Mileage Reimbursement in Sweden – A Guide for Overseas Employers
Your employees in Sweden may find it necessary to travel for work by car, and in that case, you will need to know how mileage reimbursement will work for both
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Employing in Sweden: What You Need to Know
Swedish employment law appears complex and confusing when looking from outside view although in some ways there are many similarities to other countries. Other factors that complicate matters include the differences between regions and an inconsistent approach to adherence to laws in different cities. For example, there are differences between minimum wages and welfare contribution amounts in different cities. For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Sweden.
Swedish employment law is highly regulated, particularly with regards to termination. The majority of Swedish workplaces have collective agreements in place between employers and unions to cover the regulation of wages, working conditions and insurance. Employers are free to offer better conditions than those stipulated by collective agreements. Personal agreements which create working conditions below those set out in the relevant collective agreement are illegal.
Key Factors to Consider When Employing in Sweden
There are several key areas to be aware of within Sweden’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.
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Probation
An employer may set up a probationary period of up to six months, whereby either party may terminate the employment during the period or at its conclusion. If the employer chooses to terminate the employment, two weeks’ notice is required. If the employee in question is a member of a trade union, the union must also be notified of the termination, with the employer liable for damages if these guidelines are not adhered to. If the employee continues to work after the trial period, the employment contract is automatically assumed to convert into an indefinite-term contract.
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Termination
The minimum period of notice for termination is 1 month, although this varies according to the length of employment. Summary dismissal – applicable where an employee has grossly neglected their obligations to the employer – allows for immediate effective termination of the employment, with one weeks’ notice necessary. Notice must be given to the relevant union if the employee is a member.
Number of years employed Minimum termination notice <2 1 month 2 2 months 4 3 months 6 4 months 8 5 months 10 6 months Notice of termination must be given in writing and include information such as the existence of priority to re-employment and how the employee should proceed if they wish to challenge the termination. Notice must be given personally to the employee, within the appropriate time frame as outlined above. If employees are on parental leave, the notice period begins from the date from which the employee is due to resume work. During the notice period, the employee is obliged to continue working and receive salary and all other employment benefits.
Employees are entitled to terminate the employment without giving reason so long as the notice period is adhered to.
Under the Swedish Employment Protection Act, employment contracts may only be terminated if objective grounds are at hand, such as shortage of work or personal reasons like serious misconduct or disloyalty. Employers are able to enter into a settlement with an employee, which sees the employee financially compensated and the employment is terminated if the rules are disregarded.
Under Swedish law, there is no mandatory severance payment – this would be set out in the employment contract if applicable.
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Leave
- Annual leave
As set forth in the Swedish Annual Leave Act, employees are entitled to annual leave benefits like vacation leave and pay, and compensation in lieu of annual leave. Usually, a minimum 25 vacation days is available to employees, within the qualifying year of April 1st to March 31st. During a vacation period, employees are entitled to vacation pay as qualified; thus, the vacation period may include both paid and unpaid vacation days. Saved paid vacation days must usually be used within a five-year period. Collective bargaining agreements tend to lack uniformity in this area, with differences from the Act not uncommon, particularly with regards to the determination of vacation pay
2. Pregnancy/maternity/paternity
Parental leave applies until the child reaches 18 months of age. The child’s mother may be on maternity leave both 7 weeks before and 7 weeks after the estimated birth, for a total of 14 weeks. The child’s father is entitled to be on paternity leave for a total of 10 days either before or after the birth. The state sets aside a maximum 480 days of paid parental leave, of which only 420 days can be used by one parent. This state compensation generally amounts to around 80% of an individual’s salary. If a collective bargaining agreement is applicable, employees may be eligible to receive some compensation from their employer, in addition to the state compensation.
3. Sick/special leave
Employees are entitled to compulsory sick leave from their employer, provided that the employment is expected to exceed a one-month period or the employee has been working for more than 14 consecutive days. There is no compensation for the first day of illness. Sick leave compensation amounts to 80% of salary and benefits during days 2-14. From day 15, the employee may be eligible to compensation from the state, determined by the Swedish Social Security Agency. Employers are not obliged to provide any supplementary sick pay, unless otherwise stipulated by a collective bargaining agreement.
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Pension
In addition to state pension, employees are frequently also entitled to supplementary pension from their employer. These are awarded discretionarily for employers not bound by collective bargaining agreements. For employers bound, the ITP pension plan is the predominant pension plan for white-collar workers, covering old-age pension, disability pension, and family pension. Dependent on age, employees belong to either ITP-1 (defined contribution plan) or ITP-2 (defined benefit plan). A defined contribution plan called SAF-LO exists for blue-collar employees.
