Swedish Business

Poles coming to Sweden for work purposes also have the opportunity to open their own business. The rules and obligations regarding the legalization of a company by citizens of EU member states are largely governed by EU law. The types of business activities are very similar to their Polish counterparts. One of the most popular activities among foreign entrepreneurs in Sweden is sole proprietorship. This page contains a collection of information that can be very useful in this regard for those wishing to open their own business in this country. One of the simplest forms of business in Sweden is the sole proprietorship. This is because formal procedures are kept to a minimum in this case. No start-up capital is required to establish such a company, and the registration process is smooth. However, the situation is different for other types of business. Among the least accessible are Swedish limited partnerships and limited liability companies. What other forms are there to choose from?

In Sweden, the amount of start-up capital and the registration process can be taken as the main points of reference when establishing a company. Poland's membership of the EU and the European Economic Area (EEA) means that our country's citizens have similar rights to Swedish citizens when it comes to setting up a business. The most popular types of business are sole proprietorships, civil partnerships, commercial companies and branches of companies. The owner of an enskildnäringsidkare according to Swedish law is not recognized as a legal entity, and there is no separation between private and company property. Consequently, the entrepreneur is liable for the company's obligations with his or her own budget. The opening of a sole proprietorship in Sweden requires registration with the tax authority, Skatteverket.

A sole proprietorship in Sweden is a particularly good form if you are not able to predict the future profits of the company and the funds you intend to turn over are expected to be quite small. The formalities for registering a sole proprietorship in Sweden are first dealt with at the tax office. The relevant documents must be prepared:

• a certified copy of an identity document (e.g. passport);
• certificate of no tax arrears in Poland;
• certificate of no arrears with social security contributions in Poland;
• completed application form for foreign entrepreneurs.

The completed form and enclosures are sent to the address of the Foreign Cooperation Division in Malmo:

Swedish Tax Agency (Skatteverket),
Utlandsskattekontoret,
SE-205 31 Malmö, Sweden.

Registration of the business takes place within 2 - 6 weeks after the application has been submitted to the office. The entrepreneur will incur an expense of SEK 1,400 for registration at Bolagsverket.

Swedish entrepreneurs are subject to mandatory VAT, which can be respectively: 25, 12 or 6 per cent. Owners of sole proprietorships are legally treated as natural persons. The tax is settled on the basis of a return filed either monthly, quarterly or annually. For entrepreneurs with a detailed plan in which they are able to predict the future profits of the company and plan to trade larger sums, special consideration is given to the legal form of a company in Sweden. Their undeniable advantage is the clearly defined licensing and financial conditions. This is due to the precision of Swedish legislation regarding the running of the company in terms of accounting, bookkeeping and reporting. As a foreign businessman, you should first go to the Swedish Migration Board -Migrationsverket. The next move is to register the company with the Companies Register -Bolagsverket - for which the following documents are needed:

• a notarized memorandum of association - this should be drawn up no later than six months before registration with the Companies Register;
• Articles of association;
• bank certificate of deposited initial capital - depending on the type of company, the initial capital ranges from SEK 50,000 (limited liability company) to SEK 500,000. (public limited company);
• a completed registration form.

The cost of registering a company with the Register of Entrepreneurs is SEK 700 - 1,700. Confirmation of registration on average takes three to six weeks from the date of application.

Once all formalities have been passed, the company becomes a taxpayer. Corporate income tax in Sweden is 28% on the holding company's profit. In addition, when a Swedish company undertakes the distribution of goods or services it is obliged to charge a corresponding amount of VAT, the percentages of which are: 25, 12 or 6 per cent. Settlement is made on the basis of a return submitted: monthly, quarterly or annually. One of the most important issues is the country of origin of the entrepreneur, as this determines what further steps are necessary to register a business in Sweden.

The first step is to obtain a residence permit in Sweden, which can be issued by authorities such as:

• the Swedish Migration Board (Migrationsverket), in which case you apply at a branch office of the Swedish Migration Board;
• the Swedish embassy residing in the entrepreneur's country of origin;
• the Swedish consulate responsible for the entrepreneur's country of origin in Sweden.

The permit is issued for a period of 5 years. After 2 years, the Migration Board examines the financial situation of the company. The ability to support oneself is the cardinal criterion for extension of residence. If it is not met, the authorities may revoke the previously granted permit.

Another important step is registration in the Swedish population register. It is then necessary to present a previously obtained residence permit or proof of right of residence in Sweden. A key issue is also the length of residence, which must already have lasted at least one year at the time of registration, and the planned continued residence must not be shorter than 12 months. In order to open a business, it is also necessary to register with the tax office, where the entrepreneur is given a personal identification number - personnummer - after applying for a number using form SKV 4620; as well as to register with the social security system, which is under the jurisdiction of the Swedish Social Insurance Agency - Försäkringskassan.

