Business in Sweden

People emigrating to Sweden, can not only take up a job in Sweden, but also start their own business. Before deciding to run your own business and before choosing the type of business, it is advisable to familiarize yourself with the current laws that apply to people from the European Union and the European Economic Area, as these are the laws that govern running a business in Sweden. The entrepreneur should know his/her rights and obligations, the deadlines he/she has to meet, the taxes that will apply to his/her company, how to account for the economy, and he/she should know step by step all the most important business procedures. Unfamiliarity with the basics can lead to unwanted complications and problems. To begin with, it is worth mentioning that for citizens of the European Union and the European Economic Area, including Poles, there is a simplified business registration. This is why entrepreneurs are so keen to establish companies in Sweden. The process of registering a company in Sweden, however, depends on the type of company – a sole proprietorship requires different registration conditions, a different amount of all fees or submission of different documents than any of the Swedish companies.

The types of business in Sweden are:

• Enskild nӓringsidkare - sole proprietorship (self-employment),
• Aktiebolag - limited liability company (AB),
• Handelsbolag - commercial company (HB),
• Enkelt bolag - civil partnership,
• Filial - subsidiary of a foreign company,
• Kommanditbolag - limited partnership (KB).

It is also necessary to mention the three other forms of business activity, which are: the business association (ekonomisk förening), the foundation (stiftelse) and the European Joint Stock Company (Europabolag). However, these are forms that are not very popular with foreign entrepreneurs.

Infographic 'The most common types of Swedish companies' The sole proprietorship (Enskild nӓringsidkare) is one of the most popular business types chosen in Sweden not only by entrepreneurs from Poland, but also from all over the world. The key fact that determines this is being self-employed and being able to have a real impact on all aspects of the company's development. A sole proprietorship (self-employment) is a business that can be registered quickly and without major formalities. An additional advantage is that there is no need for start-up capital (unlike companies). However, it is worth remembering that the owner of a sole proprietorship is entirely liable for the company's obligations with his/her own assets (there is no separation of personal and company assets). It is also related to the fact that a sole proprietorship settles income tax on the same basis as natural persons, as it has no legal personality.

In order to register an Enskild näringsidkare company and work on a self-employed basis, it is necessary to obtain a statistical number and a VAT number. To do this, the following documents must be sent to the tax office (Skatteverket, www.skatteverket.se):

• a completed application form for foreign entrepreneurs,
• a Polish certificate from the Social Insurance Institution (ZUS) stating that you are not in arrears,
• a copy of an identity document (e.g. passport or identity card),
• Polish certificate of regular tax payment.

All certificates from Poland should be translated into Swedish by a sworn translator. The documents must be sent by post to: Swedish Tax Agency (Skatteverket), Utlandsskattekontoret, SE-205 31 Malmö, Sverige. The registration procedure at the Skatteverket takes between two and six weeks (from the date of application).

If the entrepreneur wishes to have his/her company name registered, it is necessary to register it also with the Swedish Companies Registration Office (Bolagsverket). The cost of registering a Swedish sole proprietorship is SEK 1000-1400 (Swedish kronor).

It is worth remembering that if a sole proprietorship in Sweden will sell services and goods, it becomes liable for VAT. Its rates are 25%, 12% and 6%. The VAT return in Sweden can be submitted monthly, quarterly or annually. The establishment of a Swedish company requires the owner to meet the following conditions:

• age of majority,
• no debts,
• no criminal record,
• legal capacity,
• legalization of residence in Sweden at the Migration Board (Migrationsverket),
• deposit of start-up capital in a company bank account.

Those wishing to set up a company in Sweden are required to sign (in the presence of a notary) a memorandum of incorporation and, within six months, be entered in the Companies Register (Bolagsverket).

Infographic "To register a company..."

