“The Kingdom of Sweden is a constitutional monarchy in northern Europe, with approximately 9,4 million citizens (as of 2011). King Carl XVI Gustaf is the current Head of State. Swedish is the official language of the country and the Swedish Kronor (SEK) is the currency denomination used in the country. The three largest cities are Stockholm (capital city), Göteborg and Malmö/Lund. 1,2
The country is characterised by one of the longest life expectancies and lowest birth rates in the world. Based on estimates, approximately one in every nine Swedes is an immigrant or has at least one foreign-born parent. Most immigrants have come from countries such as Finland, Iraq, Serbia, Montenegro, Bosnia and Herzegovina, Somalia, Iran, Turkey, Norway, Denmark, and Poland.3 3
According to the Organisation for Economic Co-operation and Development (OECD) projections for Sweden, the country’s GDP (at market price) will grow by 4,0 percent in 2011, by 0,6 percent in 2012 and by 2,8 percent in 2013. Due to the recession, Sweden’s GDP (at market prices) declined by 5,0 percent in 2009. 4 The services sector (70,9 percent in 2011) is estimated to be the largest contributor to GDP and the biggest employer, followed by the industrial (27,3 percent) and agricultural sectors (1,8 percent). The unemployment rate as a percentage of the total labour force is estimated to be 7,5 percent for 2011 and inflation (consumer price index) is estimated to be 2,5 percent in 2011. 5
The major industries in Sweden include iron and steel, precision equipment (bearings, radio and telephone parts, armaments), wood pulp and paper products, processed foods and motor vehicles. In 2011, Sweden’s total exports were estimated to be EUR 146,59 billion (USD 204,2 billion) and imports were valued at EUR 134,53 billion (USD 187,4 billion).
In 2011, the country’s main export products were machinery (35 percent), motor vehicles, paper products, pulp and wood, iron and steel products, chemicals, while imports included machinery, petroleum and petroleum products, chemicals, motor vehicles, iron and steel, foodstuffs and clothing. Sweden’s major trading partners include Norway, Germany, the UK, Denmark, Finland, the US, France, China and the Netherlands.
Sweden ranked second in the World Economic Forum’s global competitiveness rankings (2010), while Switzerland topped the rankings. 6
The rankings, covering 139 economies, are based on a combination of publicly available data and a survey of several thousand business leaders around the world. The country topped the innovation capacity in the world according to the European Business School’s Innovation Capacity Index. The ranking covers 131 nations and is based on over 60 indicators of innovativeness, performance of institutions, human capital endowment and regulatory and legal framework. 7
The investment climate in Sweden has improved significantly following its membership of the European Union (EU) in 1995. The biggest investments have been made in computer software and hardware, IT/telecommunications, industrial goods and healthcare sectors.
Despite strong finances and underlying fundamentals, the Swedish economy slid into recession in the third quarter of 2008. Growth continued downward in 2009, as deteriorating global conditions reduced export demand and consumption. Strong exports of commodities and a return to profitability by Sweden’s banking sector drove the strong rebound in 2010, which continued in 2011, and the government is proposing stimulus measures in the 2012 budget to curb the effects of a global economic slowdown and boost employment and growth. 8
Most of the Swedish labour force is unionised. In Sweden, unions and employer organisations are independent of both the Government and political parties. However, the National Swedish Confederation of Trade Unions (LO) keeps a close contact with the Social Democrats. Wages are set by collective bargaining and there is no national minimum wage. 9
The following report aims to discuss the most important issues pertaining to the administrative, legal and financial aspects of setting up businesses and hiring personnel, as well as the living conditions in Sweden.
This section discusses the common investment vehicles available to foreign investors, the procedures to be followed in order to establish them and related regulations for each investment mode.
Starting a business in Sweden is not complicated, with simple and straightforward procedures and a transparent system. It is not mandatory to have a Swedish partner to start up an enterprise in Sweden. The most common modes for setting up business entities in Sweden by foreign investors and the legal particulars involved in each process are discussed below. Of the seven modes described below, a Limited Liability Company is the most common vehicle to start a business in the country. 10
Table 1 below lists the various business modes in Sweden.
