Sweden: Running a business

Sweden, as well as other Scandinavian countries, is certainly one of the most convenient places for entrepreneurs from Poland who wish to conquer the market there. First, because the country is a member of both the European Union and the Organization for Economic Cooperation and Development, and thus is obliged to apply equal rights to all people who want to open and run their own business precisely on the territory of the Kingdom of Sweden. In addition to liberal economic policies, opportunities for growth and high incomes, Sweden offers entrepreneurs many privileges, for example, in the form of tax breaks, as well as the possibility to handle all company formalities online - through the website verksamt.se, which makes running one's own business much easier. When you decide to set up and run your own business in Sweden, you are required to register your business with both Bolagsverket (the Companies Register) and Försäkringskassan (the Social Insurance Agency), for which you will need a personnummer (or samordningsnummer), a document confirming that your business is registered in the Kingdom of Sweden, and a correctly completed form "Uppgifter för registrering". In addition, you must submit your tax return to the Swedish tax authority, Skatteverket, every year by 2 May, preferably via the website skatteverket.se, taking into account both the 25 per cent MOMS tax (VAT) and any tax allowances to which you are entitled, such as: traktamente (for business travel expenses), jobbskattereduktion (for income), dubbel bosättning (for having a double household) grundavdrag (for time worked in Sweden), abolition relief (available to Polish tax residents who have income only from their own Swedish company; a PIT/O declaration must be submitted to the tax office in Poland) and others.

What else should you know about a Swedish company?

1. In Sweden, the most popular and accessible legal form of business for entrepreneurs from Poland is the sole proprietorship (Enskild nӓringsidkare), whose owners do not have legal personality and thus cannot separate their private assets from those of their company.
2. When deciding to operate a company in Sweden, you must choose from the legal forms available to foreigners (it is worth noting that companies such as Aktiebolag or Kommanditbolag may not be available to you, as their establishment involves complicated formalities and high initial capital).
3. You are required to register your chosen type of business at both the Bolagsverket (Register of Companies) and the Skatteverket (Tax Office), either in person by submitting a completed SKV 4632 form or via verksamt.se.
4. If you wish to register a company with the Skatteverket, you must complete all the required documents, such as a completed application form for foreign entrepreneurs, a certificate from Poland stating that you are not in arrears with social security contributions and taxes and a certified copy of your identity document, and send it together with the form to Malmo to the address of the foreign cooperation department: Swedish Tax Agency (Skatteverket), Utlandsskattekontoret, SE-205 31 Malmö, Sweden.
5. When running a business in Sweden, you are required to pay taxes such as:
   • MOMS (VAT) - 25% (standard rate), 12% (reduced rate e.g. hotels, handicrafts or groceries) or 6% (low rate e.g. books, passenger transport, newspapers) - paid monthly, quarterly or annually;
   • national income tax - 0% (income not higher than SEK 490 700), 20% (income higher than SEK 509 300). 28% (on company profit, for legal entities);
   • local income tax - 32% (average rate, this tax is between 30% and 35%, depending on the region);
   • 22 per cent personal income tax – CIT;
   • 25% SINK tax is paid by persons working in Sweden for a maximum of six months;
   • state tax (20%-25%) - for incomes above SEK 290 000 (Swedish kronor) per year.
6. If you run a business in Sweden, you are required to pay advance income tax, which is calculated by Skatteverket on the basis of the estimated income stated when registering the business (advance payment deadlines: by 17 January, 12 February, 12 March, 12 April, 12 May, 12 June, 12 July, 17 August, 12 September, 12 October, 12 November, 12 December).
7. As a business owner in Sweden, you have to submit your tax return every year (online by 31 March, and by letter or in person by 4 May), which is issued and sent by Skatteverket - either by letter (between 13 and 15 April) or electronically (between 4 and 11 March), for which it is advisable to set up a digital mailbox in advance (by 27 February), to which you log in with your BankID.
8. If you are running a business in Sweden whose customers are all VAT payers, you are not obliged to register as a VAT payer. However, services that are completely exempt from paying VAT are:
   • medical and social care,
   • banking and finance,
   • education.
   
