying money they make at home and overseas. Non-residents who are only in the country temporarily will be taxed just on what they make in Sweden. They will also only be taxed based on the duration of their stay. 

Taxes in Sweden 

While in Sweden, there are several types of taxes you may come across. Keep in mind that tax brackets will differ based on the municipality. 

VAT (Value-added tax ) 

The standard rate for Value added tax (mervärdesskatt or moms) in Sweden for goods and services is 25%, but there are also specific reduced rates of 12% and 6%. 

Personal income tax 

Every residents pays kommun and landsting tax in Sweden. Commonly, kommun tax will take around 24% of an individual’s income (this goes towards city services). Landsting tax will take around 8% of an individual’s income, and these taxes will go towards more regional matters). 

There is also stat tax in Sweden but only the highest earners pay it. This tax rate is usually about 20% of an individual’s income. 

Social security tax 

In additionally to the three government levels of taxes, Swede employers must pay an extra 30% of the employee’s income for social security tax. 

Capital gains income tax 

Swedish tax authorities specify capital gains as incomes that can not be associated with business operations or services. The capital gains income tax in Sweden is normally around 30%, but the rate may vary a little. 

Corporate income tax 

Corporate income tax is a tax on the profits of companies. All OECD countries, including Sweden, charge a tax on corporate profits, but the rates vary from country to country. Sweden currently charges its corporate income tax between the rate of 20 to 21%. 

International taxes in Sweden 

In a globalized economy, businesses frequently expand beyond the borders of their home regions to reach clients around the world. And as a result of this, countries must clarify how/if corporate income earned in foreign countries is taxed, and Sweden is not behind on this. International tax rules come in and deal with the systems and legislation that countries apply to those business activities. Being a part of this, Sweden has a vast network of double tax treaties on income and capital taxes. 

INTELLECTUAL PROPERTY

Intellectual Property Rights is a joint name for the legal protection of intellectual and intangible assets. 

The objective of intellectual property rights is to safeguard the holder’s limited rights to his assets, for a particular period of time. The importance of intellectual property rights is fundamental, both to facilitating innovation and to the development of the market economy and the nation’s economic growth. 

In the Swedish legal system, intellectual property law is split into four subcategories. These categories are: 

Trademark 

Trade marks can include any symbol, in specific, words, or the design or decorative aspects of a product, given that the symbol is unique and can be generated in the trademark register in an apparent and precise way. The trademark must be unique and different from other related products or services. 

National trademarks in Sweden are filed and registered with the Swedish Patent and Registration Office. 

Registration usually takes 4-6 months, and once granted, trademark protection will be valid for 10 years at a time, after which it can be prolonged for another 10 years for an indefinite amount of time. 

Patent 

A patent is the sole right for the owner to exploit an invention. 

National patents in Sweden are filed and registered with the Swedish Patent and Registration Office. In Sweden, patent applications are published after 18 months. The conservation will be valid for a maximum of 20 years and cannot be prolonged other than for medicines and plant preservation products. Additional protection for medical patents is possible for up to extra five years. 

Design 

In Sweden, design protection insures the appearance and pattern of a product, but not the basic function or the primary idea. Protection is approved upon application and is then valid for five years. An expansion can be made for a maximum of 20 more years. So in general, design protection involves a maximum of 25 years. 

Copyright 

Copyright is approved for literary and artistic works that contain a particular degree of unique character and originality. Copyright protects music, films, literature, and other inventive works. 

Copyright protection ensues automatically without registration, and is not registerable in Sweden. Copyright protection will then be active for 70 years after the proprietor’s death. 

The application procedure for intellectual property usually employs time and a great deal of legal knowledge, which might be a little stressful, but luckily, your Damalion expert is here to help. Contact us now. 

LABOR AND EMPLOYMENT

If you’re looking to break into the Swedish labor market, you need to understand the Swedish labor market and its labor laws. Within the Swedish employment law, Swedish legislation aims, in some aspects, to resemble that of other Nordic countries. The primary sources of Sweden’s employment law are found in its Constitution, authority provisions, statutes, case law, employer decision-making, and employment contracts. 

Swedish employment contract 

An employment contract in Sweden is a personal agreement between an employee and an employer. An employment contract is negotiated between employers and a company and it is a way to regulate the labor market on the rationale of the nature of the work. Only a company can draw up an employment contract – not the employee. An employment contract does not necessarily have to be written, but there are specific areas in which the employer is required to inform the employee in writing. 

Types of employment contracts in Sweden 

  • Permanent employment: this is the most popular type of employment in Sweden. It is distinguished by the fact that you do not know in advance how long the appointment will last. In Sweden, permanent contracts have a probation period with a maximum period of 6 months, and after this probation period, it will become difficult to terminate employment. 
  • Fixed-term employment: this type of employment contract in Sweden usually includes general fixed-term contracts, seasonal employment, a temporary position or appointment of a person who has turned 67. Fixed-term contracts are generally more flexible regarding employment termination. 
  • Probationary employment: the Swedish Employment Protection Act enables probationary employment for no more than six months. This makes it possible for the employer to see if the employee fits into the company and the job. 

Employee benefits in Sweden 

Minimum guaranteed benefits, either from legislation or agreements in the Swedish framework, include the following: 

  • Minimum wages: like its Scandinavian neighbors, there are no applied minimum wages in Sweden. Salaries are either agreed upon contractually between employers and staff or through a trade union. 
  • Sick leave: Swedish employers must pay sick pay during the first two weeks of each period of sick leave for their employees. The sick pay will amount to roughly 80% of the employment benefits. Note that the employee has to provide a medical certificate if ill for more than one week. 
  • Working hours: the statutory maximum ordinary working hours in Sweden are 40 hours per week, excluding lunch. 
  • Vacations: in Sweden, the fundamental vacation entitlement is 25 paid days per year. This is a minimum and cannot be negotiated. Employment agreements generally contain rules authorizing employees to a longer period of annual leave. 
  • Maternity and paternity leave: Swede female employees are allowed 14 weeks of maternity leave split into two before and after delivery. And fathers are entitled to 10 days of paternity leave within 60 days pursuing childbirth. The compensation is paid by the state for a tally of 480 days per child. 
  • Insurances: except for insurances included in the crucial employer social security contribution, there is no responsibility under the Swede law for the employer to provide the employees with different insurance. 
  • Pensions: there is a pension system in Sweden that is administrated by the state and financed by employers and employees jointly. The employer payroll contributions will amount to 31.42% of an employee’s wages, and this will cover pensions, health insurance, and parental benefits. 
  • Termination and severance: Swedish employers must prove ‘just cause’ for termination, and must give at least two weeks’ notice to the employee and trade union of the motive to terminate employment. 

In Sweden, the failure to acknowledge specific regulations applying to benefits and entitlements runs the risk of fines and sanctions to employers. 

So, are you thinking of entering the Sweden market?

Damalion assists investors and entrepreneurs looking to enter the Swede market. We have the expertise and knowledge that allows us to guide clients in setting up a company in Sweden. In addition, we are highly skilled in providing various integral business solutions, including compliance, entity management, accounting, taxation, payroll support, and many more.

Contact us now to establish your presence in Sweden.

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