Every Swedish company (except civil law companies) is subject to corporation tax, which is 28%. As with a sole proprietorship, a company that sells services or goods is additionally subject to VAT - 25%, 12% or 6%. This is settled on the basis of a tax return to be submitted monthly, quarterly or annually. It may be established by at least two natural persons (not legal entities). As it has no legal personality, it is often considered a contract between partners. The owners are liable for the company's debts or losses with all their assets. In Polish law, the equivalent of this company is a general partnership. The rules governing Swedish commercial companies are contained in the General Partnerships and Civil Partnerships Act (Swedish Lag om handelsbolag och enkla bolag). This company may be established by two legal or natural persons (or more). A commercial company has legal personality and the liability for any debts is shared equally between the partners. This company is required to prepare formal annual reports. The accounting year equals the calendar year if at least one of the partners is an individual (an important condition!). The income of the partnership is accounted for during the annual accounting of the individuals or companies that are partners in the partnership. A limited partnership in Sweden is a company in which one or more partners have liability limited to the amount invested in the company's activities (they are called limited partners). However, it is important that at least one general partner must have unlimited liability. A limited liability company in Sweden has legal personality. There is no limit on the number of persons who can form it - it can be one natural person or several legal persons. The shareholders of a limited liability company are not personally liable for its obligations. A very specific, but also important, condition is that, prior to its official registration, the company must establish cooperation with an accountant auditor whose competence will be to assist in the preparation of the annual reports that are mandatory for this company. In the case of a limited liability company, the accounting year does not have to be a standard one - 1.01-31.12. In Sweden, the country of origin of the person who wishes to establish a company is the base point on which the further steps of business registration depend. As Poland is a member of the European Union and the European Economic Area, Poles who wish to set up their own business in Sweden only need to legalize their residence and confirm their ability to support themselves. A residence permit, for five years, is issued by the Migration Authority - Migrationsverket. However, after two years, this office examines the financial situation of the company and, if it is unstable, the permit may be revoked.

Before the official registration steps begin, a personnummer identification number (form SKV 4620) must also be applied for at Skatteverket.

Infographic: "A Swedish company in three steps".

The initial step an entrepreneur must take is to choose the type of business. You need to consider whether you want to go it alone and run the most popular company - a sole proprietorship - or, together with a partner, set up a company.

You then need to register with the Swedish Companies Register - Bolagsverket. Owners of sole proprietorships are not obliged to do so, but most choose to do so because it keeps the company name registered.

The last step is to register with the Swedish Tax Agency - Skatteverket, which will result in a coordination number (a temporary identification number that is needed for official applications). Registration with the Skatteverket can be done electronically (https://www.skatteverket.se) or at the office (using form SKV 4632).

It is also worth knowing that:
- a Swedish company must be registered for VAT (moms) and business tax (f-skatt);
- an entrepreneur with employees must register as an employer;
- a person who is both an employee of another company and runs his or her own company must register as an FA taxpayer - a combination of activity tax (f-skatt) and employment tax (A-tax). The income tax with which every Swedish company is charged consists of national tax and local tax, which includes municipal tax (kommun) and regional tax (landsting). The amount of local tax depends on the region in which a person resides. Its rates range from 29.2% to 35.2%.

Infographic: "What makes up income tax in Sweden?"

Income tax rates in Sweden depend on annual income and the region of the country, and are:

• income less than SEK 490 700 - 0%,
• income between 490 700 and 689 300 SEK - 20%,
• income above SEK 689 300 - 25%.

Corporate income tax, on the other hand, has a uniform rate and is 28%. The basis for income tax on a Swedish company is the amount of income for the year, which the entrepreneur estimates when registering the companies, and based on this, the tax office calculates the advance payments for income tax. It is worth remembering that if the estimated profit of the company was greater than the actual profit, the overpaid tax will be refunded. However, if the actual profit was greater, the arrears will have to be repaid.

Infographic: "Income tax advance payment deadlines in Sweden".

The preliminary tax return, which is created during the tax year, may be adjusted. The actual return, which forms the basis for calculating the amount of tax for the year, is not subject to correction. The tax return is sent by the Swedish Tax Agency to an electronic mailbox (which must be created by 27 February) or in paper form (to the address provided during registration). Between 4 and 11 March, the returns usually arrive in the mailboxes and between 13 and 15 April, paper versions are sent. The online tax return must be submitted by 31 March and the paper return by 4 May. The following VAT rates apply in Sweden:

• the standard rate, which is 25 per cent,
• the rate for food, hotels, catering etc., or 12 per cent,
• the rate for books, transport services and magazines, i.e. 6 per cent,
• the rate covering medicines, international transport, etc., i.e. 0 per cent.

