BUSINESS IN SWEDEN
According to official statistics, more than 30% of companies listed on the Swedish stock exchange are owned by foreigners from countries outside the European Union. This is not surprising. After the financial crisis in the early 1990s, Sweden drew some conclusions, allowing for an open economy with a liberal approach to trade.
Today, entrepreneurs from different countries are quite willing to open their business in Sweden. This is especially true in the IT sector. Stockholm is known to be one of the top European cities for launching new companies in this sector. Actually, the overwhelming part of the Swedish economy is based on innovation and production of high-tech products.
Sweden has been a member of the EU since 1995, but after the referendum in 2003 the country chose not to switch to a single European currency, leaving the Swedish krona in circulation. This was largely due to citizens' concerns that the introduction of the euro could affect social security, which is among the highest in the world.
The high competitiveness of Swedish goods allows the country to successfully enter foreign markets and increase trade relations. The main share of exports goes to Scandinavian neighbours, especially Norway (more than 10%), as well as Germany, the UK and the USA. The country has a fairly stable banking sector with low rates on commercial loans. In this article, let's try to understand the peculiarities of business immigration to Sweden.
CONTENTS
How to start a business in Sweden
In the annual ranking of Doing Business, Sweden ranks 10th out of 190 countries in terms of accessibility of opening and ease of doing business. Among European countries, it is the fifth result, including after its regional neighbours Denmark and Norway. Starting a successful business project in Sweden depends primarily on 3 critical factors:
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Maximising in-depth knowledge of the Swedish market for goods and services. One of the distinctive features of Sweden is a fairly even distribution of the country's GDP in different regions. That is, the future entrepreneur does not necessarily need to focus on major cities such as Stockholm or Malmö. Active business life is boiling in other parts of Sweden. In the study of the market will help sites of local trade organisations that exist in almost any direction of business.
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Proper business plan. After choosing the sphere of activity, the key point is to set specific goals and objectives for the future enterprise. The document should be concise and understandable. Especially if it is planned to attract borrowed funds from Swedish investors or local tanks.
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Financing. Quite a logical factor. For entrepreneurial activity in Sweden and the realisation of the business plan in any case will need start-up funds. The amount of investment depends on the specific idea and the businessman himself.
The next mandatory step in setting up a business in Sweden by foreigners is to obtain the appropriate authorisation from the local authorities, in other words, a residence permit. This document does not allow employment in a Swedish company and is designed only for business activities in Sweden for a period of more than 3 months. The Swedish Immigration Agency has the following requirements for entrepreneurs from abroad:
Copies and original of a valid passport.
Business experience.
Knowledge of English or Swedish language, confirmed by a certificate.
Ownership of at least 50% of the business and, as a consequence, responsibility for the company's operations.
Products and services must be produced in Sweden. Plus provide evidence of business contacts or customer base in the country.
Possession of financial resources sufficient for at least two years' residence in Sweden for the businessman and his family members. The sources of income must be legal and documented. The amount of funds for the businessman is not less than 200 thousand Swedish kronor, for the spouse 100 thousand kronor, for each child 50 thousand.
Ability to prove the prospects of the business, which within two years will be able to bring profit, and thus provide the entrepreneur and his family with funds for further residence in Sweden.
If the above points are fulfilled, the immigration agency will carefully consider the business plan of the foreigner and make the appropriate decision on granting a residence permit card in Sweden. Usually the permit is issued for one year, with the right to extend it for a similar period. It is mandatory to reside in the country for at least 6 months each year.
After two years, if the business is successful, the foreigner has the right to apply for permanent residence. And after 5 years of residence in the country there is a basis for registration of Swedish citizenship.
In addition, to the positive factors of business immigration to Sweden can be attributed the possibility of moving the family of the entrepreneur and register the company without the participation of a Swedish resident, although an authorised person from the local residents may be needed.
Procedure and cost of business (company) registration in Sweden
Obtaining a certificate from a Swedish financial institution (bank) on payment of the initial value of the company shares. The procedure is free of charge and takes 1 to 3 days.
