When starting your operations in Sweden, you will need to choose a legal form most suitable to your business plan. In this summary, we will briefly compare the pros and cons of three legal forms to help you make the right decision.
As a foreign entrepreneur in Sweden, you can choose between three main options:
- Do business with your foreign company
- Register a Swedish branch for your foreign company
- Create a public limited company in Sweden (Swedish AB)
Below we have listed some pros and cons for each option to help you make the right decision.
Pros and cons of different legal forms in Sweden
| Foreign company | Swedish branch | Swedish public limited company (AB) | |
| Pros | • Suitable for a short-term business activity • Suitable if you already have existing business partners and/or clients • Easier to maintain (accounting) • Not that many obligations | • It is easier to maintain than a public limited company (AB) • Suitable for a long-term business activity • More trustworthy than a foreign company | • Suitable for a long-term business activity • Suitable choice if you are planning to expand your business • Greater trustworthiness among Swedes • The risks are lower as the businesses are kept separate • The most competitive legal form compared to a foreign company or legal branch |
| Cons | • Not that trustworthy among Swedes • The risks are higher as the company is active in multiple countries at the same time | • You will have an accounting obligation in Sweden • It will affect the results of your foreign company | • You will have an accounting obligation in Sweden • More expensive than the other two forms • You will have more responsibilities compared to the other two forms
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So, which legal form to choose?
As you can see, all three legal forms have their pros and cons. Therefore, the right form depends mostly on your plans and goals in Sweden.
If you need to carry out a short-term project in Sweden and you already have existing business partners and clients, the best option is definitely to operate with your existing company. This option is easier to maintain and has lower costs as it doesn’t require establishing a new entity and the accounting is easier. But there are still some rules you have to follow (tax registrations, legal address and accounting). Read more: Starting package for a foreign company
On the other hand, if the project is more long-term and needs finding some local partners and showing your trustworthiness, you might consider opting for registering a branch. Maintaining and establishing a branch can be more expensive than operating with your existing foreign company, but it is definitely easier to maintain than a limited liability company. But keep in mind that having a branch will affect the results of your foreign company.
However, if your goal is to do long-term business in Sweden and maybe even expand at some point, registering a limited liability company is the right choice for you. It’s also the most competitive legal form, looks good for all potential partners and keeps all the risks lower as the businesses are kept separate. As for cons, you will have more obligations (like your accounting must be kept in Sweden), but all the other obligations (like tax registrations, legal address and contact person) are the same for the first two legal forms anyway. For this option, we can also recommend a full starting package for new entrepreneurs that already includes all the registrations, state fees, legal address and support regarding accounting.
Still not sure which legal form to choose for your business in Sweden?
1Office can help you decide which option is best for your situation and what are the main differences between the business forms.
Contact us or book a personal Starting business in Sweden consultation.
