SWEDEN

SETTING UP IN BUSINESS

Introduction

Sweden has been officially neutral and at peace for the entire 20th century, which goes some way to explaining its prosperity and security today. With a stable economy that is strongly oriented towards foreign trade, it is a natural choice for international investors seeking new territorial markets. Sweden is also firmly committed to the welfare state and the high tax rates that are needed to fund it, so it is essential to take professional advice on tax planning and related issues. Please contact us for details.

What are the main types of company in Sweden?

The five most popular forms of corporate structure in Sweden are as follows:

	private limited company
	public limited company
	branch office of a foreign company
	partnership
	sole trader

What are the main features of a private limited company?

	suitable for even the smallest company
	board may consist of just one member, plus a deputy
	minimum share capital is SEK 100,000 (€10,713)
	owner’s liability is limited to assets of the company

What are the main features of a public limited company?

	standard format for large companies
	minimum share capital is SEK 500,000 (€53,568)
	board of directors to have at least three members
	managing director and 50% of board must be resident in EEA

What are the reporting requirements for limited companies?

Irrespective of size and whether it is private or public, a limited company has to file annual accounts with the Patent and Registration Office. In addition, the annual report has to be audited.

What are the main features of a branch office?

A foreign company that wishes to operate in Sweden without establishing a subsidiary can set up a branch office instead. The branch must have a managing director who should be resident in an EEA country. The Swedish branch of a foreign company is taxed on its profits as if it were a Swedish limited company, but losses may be tax-deductible in the foreign company’s jurisdiction. All branches are required to file annual accounts and are subject to audit.

How do partnerships work?

There are two kinds of partnership under Swedish corporate law. A general partnership is a trading relationship between two or more people and, even though the partnership may be a legal entity in its own right, the partners are personally liable, joint and several. With a limited partnership, however, there is always at least one partner with limited liability, as well as one partner with unlimited liability for all debts.

What about sole traders?

A sole trader is a recognised form of business enterprise but does not comprise a legal entity. The business is run by a single individual who is personally liable for all debts that may be incurred. Annual accounts are required as an appendix to the owner’s personal tax return, but there is no audit requirement.

How easy is it to recruit staff in Sweden?

Sweden has the best-educated workforce in the world after the US and Canada, a factor that is widely cited by foreign companies in deciding whether to invest here. Unemployment has been rising in recent years and there should be no shortage of applicants for jobs. Recruitment agencies abound in Sweden. We have our own network of local recruitment specialists – please contact us for details.

What is the regulatory environment like?

There are few regulations governing foreign ownership or business operations and profits can be freely remitted abroad. The labour market is highly regulated, and subject to laws on employee contracts, the working environment and corporate decision-making. It is essential to take legal advice before offering or entering into any kind of employment contract. We can help you with this – just contact us for details.

Are there financial incentives available?

There are no general incentives for foreign companies in Sweden but interest-free loans may be available for investment in regional development zones. There are specific tax breaks for foreign companies that need to recruit specialist personnel from abroad, such as technical experts, researchers and top managers.

And what about banking facilities?

There is no shortage of international and local banks in Sweden and banking systems are highly advanced, however opening a bank account can be surprisingly difficult. Please contact us for help with this – and any other aspect of opening a Swedish company.