As a new entrepreneur, choosing the right legal form for starting a business in Sweden is important to meet your future goals. Therefore, we will introduce the main legal entities in Sweden and offer a couple of suggestions to make the best choice considering your plans. We will also give an overview of the taxes in Sweden and introduce the tax registration process.

1. Why Start a Business in Sweden?
2. Choosing the Right Legal Form
3. Launching a Business as a Foreigner
4. Market Entry Strategies
5. Financing Your Swedish Business
6. Sweden vs. Finland and the UK
7. Taxes, Accounting & Compliance
8. Conclusion & Next Steps

1. Why Start a Business in Sweden?

Sweden is consistently ranked among the top countries for ease of doing business. Entrepreneurs are drawn to its:

• Strong innovation ecosystem
• Transparent legal framework
• Skilled, multilingual workforce
• Competitive corporate tax environment (20.6%)
• Gateway to the Nordic market and the EU

Whether you’re a startup founder, digital nomad, or established company expanding to the Nordics, Sweden offers a stable and future-oriented environment for business growth.

2. Choosing the Right Legal Form

Sweden offers several business structures. Here’s a quick comparison:

Open an Aktibolag (AB) in 2025

A public limited company is the most common legal entity in Sweden and is registered in the business registry. Here’s what you need to know:

• Share capital requirement: SEK 25,000

• Registration fee: State fee

• Founding documents: Application, founding act, articles of association, and bank certificate

• Processing time: 5–10 business days (after capital deposit)

To register:

• Reserve 3 potential company names.

• Provide a legal business address (home addresses are not accepted).

• Appoint a board: either 3 members or 1–2 members plus one deputy.

If no board member resides in the EEA, you must appoint a Swedish contact person. Explore our contact person service.

Note: Opening a bank account for depositing share capital is often the trickiest part — early coordination with a bank is advised.

1Office also has a starting package for new entrepreneurs, including a ready-made company, tax registrations, and legal address with a contact person service for a year. The necessary founding documents are the application for registration, the founding act, the articles of association, and the original proof of certificate from the bank. All the documents must be submitted to the business registry in physical form. The state fee for founding a public limited company in Sweden is currently 1,900 SEK for online applications.

Establishing a Branch in Sweden

A foreign company’s branch has to be registered in the business registry. We can also help you with branch registration.

Key points:

• A branch has no share capital requirement.

• The foreign parent company is fully liable for the branch’s obligations.

• A local executive director must be appointed.

• If the director lacks Swedish ID or residency, a legal contact person is required.

Registration typically takes 5–10 business days.

The branch must maintain separate accounting in accordance with Swedish standards.

A foreign company and a permanent establishment

Doing business with a foreign company is also very common in Sweden. Then you must consider if the company will have a permanent establishment in Sweden or not.

A permanent establishment will determine if the company must pay taxes in Sweden. You should notify the Swedish tax office if you know that the company will have a permanent establishment in Sweden before you establish the company.

When will a foreign company have a permanent establishment in Sweden?

A permanent establishment occurs when:

• You have a physical presence in Sweden (e.g., office, warehouse).

• Activities continue for more than 6 months (common in construction).

• Seasonal work recurs annually (e.g., berry picking, forestry).

• A local agent can negotiate or sign contracts on your behalf.

• You’re renting workforce to a Swedish company — this creates a permanent establishment from day one.

Unsure if your business qualifies as a permanent establishment? 1Office can help you evaluate your structure and register accordingly.

3. Launching a Business as a Foreigner

Sweden welcomes foreign entrepreneurs, but there are some specific requirements to consider:

Residency & Identification

• EU/EEA citizens can start a business without restrictions.
• Non-EU citizens typically need a residence permit for self-employment.
• A Swedish personal identity number (personnummer) or coordination number is often required.

Business Registration Process

• Reserve a company name with the Swedish Companies Registration Office (Bolagsverket).
• Submit the company registration and articles of association.
• Register for taxes and VAT with the Swedish Tax Agency (Skatteverket).

Local Representation

• If no board member resides in the EEA, a Swedish contact person must be appointed.

1Office helps foreign founders navigate registration, appoint local contact persons, and handle compliance issues smoothly.