9. If you hire employees in your Swedish company, you have to pay employee contributions and employer tax (31.42% in total).
10. If you run your own business in Sweden without a permanent establishment, you must send a tax declaration to the Swedish tax office for foreign entrepreneurs (form SKV 4632). After a few weeks (2 to 6), the Skatteverket is obliged to send you a certificate of registration as an F-taxpayer and a tax card (F-skattesedel).

Remember that if you are a VAT payer, you are obliged to issue and send a correctly completed invoice to the customer, which should contain data such as: the company bank account number, the VAT number of the seller and the buyer, identification number, terms of payment and delivery of the service or goods, the amount of MOMS tax, type of transaction, date of issue and payment, personal data of the seller and the buyer, the price of the service or goods, the taxable amount and the terms of delivery (e-invoices as a standard - Svefaktura, paper invoices have been withdrawn by government agencies and state bodies, among others). Sweden's economy is guided by the principles of free competition, free market and no restrictions on running one's own business, and consequently the rules for setting up and running a business in the country are the same for all EU and EEA members. In Sweden, as in Poland, there are many legal forms of business and each is guided by slightly different rules, so it is advisable to carefully read the conditions, requirements and rules defining each form before registering to make the right choice. The most frequently chosen legal form of business in Sweden is the sole proprietorship, as there is the least amount of paperwork involved and bookkeeping is relatively simple. Other frequently chosen forms are the company branch and the commercial and civil partnerships. Before choosing and registering a particular legal form of business in Sweden, it is advisable to carefully review the characteristics of the different types of companies beforehand, so that the choice coincides with your possibilities. When deciding to run your own business in Sweden, you have to reckon with a number of costs, both during the registration of the company and throughout the entire period of its operation. As a Swedish entrepreneur, you are required to pay income tax on your company's profit, as well as VAT - if you sell goods and services. Below you will find a brief description of the different legal forms of business in Sweden.

Swedish company:

1. you have to pay between SEK 700 and SEK 1,700 to register a Swedish company at Bolagsverket;
2. when establishing a company in Sweden, you need to have a starting capital of SEK 50,000 to SEK 500,000, depending on the type of company;
3. income tax for companies is 28% on the company's profit;
4. when you decide to establish a company in Sweden, you must first apply to the Migrationsverket (Migration Board);
5. a Swedish sole proprietorship must also be registered with the Skatteverket (after submitting the application, you have to wait three to six weeks for the business to be registered);
6. when establishing a company in Sweden, you must also sign the company's notarial deed;
7. a Swedish company must also be registered with the Bolagsverket (Register of Companies) within six months by submitting: the company's articles of association, registration form, notarized deed of incorporation and certificates from the bank about deposited start-up capital;
8. handelsbolag (HB) - owners of Swedish commercial companies are required to submit formal annual accounts for the previous year. The company's annual income should be included either on the personal tax returns of the owners and partners or on the annual tax returns of the companies that make up the company. HB tax, on the other hand, is paid on the value of each shareholder's profit share;
9. enkelt bolag - a Swedish civil law company, the income from the operation of which is considered to be the income of its owner and partners, and consequently, the owners of the company submit a special annex on which they declare business tax every year by 2 May together with their annual tax return;
10. the owners of such Swedish companies as Kommanditbolag (KB) - a limited partnership, Ekonomisk förening - a business association, Europabolag - a European trading company, Filial - a branch of the company or Stiftelese - a foundation - are required to submit their financial statements and tax declaration also by 2 May of the following year, on the form INKOMSTDEKLARATION 1 issued and sent by the Skatteverket in March/April;
11. aktiebolag (AB) - a limited liability company, Publikt aktiebolag - a public joint-stock company and Privat aktiebolag - a private joint-stock company are subject to:
    • regulations relating to finance, accounting and bookkeeping,
    • implementing regulations - Aktiebolagsförordningen (SFS 2005:559),
    • the Public Limited Companies Act - Aktiebolagslagen (SFS 2005:551);
12. general partnerships - Lag om handelsbolag och enkla bolag (SFS 1980:1102), the General Partnerships and Civil Partnerships Act contains all the provisions governing the tax regime and the operation of these Swedish companies;
13. the Stiftelseurkund, or articles of incorporation of companies, includes information such as the start and end date of the financial year, which need not coincide with the calendar year.