Source: Bolagsverket – Information for Business Enterprise
A sole trader or proprietor is a person or individual running the business. They are not a legal entity; however, the sole trader is personally liable for the performance of contracts and other business operations.
The significant characteristics of a sole proprietorship are as follows:
A sole trader may appoint employees to accomplish a business activity.
The minimum age of the owner is 16; however, until the age of 18, the authority is given to either parents or to an appointed guardian.
Any foreigner who wants to start a business in Sweden can register him-/herself as a sole proprietor and needs to register at Bolagsverket (the Swedish Companies Registration Office) and enter the Trade Register.
Authorities have imposed certain restrictions related to the name of the enterprise; they are as follows:
To accomplish the business activity, an authorised signatory (Firmatecknare) must be appointed. This person can be:
Registration with Bolagsverket (the Swedish Companies Registration Office) is optional for a sole proprietorship business. However, it becomes mandatory under the following conditions (as applicable for the past two consecutive years):
To register as a sole trader, visit Bolagsverket – Forms – Sole Trader – to download various forms.
To register as a sole proprietor, a nominal fee of EUR 132,8 (SEK 1.200) is payable at the time of registration. This includes certain other charges such as EUR 99,6 (SEK 900) (per language) for registering the business name, and EUR 99,6 (SEK 900) per piece for registering for a secondary name. A detailed fee structure with the various components and costs of starting a business can be found at Bolagsverket- Fees for Sole Trader.
Closing Down the Business – Bolagsverket (the company’s register) must be notified while closing down and delisting the business from the register. The application for closing down a business is available at Bolagsverket – Forms – Sole Trader.
A Swedish limited liability company is a form of business enterprise in which the responsibility of the shareholders is normally limited to the capital invested in the company. Other characteristics are:
Representation by a board of directors;
Appointment of an auditor (an authorised public accountant);
The shareholders in a general meeting elect both the board of directors and the auditor.
A registration number is issued once the registration with Bolagsverket is formalised. This number is also used for other dealings with government authorities and acts as a mean of identification for the company. This number must appear on all company stationary, invoices, order forms and website.
The two types of limited liability companies and their requirements are given in Table 2.
Source: Bolagsverket- Limited Liability Company
Some of the significant characteristics of a limited liability company include:
The board of directors must be selected to represent the company and appoint an auditor who is an authorised public accountant
Registration at Bolagsverket will provide the legal entity status as a limited liability company
A limited liability company should include its name, registration number, and the registered office of the board of directors for communicating with external stakeholders
The name of the enterprise should be unique and easy to distinguish from other business enterprises. To register and check the availability of a business name, visit www.bolagsverket.se/snr .
To form a limited liability company, one or more founders are required. However, one of the founding members must be a legal entity within the European Economic Area (EEA). The following steps are adopted to form a company:
A memorandum of association needs to be prepared;
One or more founders subscribe to all the shares in the company;
The founders complete, date and sign the Memorandum of Association;
Finally, the board of directors file the company details with Bolagsverket for registration.
The Memorandum of Association must state the following:
Names, address and personal identification number of founders;
Details about the shares held by the founding partners;
Apart from the Memorandum of Association, the act requires additional information in the form of the Article of Association that should include the following important information:
Name of the company (‘Aktiebolag’ or AB is used as a suffix);
Registered office of the board of directors;
Details of members on the board of directors;
Notice of the general meeting of shareholders;
Details about the annual general meeting;
Please note that the Memorandum of Association and Articles of Association must be in Swedish.
The board of directors file an application with the Bolagsverket for registration. A board member or the managing director must sign the application that is submitted in the original form.
