If you are a foreign investor and you are interested in opening an SPV (special purpose vehicle), our team specializing in starting a company in Sweden is able to assist investors throughout the incorporation of a special purpose vehicle, as well as with the mandatory post-registration steps.
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What are special-purpose vehicles?
A special purpose vehicle is a legal entity, usually structured as a company, used for a certain purpose (financial or operational). At the same time, SPVs are a functional concept used in financial structuring to isolate risk, manage assets, or support specific transactions.
Under Swedish legislation, any entity used as an SPV must be incorporated in accordance with general company law, notably the Swedish Company Act (ABL – Aktiebolagslagen).
What are the general requirements for an SPV incorporation in Sweden?
The registration of a new business is contingent upon meeting the requirements set forth in the Swedish Companies Act. Investors who wish to open a company in Sweden and use it as a special purpose vehicle can keep in mind the following key requirements for incorporation:
- Choose the business form: an SPV is incorporated as a private limited company (Aktiebolag AB) due to its limited liability and legal separation.
- Select the company name: when opening a limited company, the founders need to choose and reserve an available business name. The name does not have to be misleading, must be unique, and approved by the Swedish Companies Registration Office (Bolagsverket).
- The Articles of Association and Memorandum must comply with Swedish law and clearly define the company’s purpose, share structure, and governance framework. The specification of a limited purpose may support the functional use of the entity as an SPV.
- Prepare the incorporation documents: these are the Memorandum and the Articles of Association; for investors who open an SPV company in Sweden, the constitutive documents can specify its particular purpose.
- Pay the minimum capital: for a private limited company, this is SEK 25,000; proof of this payment must be provided via a bank certificate.
- Register the new company: a limited company is registered with the Swedish Companies Registration Office, which maintains the official register of companies in Sweden. Legal personality is acquired upon registration.
In addition to these general requirements, further obligations could be instated depending on the intended activity of the SPV.
Which additional licenses are required for an SPV in Sweden?
The requirement to obtain a license depends on the nature of the SPV activity. If the SPV conducts regulated financial activities, such as investment services, fund management, or credit provisions, an authorization from the Swedish Financial Supervisory Authority may be necessary.
It is important to note that the assessment of licensing requirements is carried out on an entity-specific basis. This is because regulations that specifically address this segment mean that entities are not exempt from them when there is no specific legal framework.
What taxes apply to an SPV in Sweden?
Our team also reminds investors of the main types of taxes and contributions applicable in the country, which are also relevant for those considering their option to open an SPV in Sweden:
- Corporate income tax: imposed at a rate of 20.6% – no alternative minimum tax applies, according to the Swedish Tax Agency;
- VAT: with a standard rate of 25%, and reduced rates of 6%, 12%, and 0% in some cases or for certain goods and services. Not all SPVs are required to register for VAT. Holding companies could fall outside VAT scope depending on their activity;
- Social security contributions: while there is no payroll in Sweden in place as a standalone tax, employers need to pay social security contributions for their employees, and these usually have a value of 31.42% (they can be lower, depending on the age of the employee). If the SPV has no employees, such contributions do not apply;
- Other taxes: these include a real property tax for companies that own real property, as well as stamp duty in some cases, depending on the SPV’s activities.
Do tax treaties affect SPVs in Sweden?
Sweden has an extensive network of double tax treaties with other countries that aim to prevent double taxation and facilitate cross-border investments. Access to treaty benefits depends on factors such as beneficial ownership and economic substance. SPVs without sufficient substance may not benefit from the protections offered by such treaties.
The application of tax treaties is governed by Swedish law and international tax principles, including those developed by the Organization for Economic Cooperation and Development (OECD).
Considering that Sweden has signed more than 100 double tax treaties, our team can provide you with additional information on how these can apply in the case of a foreign company that uses an SPV in Sweden.
What practical aspects apply when using an SPV?
The use of an SPV in Sweden necessitates careful planning that should follow both legal and tax aspects. Key considerations may include:
- ensuring legal separation of assets;
- compliance with financial regulations;
- meeting tax substance requirements.
For those who fail to comply with the obligations stemming from regulations of tax provisions, this may result in penalties or loss of legal protection, while accounting and reporting obligations must be respected in accordance with Swedish law.
What are the benefits of using an SPV in Sweden?
Transferring assets to an SPV in Sweden can support risk separation and be a suitable business choice when this vehicle is set up for a particular project, and the corporation that uses it does so as part of its overall business strategy. Whether it will be used for funding projects or risk management, in order to open a SPV company in Sweden, the interested parties will need to follow the company incorporation steps.
However, legal effectiveness depends on proper structuring that should include a clear ownership transfer and separation from the parent entity.
Conclusion: Is Sweden suitable for SPVs?
Sweden is internationally recognized as providing a stable legal and regulatory environment for opening an SPV. The country’s legal system is also well-developed and aligned with European Union standards, making it appropriate for company formation in Sweden.
However, the absence of a specific SPV legal framework means that such structures must rely on general company law and EU regulations. Therefore, investors should ensure full compliance with:
- the Swedish Companies Act;
- applicable tax legislation;
- financial regulation;
- relevant EU regulations;
- licensing requirements that are specific to the sector.
When the above conditions are met, Sweden can provide a suitable jurisdiction for entities used as SPVs.
If you want to know more about how to open an SPV company in Sweden, please contact us.