Swedish sole proprietorship:

1. a sole proprietorship company in Sweden is a good start-up option, mainly for young people without experience and large financial resources;
2. the cost of registering an Enskild näringsidkare at Bolagsverket is SEK 1,400.
3. a Swedish sole proprietorship must also be registered with the Skatteverket (once the application has been submitted, you have to wait two to six weeks until the business is registered);
4. income tax for a sole proprietorship in Sweden is between 30% and 55% on the company's profit;
5. skatteverket treats the income from a sole proprietorship (Enskild näringsidkare) as the income of the business owner, so the business tax is declared on one tax return and the business owner, who pays taxes and contributions, is entitled to pension and health benefits the same as those who are employed in Sweden.
6. entrepreneurs who run a sole proprietorship in Sweden are required to submit a tax return, for the previous tax year, by 2 May, on a form that the Swedish tax authorities send out - INKOMSTDEKLARATION 1;
7. if you run a sole proprietorship in Sweden, you are entitled to 14 days of sickness benefit (80% of your business income), the amount of which (SGI) is determined by the Social Insurance Agency. If, after 14 days, you are still unable to work, you are required to submit a certificate from your doctor to the Social Insurance Agency.

Formalities and costs are indispensable elements of running your own business, which accompany every entrepreneur throughout the entire period of running your own business - from the moment you register it with the Swedish authorities. In Sweden, you are not obliged to use the services of a professional accounting office, however, in the multitude of company duties, the help of a professional may prove indispensable and will allow you to maintain order in company documentation and avoid unnecessary mistakes and omissions, for which there are often quite high financial penalties.

What formalities and costs await the owner of a Swedish company?

1. Before registering your business in Sweden, you must apply for a personnummer, which is a personal identification number by which your business will be identified (print SKV 4620).
2. When you decide to set up and run your own business in Sweden, you must pay a registration fee of SEK 1,400 for a sole proprietorship and SEK 700 to 1,700 for a company (bolagsverket.se).
3. The company must also be registered with the Swedish tax office - Skatteverket (print SKV 4632 or verksamt.se), as well as with Försäkringskassan (Social Insurance Agency).
4. As a Swedish entrepreneur, you must remember to set up a company bank account.
5. You are also obliged to regularly monitor all transactions that take place in your company and submit documents to the relevant authorities on time.
6. If you are the owner of a Swedish business and simultaneously work on an employment contract in another company, you must register as a payer of FA tax, which is a combination of business tax (F) and employment tax (A).
7. If your Swedish business sells goods and services to other EU countries, or to countries outside the EU, or if you move goods needed for your business, without changing ownership, to another EU country, you are required to register your business as a VAT payer (print SKV 4620 or skatteverket.se).
8. As a Swedish entrepreneur, you have to submit your company's annual tax return to the Swedish tax authorities, who issue the necessary document called INKOMSTDEKLARATION 1 between 19 March and 15 April. You have 90 days from the day the Skatteverket issues its tax decision (sent between 15 August and 15 September; if you do not receive your tax return by 15 September, download a new form from skatteverket.se) to make the payment. For your company's annual return, you also need documents such as:
9. If you are a Polish tax resident and run a business in Sweden, you are obliged to settle with the tax office in Poland on the annual PIT-36 return (plus annex ZG), taking into account income from Sweden.
10. As the owner of a Swedish company, you are also obliged to regularly pay national (landsting and kommun) and local income tax.