An equally important aspect is the choice of business type. A Swedish sole proprietorship does not require start-up capital, although the person in charge of the company is liable for all obligations incurred with all his/her personal assets. Opening a company, on the other hand, requires start-up capital.

Most types of business require registration with the Swedish Companies Register - Bolagsverket. This obligation applies in particular to companies (e.g. limited liability company, limited partnership, but also business associations). A sole proprietorship in Sweden is exempt from this obligation, although at the same time it is worth emphasizing that entry in the register provides a kind of guarantee of having a unique company name in the region.

The final phase of legalizing a company in Sweden is to report to the Swedish Tax Agency - Skatteverket. In order to complete the formalities, it is necessary to have a copy of an identity document, such as a passport. As a result, the owner of the company in Sweden is given a co-ordination number, i.e. a temporary identification number that allows official applications to be made. The company in Sweden becomes liable for F-tax - business tax (f-skatt) and VAT. F-tax indicates that corporate clients are not liable for tax credits and employer contributions. Information on the payment of taxes can be found on invoices, contracts or vouchers issued by Swedish companies. If the business plan involves the creation of new jobs and thus the employment of employees, the entrepreneur is obliged to register as a Swedish employer. If the owner of the company simultaneously works for another entrepreneur, he/she becomes a FA taxpayer instead of F. FA is a combination of business and employment tax. Registration can be done directly at the Office building by submitting form SKV 4632, or through the website: verksmat.se - you must have a Swedish BankID digital signature.

Please note that documents and certificates submitted to the Norwegian authorities should be translated into Swedish. Business in Sweden is an opportunity to grow your company. When running a company, you must not forget about your obligations under local legislation, as well as taking responsibility for your commitments. All of this is reflected in the finances of the company, so it is worth remembering the basics.

1. A bank account - especially important when setting up a business, as this is where the company's start-up capital must be deposited. In addition, it is an absolute requirement for carrying out transactions. With a personal number - personnummer - an account can be set up online.
2. Entries in registers, submission of documents and payment of dues (such as employee tax, VAT and income tax) - registration must be made, among other things:
   • in the Register of Entrepreneurs - Bolagsverket;
   • as a VAT payer;
   • at the Swedish Social Insurance Agency - Försäkringskassan.
3. Monitoring company payments - controlling expenditure and income, cash flow statements, activities of an operational, investment and financial nature. Keeping detailed records helps to maintain a clear financial situation and avoid or quickly rectify discrepancies. In addition, keeping documents in order is extremely helpful in the event of a tax inspection (Skatteverket).
4. Keep company data up to date - any changes to contact details or the name of the company should be reported as a matter of urgency to the relevant authorities (tax authorities, banks) and customers.
5. Health and safety at work - all Swedish entrepreneurs are required to comply with health and safety rules. This aspect is important, especially if the company has employees. This is supervised by the Swedish Work Environment Authority (Mynak).

A company in Sweden is liable for income tax. Depending on the amount of income received, throughout the tax year, the appropriate tax rate must be paid. Swedish income tax consists of: national tax - paid to the state treasury; and local tax - including tax for the municipality (kommun) and the region (landsting). Local tax is earmarked, for example, for the healthcare system or the development of the local education system.

The rate of national tax is different from that of local tax. The national tax rate is set annually and in 2020 was respectively:

• for income below SEK 490 700 - 0%;
• for income above SEK 509 300 - 20%.

The local tax rate is set by the local authorities. Depending on the region, its rate varies between 30 and 35%.

Corporate income tax is 28% on company profits. The situation is different for persons for whom Sweden is not their country of tax residence, but who are employed in Sweden by a local or foreign employer. The tax rate is then 25% on income. On the other hand, income of persons working for a foreign employer in Sweden is not subject to tax if their stay is shorter than 183 days within the next 12 months.

The fiscal burden on a business in Sweden is calculated on the basis of the company's projected financial forecasts for the year. This is done when registering the business. The owner then presents a cost estimate to the tax office, which then calculates the advances to be paid each month towards income tax. Advance payments are made by the 12th of the following month, except in January and August, when the deadline is postponed until the 17th. If necessary, the initial declaration may be corrected. However, at the end of each tax year, the owner prepares an appropriate declaration, on the basis of which the office calculates the actual tax amount. If the company's initially declared profit is higher than the physical profit, the entrepreneur will receive a refund of the overpayment. This rule also works the other way round. If a company in Sweden earns more income than expected, it will have to pay the difference.

The necessary documents for the tax return can be sent by the Swedish tax authorities in two forms:

• to a digital mailbox, which can be created by 27 February at the latest. The document is sent from the office between 4 and 11 March. The time for submission ends on 31 March;
• by post - the taxpayer receives the form between 13 and 15 April. The deadline for submission is 4 May.

