A holding in Sweden, meaning a holding company, is a legal entity incorporated not for the purpose of engaging in trade or commercial activities, but in order to hold shares in and control other companies, whether also base din the country or abroad.
The holding company can also be understood as being a parent company, and it is often incorporated as a private limited liability company – or the Swedish equivalent thereof.
Investors can open a company in Sweden that will function as a holding if they wish to have oversight over other companies in which the holding owns shares.
|Legal entities used
– private limited company,
– public limited company
|With the Swedish Companies Registration Office (Bolagsverket)
|Approximately 12 working days
– risk mitigation,
– access to Swedish capital gains exemption and other tax benefits,
– a flexible structure for asset protection and control
The participation exemption can be subject to a condition for the holding to own a minimum percentage of its subsidiary's capital or voting rights.
The Swedish holding is a standalone business structure controlling shares or interest in a subsidiary company or companies
– 20.6% corporate income tax rate (the EU Parent-Subsidiary Directive can reduce or elimitate the withholding tax)
|The holding is controlled as per its Articles of Association and subject to the Swedish Companies Act
|Accounting and Reporting
– annual report to be submitted to the Companies Registration Office;
– large companies are also obliged to prepare an annual audit,
– different annual corporate income tax return dates apply, depending on the date on which the company has chosen to end its financial year
|Number of double taxation treaties
Table of Contents
What is the purpose of a holding in Sweden?
The holding company in Sweden is usually not a company involved in producing goods or selling services, nor is it involved in other business activities. Its primary (and often only purpose) is to hold stock in other companies, thus controlling them.
Even though the holding will typically own enough shares in other legal entities in order to control them, it will often be limited to an oversight capacity, meaning that the Swedish holding will not be effectively involved in running the daily activities of the companies in which it owns stock.
As a shareholder in another legal entity, the holding in Sweden is protected from the losses that can be incurred by its subsidiaries. If one of the companies in which it holds controlling stock becomes bankrupt, the Swedish holding company will suffer a capital loss, and, as a result, a net worth reduction, however, it will not be liable for the debts and obligations of the company it controlled by means of owning shares.
The holding can also be used to hold assets, not only shares. In this way, the company founder will place his assets in the company, which will effectively hold them and the individual will not be subject to liabilities or risks (these apply only up to the amount of contributed capital, as previously stated).
How is a Swedish holding company incorporated?
The holding company is incorporated as per the Swedish company formation rules and a commonly used business form is the AB, or Aktiebolag, the Swedish equivalent of the limited liability company (the LLC).
Investors who open a company in Sweden that will serve as a holding company typically choose the AB because it is a separate legal entity from its founders (as the name suggests). Other characteristics of the AB include the following:
- · Founders: the limited company can be incorporated by one or more individuals; no nationality restrictions apply in Sweden;
- · Minimum capital: founders will need to provide a minimum share capital of at least SEK 25,000 for this company;
- · Liability: the liability of the company founders is typically limited to their contributions to the share capital; in some cases, the founders can be responsible for the company’s unpaid taxes;
- · Reporting: all companies in Sweden need to maintain proper accounting records and legal entities follow several dates for filing the annual corporate income tax return, depending on the date when their financial year ends; our team can give you more details.
Our team can give you details about the option to use a virtual office for the holdign company.
There is no special holding company regime in Sweden. Companies are subject to the following taxes:
- o 20.6% corporate income tax;
- o 0% dividend withholding tax;
- o 31/42% aggregate social security contributions for companies that hire employees; our team can give you more information about social security contributions in Sweden.
The value-added tax applies on the supply of goods and services. Given the fact that the holding in Sweden does not supply goods or services, it will not register for VAT purposes or pay this tax unless it starts to supply VAT-taxable goods or services.
The conditions to set up a company in Sweden can differ according to the nationality of the investor (based on whether the founder ins an EU/EEA citizen or a citizen of a non-EU/EEA country). Our team can help you understand the conditions if you are moving to Sweden to start a business that will be engaged in active trade or that will only engage in holding activities.
If the holding in Sweden will hire employees, the employer will need to observe the rules for paying part of the social security contributions (which are paid both by the employer and the employee). Payroll in Sweden is not in place as a separate tax, however, these social security contributions are always taken into account as they vary according to the age of the employee. Our team can give you more details.
How can our team help?
Our team of company formation agents in Sweden can help you incorporate a legal entity that will ne used as a holding. When opening a company that will hold shares in other business forms, there is no need to obtain special licenses and permits, as may be the case for other types of companies, however, the business will need to be registered with the Swedish Companies Registration Office.
Our team will help you draft the incorporation documents and as needed, one of our agents can act as your legal representative in the country, when performing various submissions with the Swedish authorities.
Holding company set up is a process during which our team of company formation experts in Sweden can assist interested investors.
Contact us for more information about how we can help you open a holding company or any other business form of choice.