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Employing in Sweden

At a glance

Employment in Sweden

Foreign companies that employ workers in Sweden must adhere to the legal and regulatory framework that is in place. There are restrictions depending on the type local entity they have incorporated, and the region where the business is located. In some cases, using an outsourced employer will make the process smoother, and it is recommended to use professional legal services as well.

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Payroll & Tax in Sweden

Complying with local payroll and tax requirements is essential for a company doing business in Sweden. Issues such as tax rates and withholding and social security are all essential in ensuring a seamless human resources. Many companies will consider outsourcing these administrative tasks to a GEO (Global Employment Organization).

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Immigration / Work Permits in Sweden

Foreign workers are required to have the proper visas and work permits in Sweden, as established by immigration laws.  This often requires incorporation and licensing prior to sponsoring work permits for employees, which can be a problem if your company is trying to enter the country quickly.

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Incorporation

There are several business structures available for incorporation in Sweden –  and each has advantages and disadvantages. In some cases it will depend upon the type of industry that you are in, and the scope of planned business activity. Our guide has a a comparison of the time and cost for incorporating standard company structures.

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GEO Solutions or DIY Employment in Sweden?

Companies entering Sweden must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Sweden Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Swedish entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

 

Using Shield GEO Employer of Record Services in Sweden

Payroll Sweden
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

 
Grossed income Tax Rate (%)
From 0 to 430,200 0
From 430,300 to 616,100 20
Over 616,100 25

Non-residents employed in Sweden are taxed a flat rate of 20%. Non-Swedish residents employed by non-Swedish firms are exempt from paying any income tax provided they do not spend more than 183 days in Sweden over a 12-month period.

Tax Returns Supplied

Yes

Employers Social Security and statutory contributions

The social security system in Sweden is comprised of several elements:

  • Health insurance
  • Benefits for work-related accidents and occupational diseases
  • Benefits for invalidity
  • Pensions for the elderly and survivors
  • Unemployment insurance
  • Parental and family benefits

The system can be complex at times, but essentially to be eligible to receive any social benefits, a Swedish personal identity number must be acquired from the Swedish Tax Agency, in addition to registration with the Swedish Social Insurance Agency often being a requirement. To ensure eligibility, registration should be undertaken as soon as possible after arriving in Sweden.

Employers are required to make a contribution of 31.42% in addition to an employee’s base salary.

Employees Social Security and statutory contributions

Employees must make a 7% contribution towards the public social security system.

Corporate Income Tax Rate

The corporate income tax rate is 22%, a fall from the previous rate of over 26%.

Payroll Tax

Payroll tax is taxed at a rate of 31.42% for employers, or 28.97% for the self-employed, although this may differ to individuals under 26 or above 66 to encourage greater labour force participation.

Sales Tax

Sales tax is 25%. Swedish VAT is in accordance with EU VAT directives, at a rate of 25%. 12% or 6% rates may apply for some goods and services such as restaurant services, artworks, books and newspapers and public transport.

Withholding Tax

Dividends paid to Swedish individuals or corporations are generally not subject to any withholding, however, non-residents are subject to 30% withholding tax of dividend payments.  Sweden does not withhold tax on interest, royalties or branch profits. Withholding tax on dividends by a Swedish company to its foreign parent company is reduced or waived under most double tax treaties. Withholding tax on dividends made to a foreign company is, however, also waived according to domestic legislation if made on shares held for business reasons. Unquoted shares are always considered held for business purposes. Quoted shares are considered held for business purposes provided at least 10 per cent of the shares are held for at least one year.

Other Tax

Other than stamp duty, no transfer taxes exist. Stamp duty rates are 4.25% for the transfer or real property and site leaseholds for corporations, and 1.5% for individuals. If it is an intragroup transaction, stamp duty can be deferred. Sweden does not impose taxes upon capital duty.

Work Permits
Can Sponsor Work

EU citizens are entitled to work in Sweden without a work permit, on condition that a valid passport or national ID is presented. Non-EU citizens in general must apply for a work permit, with the exceptions of citizens of Australia, Canada, New Zealand or South Korea aged 18-30, who are eligible to apply for working holiday visas valid for up to one year. To be eligible for a work permit, a Swedish employer must make an official offer of employment for a job that has been advertised on the European Job Mobility Portal for at least 10 days, with employment terms equivalent to Swedish collective agreements – this may be ascertained with verification with the relevant union – and a minimum monthly pre-tax salary of SEK 13,000. The application process can then be completed online or submitted in person at the nearest Swedish embassy or consulate.

Can Spouse work on dependent visa?

If an individual is eligible for a work permit, spouses or registered partners, children under 21 and children over 21 who are financially dependent are eligible to reside in Sweden, and must also apply for residence permits.

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