The payment deadline indicated on the final tax return is always at least 90 days from the date of the tax office's decision. Businesses doing business in Sweden have a fiscal burden in the form of VAT, which they as a company must pay on every transaction taking place at the various stages of production and distribution - where a transaction is seen as the sale of goods, the provision of services, an exchange or any payment through the company. However, a company in Sweden does not have to register as a VAT payer if all its customers are registered as Swedish VAT payers. Industries operating in the fields of healthcare, education, banking and financial services are also exempt.

A business in Sweden must be entered in the VAT register no later than two weeks before the start of operations. Businesses are eligible for registration if:

• without changing the owner of the goods, moves the supplies necessary for the business to one of the EU member states;
• bsells products or services to other EU countries;
• bthe trade in goods or services involves countries outside the EU.

Registration can be done via the website - skatteverket.se - but also by post, in which case an application form SKV 4620 must be completed.

All Swedish companies that are obliged to pay VAT should keep records of documents confirming the charging of a certain rate of tax. A conditional circumstance for VAT to be deductible is that it is shown on the invoice. The same is true if the products or services purchased are necessary for the operation of the business, although there are certain exceptions to the rule (e.g. tax on cars is not deductible).

The Swedish tax system provides for 3 VAT rates:

• standard rate - 25%;
• reduced rate - 12% - covers foodstuffs, hotels, handicrafts;
• low rate - 6% - covers, inter alia, newspapers, books, passenger transport.

VAT can be settled depending on the size and annual turnover of the company, which is determined when registering with Skatteveret. Declarations are submitted:

1. once a year, once every three months or once a month - this option is for small companies with an annual turnover of SEK 1 million;
2. once every three months or once a month - this option is for medium-sized companies with an annual turnover between SEK 1 million and SEK 40 million;
3. once a month - for large companies with an annual turnover of more than SEK 40 million.

Most companies must meet this obligation by the 12th of each month. For medium-sized companies, the deadline moves to the 26th day of each month.

Swedish companies selling goods to EU purchasers who have registered for VAT in a member state do not charge VAT. This must be declared by the buyer. Swedish tax will be charged when the buyer is not registered for VAT. VAT will also not be charged when goods are exported to countries outside the EU. Swedish entrepreneurs should report to the tax authorities before hiring an employee. Once they qualify as an employer, they pay employment tax. It is also the employer's responsibility to deduct payroll tax and other benefits from the employees' wages. In addition, they also pay contributions by virtue of being the employer.

If the hired employee is not a citizen of either Sweden or the EU in general, the employer must report this to the Swedish Migration Board - Migrationverket. Likewise, if a foreign employer hires temporary employees, from outside Sweden, it should report this to the Swedish Work Environment Authority. In contrast, citizens of EU member states do not need a work permit. The company is obliged to pay taxes and contributions, which are paid into an individual account at the Tax Office. The total amount due is 31.42% of the tax base, which consists of the gross salary amount and other benefits, these include:

• insurance premiums - 3.55%;
• pension contribution - 10.21%;
• payroll tax - 11.62%.

The employer has until the 12th of each month to settle the aforementioned obligations.

Swedish legislation, based on the Employment Protection Act, stipulates that if an employment contract is concluded verbally, the employer is obliged to provide written information on the terms and conditions of employment. The form of the document should standardize the various aspects concerning the commencement and performance of work. Hence, the document should contain:

• personal data;
• place of work;
• date of commencement of work;
• a detailed description of the duties;
• form of employment;
• period of notice;
• the amount of remuneration;
• additional employee benefits;
• length of leave;
• length of working day or week;
• optional collective agreements in force at work.

Swedish employees are entitled to sickness benefit. Employers must be informed of the illness. The amount of benefit is then determined on the basis of the amount of benefit and other benefits paid. Sickness benefits are 80% of the average salary, including any employee allowances. The amount of costs associated with doing business in Sweden depends on: the type of company, the industry, the number of employees (if any), income.

1. Personal income tax - the range is between 30 and 55%. Applies to entrepreneurs with sole proprietorships.
2. Corporate income tax - this mainly applies to companies. In this case, the tax rate is 28% on annual income.
3. VAT - companies qualifying for this liability must register and pay a tax rate of 25%, 12% or 6%.
4. Employment tax - this obviously applies to business owners who have taken on employees. The tax base is made up of gross salary and employee benefit rates. The total comes out to 31.42%;
5. Initial capital - depending on the type of budget a Swedish company should bring in, this ranges from SEK 50,000 to SEK 500,000.

The types of certificates and permits depend on what kind of business we want to set up in Sweden. Among other things, it is about the industry, the premises conditions and the person of the owner himself. The licence is granted by the national or local authorities, such as the municipal or administrative council.

If the company's domain is catering, the licence will be issued by the National Food Agency. By contrast, when setting up a Swedish shipping company, the patent is issued by the Swedish Transport Agency. Thus, a different state authority is responsible for each field. Detailed information can be found at: verksamt.se.