4. Sweden Market Entry Strategies

When entering the Swedish market, businesses typically choose between starting a new company or acquiring an existing one.

Starting a New Company

• Offers full control over branding and operations.
• Requires more time for setup, licensing, and customer acquisition.
• Good option for startups with a clear niche or product.

Buying an Existing Company

• Faster market entry and existing customer base.
• Often includes existing contracts, assets, or staff.
• Requires due diligence to assess risks and liabilities.

Strategic Tips

• Consider a virtual office or Swedish branch to test the market.
• Partnering with local professionals accelerates adaptation and compliance.

5. Financing Your Swedish Business

Sweden offers a mature financial ecosystem with both private and public funding options available for new and growing businesses.

Equity & Venture Capital

• Angel investors and VC funds are active, especially in tech, sustainability, and life sciences.
• Invest Stockholm and Vinnova often co-finance innovative projects.

Bank Loans

• Available through major banks like SEB, Nordea, and Swedbank.
• Requires a solid business plan and often a personal guarantee.

Government Grants

• Almi Företagspartner provides loans and business development services.
• Innovation grants are available through Vinnova and Tillväxtverket.

EU Funding

• Businesses registered in Sweden can access various EU funding instruments such as Horizon Europe or the EIC Accelerator.

6. Sweden vs. Finland and the UK

Sweden is often compared with other startup-friendly markets in Northern Europe.

Key Takeaways:

• Sweden combines access to the EU market with strong startup infrastructure.
• Finland has lower share capital but similar procedures.
• The UK is fast to start but lacks EU access post-Brexit.

1Office can advise you based on where your target customers, funding sources, and operations are best aligned.

7. Taxes, Accounting & Compliance

Read the full guide covering VAT registration and taxes HERE.

The Main Taxes in Sweden

Social Tax (Employer Contributions)

• Standard rate: 31.42%—covers national pension, health and parental insurance, work incapacity, job market fee, and payroll tax.

• Reduced rate: 10.21%—for employees born between 2002–2004 and pensioners born 1954.

• For foreign employers without a permanent establishment: 19.8%—as they are exempt from the job market fee.

Personal Income Tax (Employees)

Sweden applies progressive income tax, combining local and national components:

• Local income tax: 28–35%, varies by municipality.

• National income tax:

  • 0% on annual income up to SEK 523,199.

  • 20% applies to income from SEK 523,200 and above.

Payroll Tax Calculation Methods:

1. Tax tables: Provided by the Swedish Tax Agency; employees must inform their employer of their specific table.

2. Flat rate (30%): Used when the employee doesn’t provide their tax table number.

 Corporate Income Tax

• Rate: 20.6%.

• Prepaid monthly based on estimated annual profit.

• A three-month grace period is available for new companies before tax payments begin.

Important notes:

• You must state a realistic estimated profit during tax registration—claiming no profit is not accepted.

• Profit estimates can be revised anytime.

• At year-end, you must submit expected profit for the next year and file your actual tax declaration the following year.

• The Tax Agency will issue a final tax assessment:

  • Refunds for overpaid tax: issued within two weeks.

  • Additional tax due: payable within three months.

 Value-Added Tax (VAT)

• Standard rate: 25%

• Reduced rates:

  • 12%: Hotel stays, restaurants, and catering.

  • 6%: Books, newspapers, cultural and sports event tickets.

• Exempt sectors: Education, healthcare, banking, and insurance.

Special Case – Reverse Charge (Construction):

• B2B transactions between construction companies are VAT-free (0%), and the buyer accounts for VAT under the reverse charge mechanism.

Dividend Taxation

For Swedish Tax Residents (Closely Held Companies – 3:12 Rules):

• Lower Limit (Favorable 20% Tax):

  • Simplified rule: 2.75 income base amounts = SEK 207,000 for 2025.

  • Main rule: Up to 50% of total paid salaries.

• Intermediate Bracket: Taxed as ordinary income, based on progressive income tax rates.

• Above the Upper Limit: Taxed at a flat 30% capital gains tax.

For Non-Residents:

• Tax treaty applies: Dividends typically taxed at 15%.

• No tax treaty: Subject to standard 30% withholding tax.