The form can be downloaded from Bolagsverket – Forms – Limited Liability Company. The application form must enclose the following information:
The proposed name of the limited company;
Full name, personal identification number and the municipality where the founder is registered (referred to below as its domicile);
Full name, personal identification number and mailing address (if domicile differs from mailing address then domicile must also be stated) of the following people:
Registration number of the company’s auditor, if the auditor is a public accounting firm;
Information on the signatory power;
Details of the company’s share capital and number of shares;
Details of the amount that has been paid in cash or by capital contribution in kind;
A statement certifying that the founders, board member(s), deputy board members, managing director, deputy managing director, auditor(s), layman auditor(s) or deputy/deputies for the latter, as well as the principally responsible auditor and the person(s) with signatory power, are not in bankruptcy (or have a custodian pursuant to chapter 11, section 7 of the Parental Code);
A statement certifying that the person specially authorised to receive service of process does not have a custodian pursuant to chapter 11, section 7 of the Parental Code as applicable;
A statement certifying that the company auditors meet the requirements for professional competence (as prescribed in Article 9, sections 10 to 13 in the Companies Act)
A solemn declaration that the people appointed as board members, deputy members, chairman of the board, managing director, deputy managing director, signatories, and those specially authorised to receive service of process, act as auditors, deputy auditors, layman auditors and deputy layman auditors have accepted the appointments;
A solemn declaration that the information about the choice of the chairman of the board, managing director, deputy managing director and person specially authorised to receive service of process as well as the information regarding signatory power, agrees with the company’s decisions.
The following documents (in the form of certified copies or transcripts) need to be enclosed with the application
Memorandum of Association, one copy;
Bank certificate, the original, issued by a bank, credit market company or credit institute within the EEA (in Swedish translation).
For further details, please refer to Bolagsverket- Limited Liability Company.
A limited liability company can be closed by the following methods:
Selling – The total number of shares of the limited liability company are sold when the owners sell the limited company. The change in the board directors should be advised to Företagsregistrering (in Swedish).
Bankruptcy – This is an option when the company is insolvent. The court appoints an official receiver who takes over the responsibilities for deciding on the company’s assets. The application for bankruptcy is filed with the district court (where the company registration office is located) by the board of the company or by a creditor with a claim on the company.
Liquidation – Under liquidation, the company is wound up after the payment of its debts. The Bolagsverket or the court appoints a liquidator to prepare a report on the liquidation process.
A European company is a European business enterprise for conducting business on a cross-border basis in the form of a limited liability company.
The following are some significant characteristics of a European Company:
The name of the company must use the abbreviation SE either before or after the end of the name. It should be unique or different from other company names in the European company register.
A board member, managing director or any other person can represent the company and holds signatory powers on behalf of the company. However, at least one of the authorised signatories must be a resident within the European Economic Area (EEA).
Approved accountants, approved accountants with examination of professional competence, authorised public accountants and registered public accounting firms, registered by the Supervisory Board of Public Accountants (Revisorsnämnden) are appointed to audit limited liability companies.
The European company follows two different types of business structures:
A European company can change its registered office, however:
A European company can be formed by several existing entities in the following ways:
A merger between public limited liability companies belonging to two different member states of the EU. The merger can take place either by absorption, i.e. one or more companies merge into another company. The Merger Directive (Third Council directive 78/855/EEC of 9th October 1978) includes regulations on the control by auditors and authorities that need to be exercised in connection with the merger.
Two or more private or public limited liability companies can be combined to form a holding company in the form of a European company. A prerequisite is that at least two of the companies are governed by the legislation of different member states, or that they have had a subsidiary or branch office in another member state for at least two years.
Two or more companies can establish a common subsidiary in the form of a European company. A prerequisite is that at least two of the companies are governed by the legislation of different member states, or that they have had a subsidiary or branch office in another member state for at least two years.
A national public limited company that has a subsidiary governed by legislation in another member state for at least two years can be transformed into a European company.
An existing European company can establish another subsidiary in the form of a European company.
The Bolagsverket registers European companies with a registered office in Sweden. The registration has to be published through an announcement in the Swedish Official Gazette (Post-och Inrikes tidningar) as well as in the Official Journal of the European Communities.
European Economic Interest Grouping (EEIG) is a type of partnership across borders. The purpose of forming a group is to encourage and develop the economic activities of its members and is not intended to earn profit. Key features of an EEIG are as follows:
The people proposing to form a group must enter into a contract and be registered;
The group does not need to have capital;
Members have unlimited joint and individual liability for the debts of the grouping;
The participants must include at least two people with economic activities in different member states of the EEA;
At least two members should either have their head office or be based in different member states;
The grouping enjoys legal capacity and can enter into contracts or conduct other legal acts;
Only the manager or the individual managers can represent the group’s interaction with third parties.
