Starting a business in Sweden An introduction. Starting a business in Sweden An introduction Updated:

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1 Starting a business in Sweden An introduction

2 Executive summary

3 Starting a business in Sweden Sweden is one of the most international economies in the world More than 14,000 foreign companies have operations in Sweden Employing more than 630,000 people in the country Straightforward system for business startups Transparent system with low rate of bureaucracy No restrictions on foreign ownership or need of Swedish partner No restrictions on foreign companies operations Executive summary

4 Starting a business in Sweden Main company forms: Limited Liability Company (Aktiebolag) Most used company form when establishing in Sweden Separate legal entity in Sweden Clear distinction between the company in Sweden and owners Minimum share capital SEK 50,000 Needs a board of directors Branch (Filial) Swedish company form No separate legal entity - Part of the foreign-based company No share capital or board of directors Managing director needs to be appointed Executive summary

5 Content Limited liability company Branch Limited liability company and branch -Legal differences

6 Limited liability company 1(2) Most frequently used company form by foreign companies Enough with one owner, legal or physical No restrictions on foreign ownership No restrictions on activity carried out or size of company Uncomplicated and efficient establishment process Most commonly established through an off-the-shelf solution Pre-registered limited liability company Registered with the only purpose to enable a quick start of activities No previous history or commercial activity

7 Limited liability company 2(2) Separate legal entity incorporated in Sweden Clear distinction between the company in Sweden and owners Can enter into contracts, own assets, have employees etc Requires a share capital of at least SEK 50,000 (Private company) Needs a board of directors - optional to appoint managing director Certain requirements exist on residency Corporate tax rate 22% on taxable net income

8 Branch 1(2) A branch is a Swedish company form No separate legal entity in Sweden Part of the foreign-based company Divisional office A branch is independently run in Sweden Subject to Swedish law A foreign-based company can only have one branch in Sweden

9 Branch 2(2) Can act as employer, sign agreements etc A branch must appoint a managing director residing within the EEA No board of directors A branch has no share capital Assets and liabilities are part of total assets of foreign-based company Keeps own accounting records Must hold these separate from the foreign-based company Corporate tax rate 22% on taxable net income

10 Limited liability company and branch Differences Limited liability company Branch of a foreign-based company Legal entity Yes Not a separate legal entity. Part of the foreign-based company Owners liable for the debts of the business Registration No personal liability. Only capital invested at risk With the Swedish Companies Registration Office and the Swedish Tax Agency Corporate tax payable Yes Yes Protection of name Throughout Sweden Throughout Sweden Branch is part of the foreign-based company. Owners liability depends on the legal structure of the foreign-based company. With the Swedish Companies Registration Office and the Swedish Tax Agency Number of owners One or more persons or legal entities No ownership in Sweden. Part of the foreign-based company Auditor required Yes, at least one certified public accountant. Small companies may choose not to have an auditor Yes, at least one certified public accountant. Small branches may choose not to have an auditor Distribution of profit and loss Capital requirement The profit can be distributed to owners in the form of dividends SEK 50,000 for a private limited company SEK 500,000 for a public limited company The branch is a part of the foreign-based company None Who represents the business? The board of directors, the managing director The managing director represents the branch through a power of attorney from the foreign-based company Can the business employ staff? Yes Yes Number of entities The foreign-based company may choose to start an unlimited number of companies in Sweden A foreign-based company can start only one branch in Sweden

11 Further information Fact sheet: Starting a business in Sweden an introduction