Key Points
- A Swedish AB (aktiebolag) is a separate legal entity with limited liability; a branch office (filial) is a legal extension of the foreign parent, which remains fully liable for all Swedish obligations.
- The AB requires SEK 25,000 minimum share capital and at least one EEA-resident board member. Non-EEA founders (including UK nationals) cannot be the sole director and must appoint an EEA-resident co-director, or apply for a residency exemption.
- A branch has no capital requirement but cannot retain profits in Sweden; all income flows to the parent and is taxed accordingly, with double taxation treaty coverage dependent on the parent company's country of residence.
- Both structures are subject to Swedish corporate income tax at 20.6% on Swedish-sourced profits, VAT registration obligations, and Skatteverket F-skatt approval requirements.
- For most foreign companies with longer-term Swedish ambitions, an AB is the cleaner structure. A branch suits companies testing the market, running a single Swedish project, or deliberately keeping Swedish operations within a foreign group entity.
Contents
Every foreign company entering the Swedish market faces the same early decision: register a Swedish AB subsidiary, or open a branch office (filial) of the existing company. It is a choice most founders make quickly, often on the basis of which structure sounds simpler or cheaper. The practical consequences, however, run across tax treatment, liability exposure, banking, and the company's ability to retain and reinvest Swedish profits.
Sweden processes around 70,000 new company registrations per year, with foreign-owned companies representing a consistent share of that figure. Bolagsverket and Skatteverket have distinct requirements for each structure, and the wrong choice is not easily corrected after the fact. This guide works through both structures in the detail that matters for a foreign founder making the decision in 2026.
The two routes into Sweden: what each one is
Swedish commercial law offers two primary ways for a foreign company to establish a legal presence in Sweden. A third approach, operating without any Swedish registration, is possible in limited circumstances but creates significant tax and compliance risk; it is not addressed in this guide.
The Swedish AB (aktiebolag)
An AB is a Swedish private limited company: a separate legal person, incorporated under Swedish company law, with its own organisational number, its own tax registrations, and its own balance sheet. It is wholly owned by the foreign parent but is legally distinct from it. The AB files its own tax returns, holds its own bank accounts, and enters contracts under its own name.
This is the most common structure for foreign companies establishing a substantive Swedish presence. The parent company's liability for the AB's obligations is limited to the share capital it has subscribed.
The branch office (filial)
A filial is not a separate legal entity. It is a registered extension of the foreign company, operating under the foreign company's name in Sweden. When the branch enters a contract, the foreign parent enters that contract. When the branch incurs a debt, the foreign parent owes that debt. There is no liability shield between the Swedish operations and the parent.
The branch registers with Bolagsverket and receives a Swedish organisational number, but it does not have its own share capital, its own equity, or its own annual accounts in the AB sense. It must appoint a managing director (verksamhetschef) who holds special authorisation from the foreign parent to represent it in Sweden.
Why the distinction matters in practice
The choice is not primarily administrative. It determines where profits accumulate, how Swedish income is taxed in the parent company's home jurisdiction, what happens to Swedish assets if the parent encounters financial difficulties, and how Swedish banks and counterparties perceive the Swedish entity. For companies expanding from outside the EU, the AB structure is almost always the more bankable of the two.
Liability: where the risk sits
The liability difference between the two structures is the most consequential distinction for most foreign founders.
An AB's shareholders are liable only to the extent of their subscribed share capital. If the AB incurs obligations it cannot meet, the creditor's recourse is to the AB's assets. The parent company's assets are not reachable. This is the foundation of the limited liability structure that makes the AB the standard vehicle for commercial activity in Sweden.
A branch carries no such shield. The foreign parent company is fully and directly liable for every obligation the branch incurs in Sweden. A breach of contract claim against the branch is a claim against the parent. A tax liability arising from the branch's Swedish activities is the parent's liability. If the branch's Swedish operations generate a large unexpected obligation, the parent's global assets are exposed.
Branch liability is unlimited and direct
Several foreign companies opening Swedish branches for cost reasons discover that the liability exposure outweighs the savings when they face a Swedish employment dispute, a commercial contract claim, or a Skatteverket audit. The branch structure has no liability floor.
Not sure which structure fits your situation? 1Office's Sweden advisory team can assess your options before you commit to a registration.