Forms for registering the group are available at Bolagsverket – Forms – EEIG. All members should sign the form. The grouping can be dissolved by liquidation. However, the grouping retains its legal capacity until the liquidation proceedings are completed. For registration, application form 908 can be used and all the members of the EEIG must sign the application form.
A foreign enterprise can start its business in Sweden either in the form of a subsidiary or a branch. A branch is the branch office of a foreign business enterprise with a separate administration in Sweden.
Some of the significant characteristics of a branch office include:
A managing director who is responsible for the operation of the branch;
The branch is treated as part of the foreign business enterprise;
A branch needs to follow Swedish rules and regulations to carry out its business activities;
The assets and liabilities of the branch are accounted for under the total assets of the foreign enterprise. The branch has no share capital;
All accounting records need to be maintained according to the Book-Keeping Act. Branches should not merge the account books with the foreign business enterprise;
An authorised or approved public accountant examines the accounts of the branch and the administration of the managing director;
The business name should be unique and resemble the nature of the business.
The foreign business enterprise should register its branch in the Bolagsverket with a form duly signed by the managing director. Forms can be downloaded from Bolagsverket – Forms – Branch.
A EUR 221,4 (SEK 2.000) registration fee is paid when submitting the application. More information on the costs of opening a branch office can be found at Bolagsverket- Fees for Branch.
Before opening up a branch office in Sweden, the foreign entity must notify the Bolagsverket regarding certain details. Such notification should include:
Name of the foreign business enterprise, its legal form, nationality and registered office and postal address;
Proposed company name of the branch;
Details of the branch office locations;
Particulars about the share capital of the foreign business enterprise;
Details about the financial year of the foreign business enterprise and the branch;
Name and postal address of the authorised representatives of the foreign business enterprise;
Registration number of the foreign business enterprise and its registered location;
Personal details of the managing director of the branch, the deputy managing director, the person authorised to receive services of processing and the auditor and deputy auditor (if any) of the branch;
A declaration that the company is not bankrupt;
A solemn declaration that the person authorised to receive the service of process (if appointed) does not have an administrator under chapter 11, section 7, of the Parental Code;
A declaration that the principal individuals involved have accepted their assignments;
Notification of the business activities of the foreign business enterprise;
Details about the business operations of the branch.
For a full list of the documents that need to be attached with the notification, refer to Bolagsverket – Branch Office.
A branch can be closed in the following scenarios:
If the foreign business enterprise or the branch is declared bankrupt;
Foreign business enterprises may announce their voluntary closure by submitting a notification to the Bolagsverket by the managing director (or the deputy managing director) of the branch or by a person in the foreign business enterprise who is entitled to do this;
If all the required documents (financial report, annual report) are not submitted to Bolagsverket and there is no authorised managing director or no specific person authorised to receive the service of process, the branch could be closed
It is an agreement between two or more persons who jointly want to operate a business as an enterprise. Founders of this business are called partners. Both natural and legal persons can become a partner.
Table 3 lists the types of partnership businesses and their requirements.
Source: Bolagsverket – Trading Partnership and Limited Partnership
Some significant characteristics of a partnership business include:
The minimum required age for a partner is at least 16 years; however, until the age of 18, the authority is given to either parents or to an appointed guardian.
A registration number is given to the partnership firm, and this number is used as an identity number for all further communication with the authorities.
Any partner, who joins the business at a later period, is also liable for the previous debt of the firm.
A partnership does not require an auditor in most cases.
The business name should be unique and resemble the nature of the business.
Partners can appoint a procuration holder 18 to represent the business and sign on behalf of other partners.
Any amendment in the information of the partnership agreement must be notified to the registering office.
A partnership business has to register itself at the Bolagsverket to get legal entity status. The e-service Företagsregistrering (in Swedish) can be used to register the company with the Bolagsverket. All partners must sign the application. The partners also need Swedish e-identifications for this process.