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Social security
In Sweden, the pension system is based on an income-related pension, premium pension and guarantee pension, administered by the state and financed by employers and employees together. Employer contributions are made through social security contributions, amounting to 31.42% of the employee’s gross salary and paid in addition to this salary. It is mandatory for employers to make these contributions, which cover charges such as the old-age pension, survivor’s pension, fees for work injuries and health insurance. Employees must make a 7% contribution towards the public system. Anyone residing in Sweden is covered under this scheme.
Salaried individuals, contracts, or self-employed individuals may alternatively be covered by the work-based scheme, which is essentially very similar to the residence-based scheme.
Employee Entitlements
| Information | Explanation |
|---|---|
| Working on Sundays ? | Working days and hours are regulated by The Working Hours Act, with Collective and tie-in agreements |
| Disclosure and Confidentiality of Personal Information ? | Protected disclosures – Disclosures of information in relation to legal obligations, health, safety etc. |
| Employee Protection and Anti-discrimination Rights ? | Protection from suffering detriment in employment – An employee has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer on various grounds. |
| Time Off Work ? | The employee’s right to have time off work depends on the reason for absence. Due to several different laws with Collective and tie-in agreements regulates, the time is paid or not paid. All employees have a statutory right to take time off work for the following:
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| Medical Leave ? | All employees are qualified to get Statutory Sick Pay, from the first day of employment, with special regulations if the period of employment is less than a month. The first day of illness is a waiting day and the employee does not receive any sick pay. The employer is responsible for the cost for the two first weeks. After the fourteenth day, the employee receives sickness benefit from the Swedish Social Insurance Agency, but the employers often have additional obligations due to Collective and tie-in agreements regulates. |
Employment Termination
| Information | Explanation |
|---|---|
| Severance / Redundancy Pay ? | There is a right to offer alternative work if suspension from work is because of medical grounds. |
| Termination of Employment ? | This is regulated in several employment related laws and is a complex matter. The basic right is that an employment is indefinite, so to employ temporarily must be clear from a written agreement in order to apply. Notice is required to be given to an employer to terminate the contract of employment of a person who has been continuously employed more than 12 months during a tre-year-long period. Contracts can only be terminated by the employer when there is a reasonable cause for dismissal.
Probation periods may be included at the start of an employment contract, and, if either the employee or the employer wishes to terminate the employment, notice must be given before or upon the expiry of the probation period. |
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.
Learn how we've helped clients with employees in Sweden in this case article!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.
| Tax | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Tax Rates | Swedish individuals residing in Sweden are liable to pay various forms of taxes, while Swedes residing outside Sweden are taxed on their worldwide income. Generally, individuals who are present in Sweden for 6 months or more and regularly stay overnight are considered residents for tax purposes. |
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| Tax Returns Supplied | Yes |
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| Employers Social Security and statutory contributions |
The social security system in Sweden is comprised of several elements:
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. |
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| Employees Social Security and statutory contributions |
Employees must make a 7% contribution towards the public social security system. |
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Work Permits
| Work Permits | |
|---|---|
| Can Sponsor Work Permit |
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. |
Payroll and Tax in Sweden
There are specific rules for payroll and taxation in Sweden, depending on whether foreign national or Swedish residents are employed. The primary concerns for a foreign company that needs to comply with tax laws in Sweden: Individual income tax (IIT) for employees in Sweden, social security costs, payroll tax, sales tax, and withholding tax.