Submitting an application to the Swedish company registration office and choosing a unique name. You can do this here. The cost of the procedure for electronic applications is 1,900 kronor, for paper applications 2,200 kronor. The registration period is up to two weeks.
Registration with the Swedish tax authorities. Here is a link to the official website. After that the company will be assigned an identification code and you can start working.
If necessary, it is necessary to obtain a permit for a certain type of activity.
Almost any procedure related to the registration of a company in Sweden can be done online. And this is an indisputable advantage compared to other countries.
Forms of business ownership in Sweden
Before you start the business registration procedure, you need to decide on the form of ownership for your new company. The most common types of businesses in Sweden are:
- individual entrepreneur (IE);
- limited liability company (LLC);
- trading partnership or limited partnership (TP);
- economic association (EA);
- a branch of a foreign company (relevant for immigrant businesses).
Let's dwell on some of them in more detail:
IE. There are no requirements for a minimum authorised capital. There is no need to register with the Swedish Companies Office, the tax office is sufficient. The entrepreneur is personally liable for all obligations of the company. Tax deductions are made monthly in advance payments.
LLC. The minimum authorised capital must be at least 50 thousand kronor. Registration for one or more natural or legal persons is permitted. The liability of shareholders is limited to the share of participation in the authorised capital. Exceptionally, board members and directors may be held liable for non-payment of taxes.
TP. A form of ownership for joint business of several individuals and legal entities. There are no requirements for the authorised capital, but the owners are jointly and severally liable for the company's obligations with their personal property. The tax authorities impose a special tax for this type of company.
Taxes in Sweden
Sweden has one of the most transparent and efficient tax systems in Europe. This is an additional incentive to attract investors and businessmen from different countries. To do business in Sweden, it is necessary to register with the tax authorities and obtain a special form F certificate.
This is a confirmation that the company is engaged in commercial activities and is fully responsible for the payment of taxes and fees. Very often business partners and potential clients check whether the company has a tax certificate F to determine the reliability of the company and possible business risks. In the absence of this certificate, tax form A is used.
The main types of tax payments and contributions are paid monthly and entered in the tax return. In addition, a distinction is made between state and municipal taxes.
Rates of main taxes in Sweden in 2024
- Corporate income tax – 20.6% (from 1 January 2021).
- VAT. General rate – 25%, reduced rates – 12% (food, sale of personal artwork), 6% (printed publications, passenger transport) and 0% (prescription drugs or sold in hospital; printing services; domestic and international passenger transport).
- Income tax – progressive rate of up to 52.1 per cent.
Despite a fairly flexible tax system, you will likely need the help of a local tax advisor to minimise costs and maximise your business returns in Sweden.
Destinations for business in Sweden
There are two main factors to consider when choosing an area for business in Sweden, in addition to personal qualities and experience.
The need to obtain a licence.
High innovation potential and development of information technology.
In the first case, you should carefully read the list of activities for which a licence is required (see link above). For example, this applies to medicine, food, gambling, agriculture, construction, energy. Very often not only foreigners, but also Swedes themselves cannot obtain a licence.
The second factor concerns serious competition on the Swedish market in the IT and high-tech sector. In order to enter this promising industry, one must have sufficient advantages and experience in this field.
To avoid major losses in case of failure, it is best for newcomers to start a small business in Sweden. Otherwise, the flight of fancy has no limits and depends entirely on the future Swedish businessman. The main thing is to study the demand, identify the target audience and find a worthy idea. Popular spheres are real estate, transport, catering, services (beauty salon, house and office cleaning), tourism and hotel business.
Business visa to Sweden
After a favourable decision of the Swedish Immigration Bureau to grant a residence permit, a long-term business visa to Sweden must be obtained, allowing you to stay in the country for more than 90 days. This is done at the Swedish Consulate in the place of residence of the foreigner.
Documents for a business visa to Sweden
- The application form.
Original passport and copies of all pages.
Documentary proof of business in Sweden (residence permit card).
Two colour photos (35x45 mm).
Payment of visa fee.
If necessary, the Swedish Embassy staff may require additional information. The procedure of business immigration to Sweden will be considerably simplified by obtaining education in one of the Swedish universities.
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