Infographic: "VAT rates in Sweden"

Swedish companies should register for VAT no later than 14 days before starting their business. It is mandatory for companies that:

• import and export goods with customs clearance in Sweden (to EU and non-EU countries),
• are involved in the transport of persons across Swedish territory,
• provide real estate services in Sweden, including construction services.

Registration for VAT can be done electronically, via skatteverket.se, or at the office using form SKV 4620.

It is worth remembering that there is no obligation to register as a VAT payer in Sweden if all the company's customers are registered for VAT in Sweden. Swedish companies can do their accounting themselves or with the help of a qualified accountant. Invoices in Sweden can be issued using certified software, but it is worth knowing that the use of Microsoft Excel is prohibited. Swedish invoices can only be issued by a company that has a business bank account and a special identification number, but these are basics related to registration, so this is not a problem. What is very important is that, according to the regulations, the date of the actual delivery of the goods or services to the customer must be on the invoice.

Infographic: "What should be on the invoice in Sweden?" An entrepreneur who wants to set up his or her own company in Sweden must be aware that it will generate various types of costs. All expenses and income of a Swedish company must be confirmed by invoices. It is very important to ensure that these documents are collected, archived and drawn up correctly. This is usually done by the business owner himself or an accountant appointed by him. Special attention should be paid to the most important details of the Swedish company - owners' details, address, number, etc. It is very important to be meticulous in documenting any sums of money - the value of the purchase/sale item or the VAT rate. This is very important because poorly drafted invoices are invalidated, and this can be a problem, for example during an audit of the company in question.

Incurring all kinds of costs is inherent in running a company, regardless of which country it is located in. The biggest burden on a business is taxes. Tax for sole proprietors ranges from 30 to 55%, for companies it has a flat rate of 28%. VAT must also be taken into account - 6, 12 or 25%. The last tax is employee tax (otherwise tax on the employment of employees) - it is 32 per cent of gross salary. A company in Sweden may require permits related to the activity it wants to carry out (more specifically: person, employee or premises). For example: a transport company - a certificate from the Swedish Transport Agency, and a restaurant - a post-approval permit from the National Food Agency. Information on other industries can be found at the website verksamt.se.

If you are coming to Sweden to work, you do not need to apply for a work permit (only if you intend to stay in Sweden for more than 90 days). The relevant application must be submitted to a branch of the Migration Board (Migrationsverket). The owner of a Swedish company may obtain a residence permit upon presentation of a document on the operation of their own company in Sweden or official proof of registration of a Swedish company. It is worth recalling that employees from EU countries do not need a work permit. Employees from outside the EU are required to have one. To do so, they must go to the Swedish Migration Board (Migrationverket). Non-Swedish employees who have come to Sweden for work must report the start of their work to the Swedish Work Environment Authority and to Skatteverket, the Swedish Tax Agency.

The employer usually receives PAYE forms every month, which make it easy to pay any employee taxes. You only need to indicate the amount of employee benefits and payment for work, as well as the calculated tax and employer contributions.

A Swedish employer must also remember to pay all fees, i.e. wages, employee benefits and also employment taxes. The employer is obliged to pay arbetsgivaravgifter (employer tax), which amounts to approximately 32% of the gross salary. The employer's tax (arbetsgivaravgifter) consists of payroll tax (11.62%), pension contribution (10.21%) and insurance contributions (3.55%). All these contributions should be paid by the 12th of the month.