Note that you will also need the relevant permits to operate your own business in the Kingdom of Sweden, e.g. issued by the National Food Agency - for activities related to catering or foodstuffs, or permits issued by the Swedish Transport Agency - for activities related to transport (you may also need a number of local permits issued by e.g. administrative or municipal councils). In Sweden, every entrepreneur is required to pay taxes on a regular basis, the percentage rates of which vary depending on the legal form of business chosen. The Swedish tax system includes taxes such as:

1. income tax - national income tax - 0% (income not higher than SEK 490,700), 20% (income higher than SEK 509,300); 28% (on company profit, for legal entities); local income tax - 32% (average rate, this tax ranges from 30% to 35%, depending on the region); 22% personal income tax – CIT;
2. VAT - 25% (standard rate), 12% (reduced rate e.g. hotels, handicrafts or groceries) or 6% (low rate e.g. books, passenger transport, newspapers) - paid monthly, quarterly or annually. In Sweden, services exempt from paying VAT are:
   • banking and financial services,
   • social and medical care,
   • education.
   Swedish businesses whose customers are all VAT payers do not have to register for VAT, while foreign business owners are required to pay VAT in Sweden if they sell services or goods to persons not registered for VAT;
3. excise tax - as a Swedish entrepreneur, you have to register with the Skatteverket as an excise taxpayer, you will then receive a form with a tax return date, which is customarily 1 month. Entrepreneurs in Sweden who are registered as excise taxpayers must also submit a declaration to the Skatteverket when the tax is 0. In Sweden, excise tax applies to goods such as:
   • natural gravel and fertilizers,
   • tobacco and alcohol products,
   • pesticides and waste,
   • carbon dioxide, sulphur and energy,
   • advertisements, lotteries and gambling,
   • profits from life insurance,
   • rewards from savings;
4. municipality tax - in Sweden, this tax should be paid by all Swedish tax residents and the percentage rates range from 29% to 34%;
5. tax-free amount - for low earnings it ranges from SEK 18,900 to SEK 34,300, while for earnings higher than SEK 350,660 it is SEK 13,100;
6. in Sweden, corporate taxation is in line with both the rules set by the EU and international accounting standards;
7. corporate entities in Sweden are required to pay 28 per cent income tax (in the case of rotation of corporate reserves and deposits, this tax can be reduced to 26 per cent);
8. swedish entrepreneurs are required to pay 30 per cent tax on dividends (this tax can be reduced through a double taxation agreement);
9. if you have employees in your Swedish company, you have to pay employee contributions and employer tax (31.42% in total);
10. who is not subject to income tax in Sweden? In Sweden, income tax does not have to be paid by those working for a foreign employer who is not permanently based in Sweden, as well as those who are not Swedish tax residents if they have spent less than 183 days in Sweden during the year.

If you run a business in Sweden and are thinking of hiring employees, you must be aware that as an employer you will have a lot of additional obligations to fulfil, starting with the formalities related to the employment itself through contracts, salaries, contributions, taxes and annual accounts to issues related to ensuring the safety of employees in the work environment, as well as other issues related to both health and safety regulations and the laws governing the employment of people in Sweden.

What obligations does an employer have in Sweden?

1. If you wish to hire employees in your Swedish company, you are required to register as a Swedish employer in addition to registering your company as an F-tax payer (f-skatt, business tax).
2. When you hire employees in your Swedish company, you must pay both employer tax and employee contributions.
3. As an owner of a Swedish company (Egenavgifter), you are obliged to pay social contributions for the employees hired in your company (for those born 1954 and later - 31.42%; for those born between 1938 and 1953 - 16.36%).
4. You are also obliged to issue all your employees with KU-10, KU-13 or KU-14 tax cards in January, which are needed for their annual tax return.
5. It is also important that you take care of the safety of your company's employees and comply with health and safety regulations (Mynak - Working Environment Authority).
6. In Sweden, you have the right to enter into an employment contract with a prospective employee of your company verbally, but according to the Employment Protection Act, you must provide all information regarding the terms and conditions of his/her employment in writing, such as salary, form of employment, start date, length of holiday and working day or week, benefits, collective agreements, period of notice, etc.
7. You are also obliged to pay the employer's tax, Arbetsgivaravgifter, which consists of a payroll tax of 11.62 per cent, a pension contribution of 10.21 per cent and insurance premiums of 3.55 per cent.
8. When you reach the age of 61, you are entitled to a pension, either full benefits or a part if you decide to continue working. As a Swedish business owner, you are entitled to full benefits, the amount of which is influenced by your income and your chosen pension fund. General pension (calculated from the age of 16 based on social security contributions and taxes paid) - 16% from your annual income; contributory pension - 2.5% of your annual income that has been placed in a selected or state pension fund.
9. You are also entitled to a number of tax reliefs and benefits, such as: tax relief on the rental of business premises, sickness benefit of 80% of your business income, maternity benefit of 80% of your last income (paid for 480 days in the case of your 1st child; up to 60 days can be used before the birth), childcare allowance.

