Foreign investors are generally treated the same as Swedish investors.Companies are free to make direct investments in Sweden and in Swedish property. The procedures for making a new investment in Sweden are straightforward.
Foreign investors are generally treated the same as Swedish investors.Companies are free to make direct investments in Sweden and in Swedish property. The procedures for making a new investment in Sweden are straightforward. A local commercial bank, law or accounting firm can handle the formalities.
INCOME TAX RATE
The Swedish company tax rate is 22 %.The effective company tax is often even lower through the possibility of using profit allocation reserves. Losses may be carried forward indefinitely. Losses may not however be carried back. The use of old tax losses in acquired companies is limited.
The principal forms of business organisation in Sweden are the limited liability company (aktiebolag – AB), branch of a foreign company (filial), partnership (handelsbolag – HB) and limited partnership (kommanditbolag – KB).
In a partnership there has to be at least two partners. Partners are not limited to individuals; partners may consist of limited companies, other partnerships, limited partnerships (Swedish legal entities) and/or actual persons (Swedish citizens). A contribution of capital from the partners is not necessary. Any one of the partners has the right to take actions independently on behalf of the partnership ie to sign for the partnership. The law does not require the partnership agreement to be in writing but it is recommended.
The partnership is a qualified legal entity. However, the partners are personally and jointly responsible for all the commitments of the partnership. Even though the partnership is a qualified legal entity, the partnership does not constitute a separate taxable entity for income tax. The partnership as such is not taxed; instead, the partners are taxed, each in proportion to his/her share of income of the partnership.
MAIN COMPANY TYPES
LIMITED LIABILITY COMPANY
The limited liability company is often the most suitable and therefore the most common business structure used by foreigners. The formal rules applying to limited liability companies are found in the Companies Act of 2005. There are two kinds of limited liability companies – private and public. The difference between them is the way of raising the capital. The public company is able to turn to the stock market; the private company is not. One or several founders form a limited liability company.
They can be either:
- Naturalised persons with permanent residence in the EEA
- Swedish legal entities
- Legal entities formed according to the law of a country within the EEA.
The Swedish government or its appointed representative can approve any other person as a founder.
LIMITED LIABILITY COMPANIES
A resident company is liable for national income tax on its worldwide profit, including capital gains. A company is generally only considered resident in Sweden if it is incorporated there. A non-resident company is liable for national income tax only on specified types of Swedish-source income and capital gains.
All income of a limited liability company is attributable to one and the same source of income. A limited liability company which is a partner in a partnership may therefore, unlike a natural person, set off its share of the partnership deficit against its own income or vice-versa.
PERSONAL INCOME TAX
To be regarded as a resident for tax purposes, an individual must meet one of the following requirements:
- Live permanently and be domiciled by choice in Sweden
- Have a habitual place of abode in Sweden
- Have an essential connection with Sweden.
Normally, a continuous stay of six months establishes a habitual place of abode in Sweden, which makes the individual resident from the first day.
A resident individual’s income is divided into three income categories:
- Income from employment
- Income from business activities
- Income from capital.