Book a Sweden consultationTax treatment and corporate income tax
Both structures are subject to Swedish corporate income tax at 20.6% on Swedish-sourced profits. The mechanics of how that tax is collected, and how Swedish income interacts with the parent company's home-country tax obligations, differ significantly between the two.
The AB: a standalone Swedish taxpayer
An AB files its own Swedish corporate income tax return (Inkomstdeklaration 2) with Skatteverket. Its taxable income is determined by Swedish accounting rules, applying either the K2 or K3 framework depending on its size. Tax is paid through monthly preliminary installments (F-skatt), with a reconciliation at year end. Dividends paid from the AB to the foreign parent are subject to Swedish withholding tax, though the applicable rate depends on the tax treaty between Sweden and the parent company's jurisdiction.
The branch: income flows to the parent
A branch with a permanent establishment in Sweden files a Swedish tax return and pays Swedish corporate tax on its Swedish-sourced profits. Those profits also form part of the foreign parent's income and may be taxable again in the parent's home country. Whether double taxation is avoided depends entirely on whether Sweden has a tax treaty with the parent's country of residence, and on the specific provisions of that treaty. For companies resident in countries with a strong Swedish tax treaty (Germany, the Netherlands, most EU member states), this is manageable. For companies from countries with weaker treaty coverage, it creates a material tax cost.
The F-skatt requirement applies to both
Both an AB and a branch conducting business in Sweden must apply for F-skatt (F-tax) approval from Skatteverket. Without F-skatt, every Swedish business customer who pays the Swedish entity is legally required to withhold 30% of the invoice amount and remit it to Skatteverket. This is not a theoretical risk: it is a practical obstacle that can disrupt cash flow immediately after registration and deter Swedish corporate clients.
VAT (moms)
Both structures must register for Swedish VAT (moms) if annual taxable turnover exceeds SEK 120,000. The standard rate is 25%, with reduced rates of 12% and 6% for specific categories. For companies selling to Swedish B2B clients, VAT registration is effectively mandatory regardless of the SEK 120,000 threshold, since Swedish business buyers expect a VAT number on invoices.
1Office handles F-skatt, VAT (moms), and employer registration for both Swedish ABs and foreign company branches operating in Sweden.
View tax registration serviceSetup requirements and costs
| Requirement | Swedish AB | Branch (filial) |
|---|---|---|
| Minimum capital | SEK 25,000, fully paid before registration | None. No capital requirement. |
| Bolagsverket registration fee | SEK 2,200 (electronic) or SEK 3,700 (paper) | SEK 3,000 via verksamt.se or by post |
| Board / management | At least one EEA-resident board member required. Non-EEA sole founders must appoint an EEA co-director or apply for a residency exemption (SEK 3,000 application fee). | A managing director (verksamhetschef) with special authorisation from the parent company. |
| Swedish BankID | Electronic registration via verksamt.se requires Swedish BankID. Non-residents typically use a formation agent with power of attorney. | Same requirement applies to branch registration via verksamt.se. |
| Registered address | A Swedish address is required as the company's registered seat. Can be a virtual office address. | A Swedish address is required for the branch registration. Can be a virtual office address. |
| Articles of association | Required (bolagsordning). Standard template available from verksamt.se. | Not required. The parent's existing constitutional documents suffice. |
| Auditor | Not required below two of three thresholds: 3 employees, SEK 1.5m balance sheet, SEK 3m turnover. | May be required depending on the size of Swedish operations; check at registration. |
| Timeline (electronic) | 1 to 4 weeks for Bolagsverket processing; bank account opening adds further time. | Similar processing time via verksamt.se. |
Indicative setup cost
Swedish AB
Indicative setup cost
Branch (filial)
EEA residency requirement for AB directors
At least one board member of a Swedish AB must be resident in the European Economic Area. Non-EEA nationals (including UK passport holders post-Brexit) cannot serve as the sole director unless they obtain a residency exemption from Bolagsverket, which carries a SEK 3,000 application fee and is not guaranteed. 1Office can provide a qualified Swedish contact person who satisfies the residency requirement as part of the company formation service.
1Office offers a ready-made Swedish AB for founders who need a Swedish company number immediately, without waiting for Bolagsverket processing.