The registration can be done via an application form that can be downloaded from Bolagsverket – Forms for Partnerships.
For registering as a partnership business (trading and limited), a nominal fee of EUR 132,8 (SEK 1.200) is paid at the time of registration. For more information about various other fees, refer to Bolagsverket- Fees for Partnership.
Partnerships can be closed down or terminated by liquidation or bankruptcy. This must be reported for registration with the Bolagsverket. If the enterprise is restructured, it must be reported to the Bolagsverket for registration.
Table 4 below provides a brief summary of the key features of the businesses operating in Sweden.
Source: Bolagsverket – Starting Up a Business
The following briefly describes the registration procedure and the time required for each step in Sweden:
A written statement certifying that the total cash amount to be paid for shares has been deposited in an account from a Swedish bank (requires one day and is not chargeable). 19
Register with the Swedish Companies Registration Office (Bolagsverket) and obtain the registration certificate. The Bolagsverket acts as a central body for the registration of all new businesses in Sweden. It is a government body that ensures a smooth procedure for starting a business in Sweden (requires 14 days and is chargeable). 20
Register with the Swedish Tax Agency (Skatteverket) (requires one day, takes place in parallel with other steps). 21
An employer or a company starting a business in Sweden is subject to VAT and must register with the Swedish Tax Agency. The registration should take place two weeks before starting business activities. Application forms can be downloaded from the Swedish Tax Agency website: ( www.skatteverket.se ) or can be ordered and received by post, free of charge.
According to Doing Business, a project supported by the World Bank, Sweden ranks 9th (Doing Business 2011 ranking) among the 183 economies (countries, regions and cities) it studied.
Table 5 lists the data released by the World Bank related to the time taken for starting a business in Sweden.
Figure 1 shows a comparison between various countries based on the number of days and procedures required for setting up a new business in Sweden.
Foreign nationals must apply for a visa/work permit to visit, work, and study, establish or join in any business or stay in Sweden. The Swedish Migration Board has the right to refuse the arrival and stay of foreign nationals. The Foreign Ministry controls this board (responsible for immigration) and the Ministry of the Interior (responsible for immigrant affairs within the Government Chancery). 22
The Swedish Migration Board receives visa applications from people who wish to visit Sweden. The requirements pertaining to each type of visa are available in the table below. 23 The necessary documents to complete the visa application procedure are as follows: 24
Valid national passport, original and a copy;
Confirmation letter from health insurance provider stating coverage and a photocopy;
Proof of group travel/hotel booking in Sweden/airline reservation for Sweden and a photocopy;
Reference letter from employer/education institution;
Various application forms for working, studying in Sweden, visit visiting or leaving Sweden are available at The Swedish Migration Board – Application Forms.
Table 6 lists the different types of visas issued by the Swedish government.
For more details refer to Visa for medical treatment
A person who is in Sweden wishing to extend a visit should apply for a residence permit for that visit.
For further details refer to Swedish student visa
Sources: Sweden Embassy- Visa Requirement;
Embassy of Sweden – Visa for visiting Sweden
A work permit is required for a foreign national (outside the EU) intending to work in Sweden and the applicant must have a job offer when applying. This visa is issued for a maximum of two years. If a person works in Sweden for more than three months, they should also apply for a residence permit. The main requirements when applying for a work permit are as follows:
Ability to meet expenses during the stay.
The wage should be at least EUR 1.439,1 (SEK 13.000) per month.
The employer must fulfil the following conditions:
The completed application form must be accompanied by the following documents:
Copies of the pages from the passport that validate the applicant’s identity, validity period of the passport and whether the person has permits to be in countries other than their native country.
Two passport-size photographs not older than six months.
Receipt of paid application fee (For Fee Details refer to Link)
In case the person has been granted a residence and work permit, he/she needs to carry the original passport while collecting the permit. The applicant’s immediate family may be granted residence permits for the same period that the applicant was granted residency and work permits.
The person can apply either through the Swedish Migration Board’s website or by completing a form and submitting it in person. If the application is submitted online, the decision comes within three weeks, provided no further details are required.