Here's our most recent article on running payroll and taxes in Sweden| Information | Explanation |
|---|---|
| Remote Payroll ? | A remote payroll in Sweden is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Sweden. The only option for a non-resident company to payroll its employees (both local and foreign) in Sweden is to use a fully outsourced service like a GEO or FESCO which will employ and payroll the staff on their behalf. |
| Local Payroll Administration ? | In some cases, a company will register their business in Sweden under one of the forms available, (RO, WFOE or JV) but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider. |
| Internal Payroll ? | Larger companies with a commitment to Sweden may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Swedish payroll, and can fulfill all tax, withholding, and payroll requirements. This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Swedish employment laws. |
| Fully Outsourced Payroll & Employment ? | Companies can outsource the employment and payroll of their staff in Sweden to a GEO, like Shield GEO. This is possible for both foreign workers and Swedish nationals. This is the easiest, fastest and safest way to payroll staff in Sweden. Shield GEO manages all aspects of payroll for workers in Sweden, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client. Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips. Read more about outsourced payroll and employment through Shield GEO. |
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Setting up payroll in Sweden
| Information | Explanation |
|---|---|
| Currency ? | The official Swedish currency in the Swedish Krona (SEK), equivalent to approximately USD$0.11. |
| Employee Information Required ? | Personal/corporate identity number of payee/employee is obliged, either a Swedish TIN (Tax Identification Number) or co-ordination number supplied by the Tax Agency. |
| Documentation Required for New Employees ? | Contracts do not have to be in writing, but the Employee Protection Act stipulates that the employer must provide the employee with extensive written information about the conditions of employment within one month. |
Tax Figures
| Information | Explanation | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Corporate Income Tax ? | The corporate income tax rate is 22%, a fall from the previous rate of over 26%. |
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| Income Tax Rate ? |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| Time to prepare and Pay Taxes ? | 122 hours |
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| Time required to start a Business ? | 7 days |
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Payments
| Information | Explanation |
|---|---|
| Payment Mode ? | The employee needs a bank account as the standard procedure is to pay salaries via electronic transfer, very rarely with cash. If bank account is unknown, the payment is settled with a money order from the bank. This would usually cost an extra fee to cash for the employee. |
| Frequency of Salary Payment ? | The pay frequencies which can be processed in additional to usual monthly payrolls are two-week salary and special regulations for sailors. |
| Invoice / Payslips required ? | There is no statutory right to a payslip, but it is customary to issue one. Collective and tie-in agreements may be established that require that payslips be issued |
| Minimum Wage ? | Swedish minimum wages are not regulated by law, but subject to bargaining between employers |
Immigration and Work Permits in Sweden
Foreign workers are required to have the proper visas and work permits in Sweden, as established by immigration laws. Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the Swedish market. If you have yet to complete the incorporation process you can use an outsourced management company or GEO Employer of Record to sponsor the employee for the necessary permits.
Use your own company?
In general, to bring employees to work for a company in Sweden, they must apply for a work permit rather than a business visa, which only provides entry into Sweden for short term periods. The eligibility requirements for a work permit are:
- The job must be advertised on the EURES portal for a minimum of 10 days.
- An offer of employment must be made which sets out conditions which are, at a minimum, equivalent to those of the relevant Swedish collective agreement. This offer is initiated by the employer, and requires information about the prospective employee’s name, date of birth, citizenship, education and email address.
- The employment opportunity must pay a minimum pre-tax salary as stipulated by Swedish collective agreement.
An employer can apply online for a work permit on behalf of the employee if they have all necessary information. Employers cannot apply in-person since the applicant must be present if they wish to apply in this way. The employer must be certified by the Migration Agency and have the power of attorney to apply on the applicant’s behalf, including copies of the pages in the employee’s passport which show personal information, period of validity and whether the person has permission to live in countries other than their country of origin.
The application process is as follows:
- Issuance of offer of employment
- Compilation of all necessary documents
- Consideration by the Swedish Migration Agency
- Notification to the Tax Agency if application is successful
1. An offer of employment is issued to the employee. This ensures that the Migration Agency is able to check the conditions of employment and payment are aligned with legal requirements. The employer must also issue a notice of employment to the relevant trade union, which will be returned by the union official upon approval. The employer needs to provide information about the applicant’s name, date of birth, citizenship, education and e-mail address, which will be used by the Migration Agency to communicate with the applicant.
Time: Depends on the trade union.
Fee: No cost.
2. The application is compiled and submitted. The relevant documentation is explained further below.
3. The Migration Agency will consider the application and inform of the outcome within 2-5 months, depending on whether all documentation is correctly submitted or if additional documentation is required.
Applications are required to submit the following documents:
- Copies of the relevant passport pages which contain personal information, photograph, signature, passport number, passport issuing country, the passport’s period of validity and whether the individual has permission to live in countries other than their country of origin.
The employee is also able to bring their family as long as the aforementioned information is supplied, as well as:
- Certificates of marriage for spouses
- Birth certificates for children, and consent from the other custodial parent if they are not accompanying the applicant
- Documents evidencing that the dependents have lived in the same country of origin as the applicant
- Documents evidencing that any children over the age of 21 are financially dependent upon the applicant
The employer is able to apply on behalf of the applicant’s family contingent upon obtaining a power of attorney from the family, in addition to copies of each family member’s passport and documents proving they are related to the applicant (such as marriage or birth certificates). Applications to bring family should be submitted with the employee’s application.
