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Payroll in Sweden

Payroll in Sweden

Payroll in Sweden is the employer’s obligation to keep a list of all its employees and the payments they are entitled to receive. Moreover, employers are required to make social security contributions. Companies are required to observe the rules for registering as an employer with the Swedish Tax Agency, as well as making the necessary submissions. Investors who wish to open a company in Sweden can receive more information about the required registrations for employers from our company formation experts.

Those who require payroll services in Sweden can also contact us for more information. Most businesses choose to outsource payroll as it is more convenient, and it allows for timely and accurate payments overseen by a team of experts.

Setting up payroll in Sweden

After investors open a company in Sweden, once the mandatory registration phase is complete, they will need to plan for an accomplish a number of other steps. These include meeting any special requirements that apply to their field of activity (such as special permits), as well as hiring employees and paying taxes. Our team can give you more details about the post-incorporation steps.

The first step for companies that will employ staff in Sweden is to register with the Swedish Tax Agency (Skatteverket). The employer is required to pay contributions, as well as deduct income tax on behalf of his employees. We refer to these as the payroll tax in Sweden. There are certain situations in which companies that hire foreign staff are not required to pay their percentage of the social security contributions.

This also impacts payroll in Sweden, however, it only occurs when the foreign national who are considered posted (and the employee has a certificate which proves that he/she is registered for social security purposes in another country).

Entrepreneurs who request specialized payroll services in Sweden will benefit from having services that meet these specific requirements, if they choose to hire foreign staff for their Swedish company. In order to register the information for the purpose of payroll in Sweden, the employer will require certain data and documents from the employees. These are the Swedish tax identification number (for nationals) and personal documents for foreign employees.

The social security contributions in Sweden were the following in 2023:

  • 31.42% aggregate social security contributions;
  • the contribution is 0% of the salary for individuals born in 1938 or earlier and 10.21% of the wage for those born between 1939 and 1953;
  • the employer does not pay the pension insurance fee of 7% of the salary on income up to SEK 519,708;
  • the maximum pension insurance fee charge is SEK 36,400;
  • the pension insurance fee can be fully credited against other income taxes, subject to conditions; our team specializing in company formation in Sweden can give you more details.

Investors who are ready to start a business and are looking for more details on the costs can reach out to us for details. These mandatory social security contributions are part of payroll tax in Sweden.

Our team can provide you with complete guidance regarding the applicable taxes, as well as dedicated tax services. We also offer virtual office services, which can be a suitable option for reducing the cost generally associated with traditional office spaces.

Payroll services in Sweden

Working with a team of professionals who offer dedicated payroll services is advisable for many companies in Sweden, irrespective of their size or industry.

When working with a team of specialists, companies have access to the following payroll services in Sweden:

  • employee registration for social security purposes; deregistration as needed upon the termination of the employment agreement;
  • pay agreement optimization;
  • bonus payments and salary management.

In most cases, payroll in Sweden is part of a larger accounting services package, however it can also be requested as a standalone service.

A payroll service provider, such as our team, will ensure that the payment of the wages and the corresponding taxes to the Swedish authorities are fully taken care of. This is a task that can be time-consuming for the business, therefore, many companies will choose to outsource payroll to a team of experts such as our own.

If you are just planning on opening your business, or if you are in the preliminary stages of company formation in Sweden, our team can answer preemptive questions about payroll and the most common issues (concerning the monthly wage payments to the employees, minimum wages, salary calculation, bonuses and overtime compensations, and more).

If you already have a payroll provider and wish to switch to our team, we can walk you through the necessary steps. This is commonly done at the start of the accounting year (which, in Sweden, can be the same as the calendar year). However, if you would like to change the payroll service provide midyear, this is also possible with our help.

Employment statistics in Sweden

According to Statistics Sweden, the number of employed individuals aged 16-74 is expected to increase by 691,000 between 2016 and 2040. The prediction is that most of the new employees will be foreign-born individuals.

Other data shows that:

  • Employment: in May 2022 there were 5,175,000 employed individuals in Sweden;
  • Foreign employees: the number of employed persons who were not born in Sweden increased by 84,000 to a total of 1,159,000;
  • Unemployment: the number of unemployed individuals was 482,000, a decrease of 64,000  persons compared to May 2021;
  • Work hours: the average work hours per week saw an increase of 3.5% in calendar-adjusted figures.

If you would like to know more about payroll in Sweden and the employer’s obligations, you can contact our company formation experts.

Doing business in Sweden

As previously mentioned, companies are subject to a set of taxes, however, there is no payroll tax in Sweden in place as one of the distinct taxes on businesses.

Investors can keep in mind that our team offers complete accounting solutions that also target payroll in Sweden. If you wish to outsource the payment of your employees (and the payment of the company’s social security contributions and all of the employee-related duties), our team is ready to provide you with an offer for these types of services.

Investors who open a company in Sweden can rely on our complete solutions both in the pre-registration phase, as well as once the company is registered and it needs to start complying with the ongoing requirements (among which accounting and payroll).

Discussing issues such as taxation, the employment of staff and the duties and responsibilities that come with this essential step is important and we recommend that business owners consult with our team for information on the current requirements and best practices, for payroll services in Sweden and more.

Starting a business in Sweden is subject to several mandatory steps, starting with choosing the suitable business type that will be registered with the Companies Registration Office. Our team can help you during this stage with complete assistance during business registration. In most cases, the business will take the form of a limited company or a trading partnership (which can be set up by two legal entities), as these will be the ones to hire employees.

Employing staff in Sweden is not one of the first steps, as it takes place after company registration (once the business is registered with the Companies Registration Office, after it applies for F-tax and VAT registration and once it has its needed permits for functioning).

Once the company is registered and operates under proper licensing, it can employ staff. An exception is in place when it comes to the posting of employees: in some situations, the company that hires employees from outside Sweden will not be asked to pay the social security contributions in Sweden for these foreign employees. This applies because a posted employee will still be deemed to belong to the social security contribution system in his or her country of origin. If you would like to know more about hiring employees, the form of employment, the agreements, and the contributions, taxes that are paid by the company, our team will give you details and also provide you with payroll services in Sweden.

We also offer services to investors who wish to open a branch in Sweden.