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Set up AB (LTD) Company in Sweden

Set up AB (LTD) Company in Sweden

The Swedish limited company (aktiebolag or AB), or the LLC in Sweden, is a legal structure separate from its founders and also one of the most commonly used business forms in the country. The distinct separation between the corporation and its founders is one of the main advantages for those interested in setting up a limited company in Sweden. The Swedish AB can enter into agreements, sue or be sued, and has its own responsibilities as well as rights. The shareholders are only liable for the debts and obligations of the corporation to the extent of the capital they have invested in the company, hence the limited liability. If you need more details about this business form, or about other types of companies in the country, we invite you to reach out to our specialists.

 Quick Facts  
Minimum share capital for an LLC in Sweden  SEK 25,000 

 Minimum number of LLC shareholders 

 1

Number of directors  

 1

 Mandatory residency requirements to set up an LLC

 – A residence permit is required for non-EEA/Swiss nationals who come to Sweden to start a business.

– The managing director of the limited company must reside within the EEA.

– If all the directors reside abroad, the company needs to have a Swedish representative (an individual registered with the Swedish population register).

Local director required (Yes/No) 

 No

 Time frame for setting up an LLC in Sweden

 5 – 6 days

 Corporate tax rate in Sweden

 20.6%

 Dividend tax rate

 Varies according to tax treaties

 VAT rate in Sweden

 – 25% general rate,

– reduced rates of 12% and 6% for certain types of goods and services

 Number of double taxation treaties (approx. )  92
 Annual meeting required

The limited company is obliged to hold an annual general meeting. 

 Accounting and filing requirements

An LLC must maintain accounting records and file the annual financial statements. 

 Foreign-ownership allowed

 Yes

Tax exemptions or incentives for setting up an LLC in Sweden 

Regional investment and transportation grants are available, along with an R&D tax deduction, an expert tax relief scheme, and financial support for hiring unemployed individuals (all subject to conditions) 

 Additional licenses  Permits are required according to the company's activities (finance and insurance, healthcare, manufacturing, food, lodging, etc.)

The process to set up an AB is Sweden in 2024 is a fairly simple one, and it is even more straightforward for EU citizens.  In this article, our Swedish company formation experts list the most common traits of the LLC in Sweden, the main set up steps as well as the most important taxes this company is subject to.

The private and the public LLC in Sweden

The limited company has two forms: private or public. There are several important differences between the two and our team summarizes these below:

  • Shares: the private limited company cannot sell its shares to the public and the public limited company can do so;
  • Minimum capital: SEK 25,000 for the private limited company and SEK 500,000 for the public one;
  • Members: at least 1 for the private company and at least 3 for the public company;
  • Management: the private company has an optional managing director and it is recommended to have an auditor (this is only mandatory in some cases) while the public company must have a managing director as well as an appointed auditor.

As seen above, there are important differences between the two forms of the LLC in Sweden.

In practice, the private AB company is used by small or medium-sized companies and the public form is used by large corporations.

set-up-ab-ltd-company-in-sweden.png

Residency rules for managers and directors

The conditions for the managing director are to be over 18 years of age, not be bankrupt, or prohibited in any way to carry out a business. The managing director of the company must reside within the EEA and half of the board members are also required to resident within the EEA (and the same applies to deputy board members). The conditions are only for residency within the EEA, not for citizenship in one of the states. An exemption to the residency rule presented above can apply in some cases.

The application for exemption is sent to the Bolagsverket and it is submitted in Swedish. Additional documents may need sworn translations in order to be accepted, although exemptions apply in case of easy to understand documents that are in English. 

It should be noted that the managing director has more liability for the LLC, compared to the shareholders. He or she can be held personally liable for the debts of the company, for example for unpaid taxes.

Steps needed for setting up a limited company in Sweden

When opening a new business entity, investors are required to follow a number of key steps. The same applies both for the private and the public AB in Sweden.

When setting up a limited company in Sweden, the steps are the following: 

  1. Prepare the documents: these are the new company’s Articles of Association and the Memorandum; they include information about the business for, the members, the duration of the company, its scope and name, etc.;
  2. Make the capital payment: the founders submit their capital contribution that amounts to the minimum capital requirements for the chosen form, private or public; the capital is deposited into a bank account and the contribution can be made both in cash and in kind;
  3. Apply for registration: once the documents are drafted and signed and the capital is paid, the founders fill in the form for registration with the Companies Registration Office;
  4. Receive the registration conformation: once the company is approved for registration with the Office, it will be assigned a registration number and a certificate of registration (in Swedish).