The next issue is the work permit, which, however, does not have to be applied for by persons residing in the country for less than three months. The owner of a Swedish company can obtain a residence permit upon presentation of a certificate of registration of the company in Sweden or a document of operation in Sweden. The application for a residence permit is submitted individually, while minors are represented by a legal guardian.

A residence permit in Sweden may be issued by authorities such as:

• the Swedish Migration Board - Migrationsverket - in which case you apply at a branch office;
• the Swedish embassy residing in the entrepreneur's country of origin;
• the consulate in Sweden responsible for the entrepreneur's country of origin;
• Aliens Board - if the application is rejected at the board, an appeal can be filed within three weeks of the previous decision of the Migration Board.

The paper form of invoices has been officially phased out by the Swedish authorities. The most popular format has therefore become e-invoices, which are transmitted to the business in Sweden in a dedicated standard - Svefaktura. To be able to issue invoices, a business must have an identification number and a company bank account number.

An invoice, issued by a Swedish company, should contain the following information:

• the date of issue;
• the date of delivery or payment;
• the document number;
• details of the parties to the transaction (such as name, company name, address);
• the VAT number of the seller;
• (optionally) the VAT number of the buyer;
• type of transaction;
• the price of the good or service;
• the taxable amount;
• the VAT amount;
• the terms of payment;
• the terms of delivery of the goods or services.

In addition, Swedish limited liability companies are also required to include their identification number, name and registered office address (city or municipality is sufficient).

Financial records may be kept by the company itself or with the assistance of a professional accountant. However, the invoices themselves can only be issued using certified software. The use of Microsoft Excel is prohibited. All documents must be archived by the Swedish company using special software that meets strict security requirements. Entrepreneurs who have decided to set up a sole proprietorship in Sweden can count on support from the state in the form of health and sickness insurance. A prerequisite is that taxes and social security contributions are paid. Sickness benefit can be claimed from the Swedish Social Insurance Agency. The amount of the benefit is calculated based on your income. What other social benefits are available to Swedish entrepreneurs and employees?

1. Sickness benefit - the amount is on average 80% of the company's income, although this is also influenced by a number of criteria, such as the type of business. At the same time, it is worth noting that the benefit is not available if no income is reported from the business. After a successful application, the benefit is granted for a period of 14 days. An extension is possible upon submission to the Social Insurance Agency of a medical certificate of continued inability to work.
2. Maternity allowance - all women working in Sweden are entitled to a maternity allowance. This allowance is paid in the last week of pregnancy and is 80% of the value of the last allowance. For the first child, maternity allowance is paid for 480 days. However, a maximum of 60 days of allowance can be taken before the birth.
3. Carer's allowance - the granting of this benefit is not affected by the turnover of the company. Also, the owner of a sole proprietorship can apply for this allowance. Carer's allowance for a child under one year of age is available for 480 days if the child has Swedish citizenship.
4. Unemployment allowance - a Swedish entrepreneur who closes down his or her business can apply for it.

The Swedish legal system does not indicate a retirement age in any law. As a general rule, the right to a pension is acquired by anyone who reaches the age of 61. Seniors, at their own discretion, may either retire or continue working while drawing only a certain portion of their benefit.

The body in charge of awarding and determining pensions is the Swedish Pension Agency. The general pension benefits in Sweden consist of three components: 1. an income-related pension; 2. a contributory pension; 3. a guaranteed pension.

1. The pension rate, calculated on the basis of income, takes into account:
   • taxes paid and social security contributions up to the age of 16;
   • remuneration for work;
   • income from business activity;
   • parental benefit;
   • unemployment benefit;
   • pension;
   • rehabilitation and training allowance;
   • scholarships.
   Each year, 16% of the above-mentioned sources are allocated to pensions.
2. Contributory pension - the employee or business owner has the right to contribute 2.5 per cent of their annual income each year to a pension fund or an automatic state fund designated by them.
3. Guaranteed pension - this type of benefit was created for people with little or no income. The rate is dependent on:
   • an income-related pension;
   • marital status;
   • length of residence in Sweden.
   Noteworthy here is a minor change with regard to age, as the guaranteed pension only applies from the age of 65.

There is also a so-called occupational pension in Sweden. Not all employers offer this type of benefit; it appears most often in employment in:

• municipalities or regional authorities;
• public administration;
• the private sector for white-collar workers;
• the private sector for manual workers.

In addition to the basic benefit, there is also a sickness benefit. On the other hand, immediate family members are covered in the event of the employee's death. The occupational pension in Sweden is paid either indefinitely or for a specified period of time: 5, 10, 15 or 20 years.

The last type of pension benefit is individual savings. This method is usually used by the self-employed. It involves depositing capital in a bank or insurance company.

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