These documents must be included with the applicant’s documents when the application is submitted. All documents should be provided in Swedish or English and applications should include copies of original documents.
Time: Approximately 1 month, although if information is missing from the application the process can take up to 4 months.
Please contact us for a quote.
If the application is successful, the Swedish Migration Office will contact the applicant via email. A residence permit will be issued.
4. Notification to the Swedish Tax Agency
If a non-EU national is being offered employment, the employer must notify the Swedish Tax Agency and completion of a form including the employee’s name, address and duration of employment, as well as documentation evidencing the employee’s rights to work in Sweden.
If an application for a residence or work permit is unsuccessful, an appeal may be lodged with the Aliens Appeals Board (Utlänningsnämnden) within 3 weeks of receiving rejection. If the appeal contains information that the Aliens Appeals Board deems worthy of revision, the appeal will be passed on for revision. It is not possible to appeal a rejection for work permits, unless there are new grounds for application.
Work permits are valid for a maximum of two years, but may be shorter depending on the expected duration of employment and/or remaining passport validity. They can be renewed through written application to the Migration Agency at a cost of SEK1,000 after a six-month period. During the first two years, applicants must only be employed by the employer who offered the employment, and a new application must be made during this period if they wish to change employers. However, after 2 years, if an extension is granted, employees are permitted to work for another employer. Again, the process to extend the work permit is initiated by the employer.
Use the Shield Geo Solution?
Once you get in touch with us, one of our consultants will take all the work off your hands, coordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process. Contact us to know more.
Types of visas in Sweden
| Category | Description of Visa |
|---|---|
| Business visa | For non-EU citizens wishing to visit Sweden for a business trip or conference, a business visa is necessary. To be eligible to receive a visa, the following are required: Visa applications are to be submitted to a Swedish embassy or consulate-general. They must include the following documentation: Once an application is submitted, a decision can be expected within a fortnight, although this may take longer during busy holiday periods. A visa is generally valid for 90 days. If an application is denied, appeals must be filed within 3 weeks of the decision. |
| Work permit (employer sponsored) | 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. Applications submitted online are considered by the Migration Agency immediately. If completed at an embassy or consulate, the application is forwarded to the Migration Agency in Sweden, which typically adds four weeks to the process. If all required documents are submitted together, the processing time should not exceed 1 month. 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. |
| Intra-company transfer | For an intra-company transfer, the process is largely similar to a work permit: |
| Freelance/entrepreneur permit | Entrepreneurs wishing to work for a period exceeding 3 months must apply for a Swedish residence permit. For periods less than 3 months, an entry visa is required. It may take up to 4 weeks to make a decision regarding entrepreneur permits. If granted, the permit is valid for 2 years. Family members are eligible to receive residence permits for an equivalent period of time. |
Setting up a company in Sweden
When setting up a company you may want to consider these factors:
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Geographic Location
Given that the country consists largely of islands and coastal cities, choice of geographic location may be a significant decision.
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Language
The official language of Sweden is Swedish, however, there are also small Sami and Finnish speaking minorities. An extremely high proportion of the Swedish population speak fluent English, topping the English Proficiency Index for the past two years. However, some elements of the requisite paperwork may require completion in Swedish.
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Culture
Sweden is known for its socially progressive culture, having embraced feminist, anti-racist and anti-fascist views. Given that approximately one-fifth of the population are immigrants or have a parent born outside Sweden, the nation is also well known for its multiculturalism and tolerance towards foreigners.
Company law in Sweden allows for several kinds of businesses to be set up, the most prominent forms being a branch of a foreign company or a limited company. There are two subcategories of limited companies – public and private – where only public limited companies may raise capital through share or security issues and can be listed on a public exchange.
Foreign Company branch
Foreign companies may elect to conduct their business in Sweden through a Swedish branch. This is not a separate legal entity, but rather an extension of the existing company. The foreign company therefore bears any rights and liabilities of the branch, but is subject to Swedish law and the decisions of Swedish authorities. A foreign company may only set up a maximum of one branch in Sweden.
The initial registration procedure for establishing a foreign company branch is as follows.