The Employment Protection Act obliges all Swedish employers to draw up contracts in a written form, which will make it possible to clearly specify all details regarding the performance of work. It is mandatory to include the following information in such a document:
- personal details of the employer and employees,
- the starting date of the work,
- the form of employment,
- the address of the place of work,
- a detailed description of the work performed,
- length of notice period,
- the agreed pay rate,
- additional employee benefits,
- the length of the working day or week and the length of holidays,
- collective agreements applicable to the work (optional). Every employee of a Swedish company is entitled to sickness benefit. Once an illness has been reported, based on salary and other benefits, the employer should determine the appropriate amount of benefit (80% of the average salary including any allowances). The owner of a Swedish sole proprietorship who pays taxes and social security contributions is also entitled to such a benefit. In this situation, the allowance is calculated on the basis of the company's income. All issues related to social benefits are regulated by the Swedish Social Insurance Agency. A Swedish entrepreneur can only receive the allowance for fourteen days, but if she is still unable to work after this time, she must provide the Agency with a medical certificate confirming this.

Any woman who works or runs a business in Sweden is entitled to maternity benefit. It is worth knowing that the benefit does not exceed 80% of the last income and that the benefit is paid for 480 days after the birth of the first child. Interestingly, the father of the child can only get a ten-day benefit. If the child is ill and there is no care for the child, the parent has the possibility to get a day off regardless of the time. Sweden stands out from other countries in that there is no specific retirement age. However, people who have reached the age of 61 can apply for retirement. A pensioner can draw the full benefit, but can also still work and draw only part of the pension.

The amount of the Swedish pension is calculated based on insurance premiums and tax from income such as income received from work, stipends, pensions, unemployment benefits, etc. from the age of 16.

Infographic: "On the pension system in Sweden..."

There are three types of pensions in Sweden:

• guaranteed pension - protection for those with little or no income, is available from the age of 65 and the amount depends on a number of factors (e.g. marital status, income or length of time living in Sweden),
• contributory pension - 2.5% of annual income,
• income pension - applies to all income from work, benefits, etc.; 16% of annual salary is contributed to it each year.

An occupational pension is relatively rare in Sweden. In addition to the standard benefit, the Swedish occupational pension includes a sickness benefit and a special protection benefit for the family after the employee's death. The pension is paid indefinitely or for a designated period of five, ten, fifteen or twenty years. However, it is worth remembering that not every employer provides an occupational pension.

[INFOGRAPHIC: The occupational pension includes: white-collar workers employed in the private sector; persons employed by the state administration; persons employed by municipalities and regions; manual workers employed in the private sector.] - Aktiebolag - limited liability company (AB),
- Allmänlöneavgift – universal wage contribution,
- Arbetsgivaravgifter - employer's tax,
- Arbetslöshetskassor (a-kasssor) - Swedish unemployment fund,
- Bokföringslagen - accounts,
- Bokföringsnämnden (BFN) - Swedish Accounting Standards Board,
- Bolagsverket - the Swedish Companies Registration Office,
- Ekonomisk förening - business association,
- Enkelt bolag - civil partnership,
- Enskild nӓringsidkare - sole proprietorship (self-employment),
- Europabolag - European joint stock company,
- Filial - subsidiary of a foreign company,
- Forskuddstrekk - advance payment of employee income tax,
- F-skatt - business tax,
- Garantipension - guaranteed pension,
- Grundavdrag - tax credit for time worked in Sweden,
- Handelsbolag - commercial company (HB),
- Inkomstpension - income pension,
- Jobbskattereduktion - income tax credit,
- Kommanditbolag - limited partnership (KB),
- Kommun - municipal tax,
- Kupongskatten - Swedish dividend tax (is 30%),
- Landstig - regional tax,
- Mervärdeskatt - VAT tax (moms),
- Migrationsverket - Swedish Migration Board,
- Mynak - Swedish Work Environment Authority,
- Preliminärinkomst-deklarationto - preliminary tax declaration,
- Premiepension - contributory pension,
- Särskild inkomst skatt på pensionskostnader - special tax on pension costs (SLP),
- Skatteverket - the Swedish Tax Agency,
- Statlig inkomstskatt för utomlands bosatta - 25 per cent SINK tax, which covers people who are not Swedish residents (temporary workers who have stayed in Sweden for up to 183 days) and do not have to file an annual tax return,
- Stiftelse - foundation,
- Traktamente - expense allowance for business travel,
- Tullverket - Swedish Customs Authority.