Sweden is a good, reliable place for doing business. Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. Their employees can also benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk.

MAIN TYPE OF SWEDEN BUSINESS ENTITIES

One easy way to start a business in Sweden is to become a sole trader. This means that only you own the business and you can work alone or employ other people.

  • Trading company/ Partnerships (Handelsbolag)Read more

A partnership (HB) is a common legal form for two or more to start a business together. A partnership is a separate legal entity. This means that the company may be a part to transactions, contracts etc. Despite this, the owners have the responsibility for any liabilities that the company can not afford to pay. The owners must pay tax if the company makes a profit.

AUDIT AND REGULATORY ENVIRONMENT

Swedish law requires companies to keep adequate accounting records. The Bookkeeping Act (1999:1078), abbreviated BFL is the law that governs how accounting natural and legal persons shall maintain its records. Read more

The Act regulates, except those who keep accounts also how records are added up and how it should be presented (basic book and ledger), the records must be terminated (for example, annual or annual report) and how archiving to occur.

If you break the law you are committing fraud. Penalty for false accounting is different depending on the seriousness of the crime, ranging from fines to imprisonment.

Larger companies and companies operating under FSA (finansinspektionen) supervision are required by law to have an approved or certified accountant (kvalificerad revisor). Small companies could choose not to have an accountant.
Only companies that meet at least two of the following requirements may be exempt from the audit requirement:

  • A maximum of three employees
  • Not more than SEK 1,5 million in total assets
  • Not more than SEK 3 million in sales

Through a separate reporting to the Tax authority (Skatteverket), a certified Accountant or an Authorized Accountant can confirm that these have been involved in the establishment of the annual income tax declaration or such Tax Reporting to the Tax authority.

Income Tax Act (SFS 1999:1229)Read more

Income Tax Act governs the taxation of income, and applies to both natural and legal persons. Both the municipal and state income tax are covered by the law.
The Act includes a prohibition of bribery and other improper rewards. What bribe (commissions, fees or charges) is insignificant. If there is a cost that improperly may affect the recipient's duties, it is not deductible.

Money Laundering RegulationsRead more

The Swedish Act on Money Laundering, SFS 2009:62, entered into force 15 March 2009. It is based on the EU Third Money Laundering Directive, the European Parliament and Council Directive 2005/06/EG of 26 October on measures to prevent financial system for money laundering and terrorist financing.

Money laundering law covers banks and other financial institutions, as life insurance and securities firms, credit institutions, insurance, fund management companies and companies that issue electronic money.

The law also covers business and professions outside the financial sector, such as real estate agents, accountants, authorized accountants, lawyers, tax advisors and firms assisting with company formation.

The Act covers all businesses that sell goods for more than 15 000 in cash.

Data Protection ActRead more

Data Protection Act, the regulations concerning privacy and confidentiality in the processing of personal data. In law, the term "processing" a very broad definition, which means that it is forbidden to collect, record, organize, store, adapt, modify, retrieve, use, disclose, transmit, distribute or otherwise make the data available and grouping, combining, blocking, erasing or destroying data.

In April 2016, the EU has decided on a new privacy policy processing regime to be applied in the Member States in May 2018. The rules will entail a lot of changes for those who process personal data.

INDUSTRY INCENTIVES

Please read more at these links www.tillvaxtverket.se and www.verksamt.se.             

PRINCIPAL TAXES

The main business taxes that are levied in Sweden are dealt with in turn below:

Corporation tax is a tax that companies in Sweden have to pay on the profits the company makes. The corporate tax rate is 22%.

Companies doing a taxable loss do not pay tax, and the remaining deficit are moved toward future income from the same source.

Normal tax rate is 25 percent of the sales price without VAT. For a relatively large number of goods and services tax rate is reduced to 12 or 6 percent.

12 percent VATRead more

Food (except alcoholic beverages over 3.5%, tobacco, animal feeds, and more)
Restaurant and catering services (except alcoholic beverages over 3.5%, tobacco)
Hotels and Camping (except conference arrangements, and food included there)
Sale of own artwork
Repairs of bicycles, shoes, leather goods and clothes

6 percent VATRead more

Books, magazines, sheet music, maps and the like.
Passenger transportation in Sweden
Entrance to museums and libraries
Sales of works of art, certain rights to music and more.

Tax FreedomRead more

Tax Freedom valid in Sweden are:
medicine, medical dental and social care, education at primary, secondary, college and university, banking and financial services, insurance, artist fees and more. There are no VAT on stamps and postal services.


Income TaxRead more

Income tax in Sweden consists mainly of state income tax and local income tax.

Tax legislation in Sweden divides income into three categories;

- income from Services - Capital income - Business activities income

For individuals, there is a distribution of taxable income and deductible expenses for the three categories above, resulting in three different net taxes. The net of the income services and business activities are added together and are taxed at the municipal and state income tax, the individual pension and tax of church and burial, while the surplus in the capital income is taxed at a government flat tax of 30 percent.

In Sweden, the statutory employer contributes to 31.42 percent for employees up to 65 years old, and for older employees the payroll taxes are 16.36 percent.

For the income year 2017, there are two legal limits. The lower limit is SEK 452 100. On income above this limit is taken out state income tax by 20 percent. The upper limit is SEK 651 700. On income above this limit is state income tax out by an additional 5 percent, totally 25 percent.

In contrast to corporate taxation, the deficit in services and capital can not be transferred to the next year and deducted from income in that year. Deficits in the capital income reduce to some extent the other taxes by so-called tax credit.

NATIONAL INSURANCE

In Sweden, the social insurance system consists mainly by pension insurance, medical insurance, industrial injury insurance, and unemployment insurance. Social insurance is divided into retirement, survivors, child pension, insurance, sickness and activity, work injury,unemployment and parental charge. Read more at these links (in Swedish)::

www.ekonomifakta.se/sv/Fakta/Arbetsmarknad/Arbetsgivaravgift/.
www.forsakringskassan.se