An application is submitted for registration to the Swedish Companies Registration Office. The application form must include details of both the foreign company and the branch that the company is seeking to register in Sweden, as well as the proposed name of the foreign branch and details of any individuals who are authorised any claims related to the branch and are able to represent the foreign company when associated matters of business arrive. The application must also state the nationality of the company, its legal form, registered office and postal address. Proof of non-bankruptcy and the most recent two annual reports are also required documentation. The application fee of SEK 2,000 must be paid upon submission of documents, and is not subject to VAT. If the application is complete, the Swedish Companies Registration Office will usually complete the process in two weeks from when the application is made – this may, however, take longer depending on the circumstances.
Upon completion of the registration process, the branch will be given a ten-digit registration number that serves as the identification number of the branch for the entirety of its existence. Once the registration number has been received, the branch may commence business operations.
The accounting records of a foreign branch must be kept separate from those of the company. The annual accounts of the foreign company and branch may need to be regularly submitted to the Swedish Companies Registration Office depending on the circumstances.
Public Limited Company
To establish a limited company in Sweden, the options are to either incorporate a new limited company, or buy an existing limited company. The latter option is usually the easiest way and can be completed in a day or two. Limited companies can be either public or private, although the registration processes are very similar excluding issues like fees, the board of directors and company name.
Public limited companies are required to have a minimum starting share capital of SEK 500,000, which can be denominated in either Euros or Swedish Krona.
To register a new limited company, there are several documents and forms which must be lodged with the Companies Registration Office. Prior to registration, the company is not allowed to undertake any legal acts or start any business activities.
The fee for registering a limited company is SEK 2,200. In addition to the registration form, a memorandum of association and articles of association must be included in the application, as well as either a bank statement of the share capital, if the shares have been paid for in cash, or a statement for the auditor, if the shares have been paid for with any asset other than cash.
Registration is usually completed within 2-3 weeks of the application being lodged to the Companies Registration Office. This may take longer if there are restrictions in regards to the company name, which must distinguish the company from any other companies in the market. Once registered, the business will receive a registration number and may commence business. Businesses are advised to ensure their name is original and not already in use before applying. If the limited company is public, this is to be indicated in the company name.
Public limited companies must have at least three directors – if more, one must be appointed chairman. If none of the aforementioned individuals are Swedish residents, the board must appoint a Swedish resident to act as an agent for service of process on the company’s behalf.
To close a public limited company, there are five options:
- Selling: selling all shares.
- Liquidation: may be voluntary (action taken by shareholders at a general meeting) or compulsory (when the Companies Registration Office or a court orders the limited company must go into liquidation)
- Bankruptcy: an application for bankruptcy can be made either by the company or a creditor, filed to the district court.
- Merger: This can be either through absorption of a wholly owned subsidiary, absorption, or formation of a new company.
- Division: This can be either a complete or partial demerger.
Private Limited Company
Whilst very similar to the process of setting a public limited company, there are some differences with regards to fees, directorial boards and the naming of companies.
Private limited companies are required to have a minimum starting share capital of SEK 50,000.
The board of directors for a private limited company may consist of 1 or more directors; if there are more than two ordinary directors, then one deputy director must be appointed. If none of the aforementioned individuals are Swedish residents, the board must appoint a Swedish resident to act as an agent for service of process on the company’s behalf.
To close a private limited company, there are five options:
- Selling: selling all shares.
- Liquidation: may be voluntary (action taken by shareholders at a general meeting) or compulsory (when the Companies Registration Office or a court orders the limited company must go into liquidation)
- Bankruptcy: an application for bankruptcy can be made either by the company or a creditor, filed to the district court.
- Merger: This can be either through absorption of a wholly owned subsidiary, absorption, or formation of a new company.
- Division: This can be either a complete or partial demerger.
| Private limited company | Public limited company | |
| Can sell shares to the public | No | Yes |
| Minimum share capital | SEK 50,000 | SEK 500,000 |
| Minimum amount of board members | 1 member | 3 members |
| Managing director | Optional | Mandatory |
| Auditor | Recommended and sometimes mandatory | Mandatory |
Outsourcing Employment Through a GEO Employer of Record Service
Whether to incorporate in Sweden and what sort of entity to set up are just two of the many choices companies must make when expanding into a new market.
If the company intends to have staff in Sweden they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities. A GEO Employer of Record solution is an attractive alternative where
- the company is looking to setup an office quickly
- the company wants to work within a defined budget
- the company wants to limit its initial commitment in Sweden
- the company needs help with tax, employment, immigration and payroll compliance in Sweden
The complexity of employment regulations in Sweden makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.
Shield GEO provides a comprehensive service in Sweden allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Sweden.
Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Sweden. Read more about outsourced employment through Shield GEO.
Related Articles
- Sweden Employer of Record Overview
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