View ready-made ABOngoing obligations after registration
Both structures carry annual compliance obligations with Bolagsverket and Skatteverket. The obligations are broadly comparable, though the AB's are framed around its own standalone financial statements while the branch files returns that report its Swedish activities as a subset of the parent's global operations.
Swedish AB annual obligations
- File annual accounts (årsredovisning) with Bolagsverket within seven months of the financial year end. The accounts must be signed by all board members and adopted at the annual general meeting (bolagsstämma), which must be held within six months of year end.
- File the corporate income tax return (Inkomstdeklaration 2) with Skatteverket, due on 1 July for companies with a 31 December financial year end (later for companies with other year-end dates).
- Pay monthly preliminary corporate tax (F-skatt installments) based on estimated annual profit. The amount is adjusted at year end based on the actual tax return.
- File VAT returns monthly or quarterly and remit moms collected.
- File employer declarations (arbetsgivardeklaration) monthly if the company has Swedish payroll.
- Maintain bookkeeping records for seven years under the Swedish Bookkeeping Act (Bokföringslagen).
Branch annual obligations
A registered Swedish branch must file a Swedish corporate tax return for its Swedish-sourced income. It is not required to file separate annual accounts with Bolagsverket in the same way as an AB, but it must keep Swedish bookkeeping records and comply with the same VAT and employer declaration requirements. The parent company's annual accounts must be translated into Swedish and filed with Bolagsverket within one month of adoption by the parent's governing body, within a maximum of seven months of the parent's financial year end.
1Office handles annual accounts, corporate tax returns, VAT filings, and ongoing bookkeeping for both Swedish ABs and branches.
View accounting servicesWhich structure fits which situation
Scenario A
Long-term Swedish market presence with local clients
The company intends to hire Swedish employees, sign multi-year contracts with Swedish clients, open a Swedish bank account, and retain profits in Sweden for reinvestment.
Structure: Swedish AB
The AB's limited liability protects the parent. The AB can retain and accumulate profits. Swedish banks, corporates, and public tenders generally expect a Swedish AB rather than a branch. The AB is the standard vehicle for this scenario.
Scenario B
Single Swedish project or short-term contract
The company has won one Swedish contract or is testing a Swedish client relationship. The Swedish presence is expected to last one to two years. No Swedish hiring is planned; the work will be performed by employees based abroad.
Structure: Branch (filial)
A branch avoids the share capital requirement and can be closed more cleanly when the project ends. The economic employer rules and permanent establishment tests still apply; get these assessed before assuming a branch avoids Swedish tax entirely.
Scenario C
Non-EEA founder, no EEA-resident director available
The company is owned by a non-EEA national (UK, US, UAE, etc.) who cannot or does not want to appoint an EEA co-director. The goal is to access Swedish F-skatt and start invoicing Swedish clients.
Structure: AB with 1Office contact person, or residency exemption
1Office can provide the EEA-resident contact person required for AB formation, or file the Bolagsverket exemption application on your behalf. This is the fastest route to a compliant Swedish AB for non-EEA founders.
Scenario D
Parent company wants Swedish profits consolidated in its home jurisdiction
The parent company is in a jurisdiction with a strong Sweden tax treaty and wants Swedish income to flow directly to the parent rather than sit in a separate Swedish entity.
Structure: Branch (filial), if treaty coverage is confirmed
The branch's income flows to the parent. If the treaty prevents double taxation, this avoids the second layer of entity management. Confirm treaty coverage with a tax adviser before proceeding; not all treaties eliminate branch-level double taxation.
Scenario E
Fast market entry, no time for AB formation process
The company needs a Swedish organisational number and F-skatt in days rather than weeks. A large Swedish client requires proof of Swedish registration before signing.
Structure: Ready-made AB
1Office's ready-made AB provides a pre-registered Swedish AB with an existing organisational number. F-skatt and VAT registrations can follow immediately. The company name and articles of association are updated to match the new owner.
Scenario F
Construction, restaurant, or regulated industry
The company will operate in an industry with Swedish-specific licensing and reporting requirements: ID06 card obligations for construction, cash register requirements for retail and hospitality, food handling permits.