Sweden is undoubtedly an open and friendly country for entrepreneurs from both home and abroad, but remember that self-employment has its pros and cons, so before you decide to register your business, consider whether you are ready to take on such a challenge in Sweden, familiarize yourself in advance with the basic documents, deadlines and obligations you will have to follow and ensure, as well as choose the legal form that will most closely match your expectations and possibilities.

1. How and where can I set up my own business in Sweden?
   In Sweden, you can register a business electronically, through the website of the Business Register (Bolagsverket), you will need a personal identification number - personnummer - for this, as well as a residence permit in Sweden, issued by the Migrationsverket, if you are an emigrant e.g. from Poland (to register a business you must also demonstrate your ability to support yourself in Sweden).


2. By when do I have to submit an annual tax return when running a company in Sweden?
   If you run a company in Sweden, you are required to submit an annual tax return every year, for the previous tax year, between 1 March and 2 May.


3. What websites are worth knowing about when running your own business in Sweden?
   If you are running your own business in Sweden, websites such as:
   • www.skatteverket.se - Skatteverket (Swedish Tax Agency),
   • www.bolagsverket.se - Bolagsverket (the Swedish Companies Register),
   • www.forsakringskassan.se - Försäkringskassan (the Swedish Social Insurance Agency),
   • www.migrationsverket.se - Migrationsverket (Swedish Migration Board),
   • www.verksamt.se.


4. What does the Convention between the Government of the Republic of Poland and the Government of the Kingdom of Sweden concern?
   The Convention between the Government of the Republic of Poland and the Government of the Kingdom of Sweden of 15 October 2005 protects both Swedish and Polish companies against double taxation and tax avoidance by Swedish and Polish entrepreneurs.


5. What social benefits am I entitled to when running a company in Sweden?
   If you run a company in Sweden, you are entitled, among other things, to sickness benefit (only if your company shows income), maternity and childcare benefits, as well as pension benefits.


6. How long is the tax year in Sweden?
   The tax year in Sweden lasts 12 months (January to December). For some Swedish companies, the tax year does not necessarily coincide with the calendar year.


7. What is an occupational and guaranteed pension in Sweden?
   In Sweden, occupational pension is a benefit provided by a Swedish employer (not every employer) to its employees, which includes: blue-collar and white-collar workers employed in the private sector, government employees and those employed by regions or municipalities. This pension also includes protection for the employee's family in case of death and sickness benefits, and is paid for 5, 10, 15, 20 years or indefinitely. Guaranteed pensions, on the other hand, are benefits for people over 65 with no or low income.


8. How amount is state tax, and how much is municipality tax in Sweden?
   The Swedish municipality tax, which all Swedish residents should pay, is between 29% and 34%, while the state tax is 20% - annual income greater than SEK 490 700 and 25% - income greater than SEK 689 300.


9. Who can include tax credits in their annual return in Sweden?
   In Sweden, all Swedish residents, i.e. taxpayers who have lived in Sweden for more than 183 days and whose income is 90% from Sweden, are entitled to tax relief.


10. What is an Arbetsgivaravgifter?
    Arbetsgivaravgifter - is an employer's tax, consisting of a payroll tax of 11.62%, a pension contribution of 10.21%, as well as insurance contributions of 3.55%.


11. Who is an economic employer in Sweden?
    An 'economic' employer (a concept introduced in Sweden on 1 January 2021) is a person who has the right to carry out work in Sweden (e.g. business travellers to Sweden or Polish companies that second short-term employees to work in Sweden) and who is fully responsible and at risk.


12. What is Bolagsverket?
    Bolagsverket is the Swedish Companies Register, where Swedish companies (mainly those that want to protect their name) should register.