If the person is residing outside Sweden, the applicant has two options to apply:
At the Swedish Migration Board’s website, or
At a Swedish mission abroad in the country where the applicant resides. Use the form Application for Swedish Work Permit — for applicants outside Sweden, no. 149011.
If the person resides in Sweden, the applicant has two options to apply:
At the Swedish Migration Board’s website, or
By post to the Swedish Migration Board or to one of the Swedish Migration Board’s permit units.
For details about terminating employment or a change of employer, refer to Work Permit.
Table 7 lists the other types of work permits and the links for finding more information on the visa requirements.
Source: Migrationsverket – Work Permit
However, certain people are exempted from the requirement to hold a work permit, such as citizens of Nordic countries, EU/ EEA citizens and their family members, citizens of Switzerland, etc. A detailed list of this category of people can be found at Exemptions to the work permit requirement.
Sweden is less expensive than neighbouring countries, such as Norway and Denmark. 26 The cost of living in Sweden differs based on the city in which the person resides. In the large cities, prices can be significantly higher than in other areas of the country. The general perception among foreign visitors is that the cost of living is higher in Sweden compared to their home countries; however, the average Swedish income is also relatively high. 27
Table 8 provides an overview of the costs of useful items.
In Sweden, rental costs for industrial and office space are comparatively lower than in other OECD countries. Property tax is 1 percent for commercial office space and 0,5 percent for industrial premises; it is charged over and above the rent. The rental rates change in line with the consumer price index (CPI) to account for inflation.
Table 9 provides information related to rent for office space in major Swedish cities.
Source: Invest in Sweden: Running a Business
The Swedish Parliament or the Riksdag is responsible for deciding the benefits that are included in the social insurance system. The Försäkringskassan manages the social insurance and allocates the money. The social security system in Sweden covers almost everyone living and working in Sweden and is funded by the State. 31
The main objectives of the social security system are to provide:
Guaranteed minimum level of financial security to residents;
Financial support for people who are either ill, disabled, parents or pensioners.
An applicant or their family members (residing or working in the EU) will be eligible for social insurance benefits in any other EU Member State, which includes Sweden, as it is a member of the EU. The benefits available under the social insurance scheme are given in Table 10 below:
If a person is insured in Sweden, they are entitled to medical assistance in an EU/EEA country or Switzerland for a short period. The person may be entitled to benefits outside the EU/EEA if Sweden has agreements with those countries.
Source: Forsakringskassan – Social Insurance
* The price base amount is an amount established by the Government for one year at a time on the basis of figures provided by Statistics Sweden [Statistiska centralbyrån]. It is adjusted annually. When Försäkringskassan calculates, for example, the amount of your pensions, sickness benefit and allowances, it makes use of the price base amount.
In order to encourage investors to establish business operations in Sweden, the National Board for Industrial and Technical Development (NUTEK) and various regional development funds offer loans at favourable rates. The regional support programmes include location and employment grants, low rent industrial parks, and economic free zones. In addition to the Swedish Government offering a range of incentives for research and development programmes, there are several European funds that offer subsidies for establishing enterprises in Sweden.
In Sweden, there are foreign trade zones with bonded warehouses in the ports of Stockholm, Goteborg, Malmo, and Jonkoping. Though these goods cannot be consumed or sold on a retail basis, they can be stored without customs clearance. However, these goods can be used as material for industrial operations within a free trade zone. The tax and labour laws are the same in free trade zones as they are in other workplaces in Sweden. 32
In Sweden, the financial market accounts for 4,5 percent or more of the country’s total output, expressed as its GDP. Nearly two percent of Sweden’s work force (about 100.000 people) is employed in the financial industry.
There have been major changes in the Swedish banking sector. Sweden’s major banks are involved in the life insurance business. Increasingly, branch offices are in decline since customers prefer conducting their daily banking operations via the Internet and using cash/debit cards and credit cards in chain stores. Mutual funds and insurance savings have developed into major forms of savings.33 As of 31 December 2011, total bank deposits for the general public was estimated at EUR 312,06 billion (SEK 2.819 billion), of which households accounted for 42 percent, followed by companies (24 percent), local governments (2 percent), and f”