Structure: Swedish AB (usually)
Industry-specific obligations apply to both structures, but Swedish authorities and industry bodies (Byggbranschen, BKR) tend to deal more straightforwardly with Swedish ABs. 1Office has construction-specific setup packages for this profile.
How 1Office handles Swedish company setup
1Office has operated in Stockholm since the company's founding and handles the full registration process for both Swedish ABs and branch offices, including the EEA residency requirement that creates the most practical friction for non-European founders.
Company formation
Swedish AB formation
Full AB registration with Bolagsverket, articles of association, shareholder documentation, and F-skatt application. Includes EEA-resident contact person for non-EEA founders.
View service →Fast entry
Ready-made Swedish AB
Pre-registered AB with an existing Swedish organisational number. Transfer and rename in days rather than weeks. Suited to founders with an urgent client or contract deadline.
View ready-made AB →Branch registration
Branch office (filial) formation
Full filial registration for foreign companies opening a Swedish branch. Includes Bolagsverket registration, managing director documentation, and F-skatt application.
View branch service →Tax registrations
F-skatt, VAT and employer registration
Skatteverket registrations for F-tax, moms, and employer status. Can be handled alongside company formation or as a standalone service for companies already registered.
View tax registrations →Virtual office
Stockholm registered office address
A central Stockholm address that satisfies the Swedish registered office requirement for both ABs and branches. Post forwarding and official correspondence handling included.
View address service →Non-EEA founders
Residency requirement exemption
Application to Bolagsverket for an exemption from the EEA-residency board requirement. For non-EEA nationals who need to serve as the company's sole director.
View exemption service →Register your Swedish company with 1Office
AB or branch, ready-made or new: 1Office handles the complete Swedish registration process, including EEA-residency requirements, F-skatt, VAT, and your Stockholm registered office address.
Frequently asked questions
Can I register a Swedish AB without being physically present in Sweden?
Yes. 1Office handles the full registration process remotely, using a power of attorney from the foreign founder. Electronic registration via verksamt.se requires Swedish BankID, which non-residents typically cannot obtain directly; the formation agent uses its own BankID credentials on the founder's behalf. You do not need to travel to Sweden at any stage of the registration process.
I am a UK national. Can I be the sole director of a Swedish AB?
Not automatically. Since Brexit, UK nationals are no longer EEA residents for the purposes of Swedish company law. At least one board member of a Swedish AB must be EEA-resident. A UK-based founder either needs to appoint an EEA-resident co-director, or apply for a Bolagsverket residency exemption. 1Office can provide an EEA-resident contact person as the required board member, or handle the exemption application on your behalf.
How long does F-skatt approval take after registration?
F-skatt applications to Skatteverket are typically processed within two to four weeks of submission, though Skatteverket may request additional information for newly formed companies or non-resident owners. The practical implication is that a company may have its Bolagsverket registration number before F-skatt is confirmed. Swedish business clients should be informed of the pending F-skatt status to avoid invoice withholding obligations arising in the interim.
Does a Swedish branch always create a permanent establishment?
Not automatically. Whether a branch creates a Swedish permanent establishment depends on the nature of the Swedish activities, the applicable tax treaty, and in some cases on the economic employer rules introduced for temporary assignees. A branch registered with Bolagsverket is a formal presence, but Swedish tax law and treaty provisions determine whether that presence constitutes a taxable permanent establishment. This assessment should be made before choosing the branch structure, particularly if the goal is to avoid Swedish corporate tax on the Swedish activities.
Can I convert a Swedish branch into an AB later?
Not through a simple conversion. The two structures are separate legal forms under Swedish law. Moving from a branch to an AB involves forming a new AB, transferring the Swedish operations (contracts, employees, assets) into the AB, and then deregistering the branch. This is straightforward in principle but involves legal, accounting, and potentially tax implications depending on what has accumulated in the branch. It is worth choosing the right structure from the start rather than planning to convert.
What is the SEK 25,000 share capital requirement in euros?
At November 2026 exchange rates, SEK 25,000 is approximately EUR 2,200. This capital is paid into the company's bank account before or at formation and remains in the company as equity. It is not a fee or a sunk cost: it becomes part of the AB's working capital and can be used for business expenses after registration. The minimum is unchanged from the reduction introduced in 2010 (from SEK 100,000).