If the registration of the business is approved by the Bolagsverket, the Swedish Companies Registration Office, then the authorities will issue a business registration certificate in Swedish. The business can start its activities after receiving the registration certificate. After registration, investors who open an LLC in Sweden will wish to register as employers with the Swedish Tax Agency, as well as follow the steps needed to obtain special permits and licenses.

For example, companies that engage in certain finance and insurance services need to obtain an authorization from the Swedish Financial Supervisory Authority.

If you want to open a company in Sweden, our team can assist you with the registration of any corporate form. We provide complete assistance with the registration of the company with the Swedish Companies Registration Office, as well as the subsequent registration with the Swedish Tax Agency for tax purposes and, depending on the nature of the business, we also assist with VAT registration. 

We invite you to watch a video about this type of company:

Costs to consider after setting up a limited company in Sweden

The company formation process in Sweden includes the aforementioned registrations with the authorities, most notably with the Swedish Companies Registration Office.

Our team lists the most important costs for the initial company registration, as well as other costs that apply for subsequent changes brought to the company. Please keep in mind that these fees can be subject to change:

  • Limited company registration: 2,200 SEK;
  • Second company name application: 1,600 SEK;
  • Business name change: 1,600 SEK;
  • Changes to the company’s articles of association: 1,000 SEK;
  • Secondary business name application: 1,600 SEK per name.

Other fees apply, for example when the founders wish to change the board of directors, register or change an auditor an din other cases.

Investors who use the electronic registration services offered by the Swedish business portal are subject to other fees:

  • Registration: 1,900 SEK;
  • Register a special company name: 1,400 SEK for each name;
  • Register the company name in a foreign language: 1,400 SEK for each name;
  • Change the company name: 1,400 SEK;
  • Operations that are not subject to taxation: changing the postal and e-mail address for the company and changing the postal address for the company representatives.

The fees above do not include and are not subject to VAT.

As seen above, the fees for registering a limited liability company in Sweden can differ.

You can reach out to our team as soon as you decide to incorporate in order to find out an estimate of the costs and how to proceed so maximize efficiency during the registration process.

In addition to the fees owed to the Swedish authorities, investors can also include the costs related to renting or purchasing an office space or a virtual office, as well as any equipment costs that are relevant for their industry. 

AB company taxation in Sweden in 2024

When setting up a limited company in Sweden, one of the most important issues to take into account is how the company will be taxed.

The LLC in Sweden is subject to the following taxes:

  • 20.6% corporate income tax rate;
  • 30% Swedish withholding tax on dividend distributions from Swedish companies (for foreign companies);
  • 25% standard value-added tax and two other reduced rates of 12% and 6% plus a 0% rate for certain types of goods and services;
  • 31.42% aggregate social security contributions paid by the employer;
  • 4.25% standard stamp duty payable on the purchase or transfer of real estate.

All companies in Sweden prepare an annual report and file it with the Swedish Companies Registration Office.

As far as value-added tax in Sweden is concerned, the 2024 value for this tax remains unchanged, at 25%. Two reduced rates of 6% and 12% also apply for certain types of goods and services, and some types of services are either exempt altogether, or subject to a 0% rate. The Swedish VAT law follows the EU VAT directive, also including those that refer to the exemptions applicable in the case of this tax (for example, education or healthcare, among other types of activities). Also, local and foreign companies are expected to register for VAT purposes if they are subject to this tax and there is no threshold for registration. 

Investors who open a company in the country that will engage in VAT-taxable activities will need to register the business for VAT. Our team can provide assistance during this step.

A small limited liability company will be subject to lighter annual report requirements, for example, the auditor report may not be required in all cases.

The tax year has a 12-month period and companies has four dates to file the corporate income tax return based on the period during which their financial year ends. For example, for an LLC in Sweden for which the tax year ends between 31 January and 30 April, the return is filed no later than 1 November for the paper for or 1 December for electronic returns, the year in which the financial year ends.

Penalties apply for late filing and if the members do not file the annual report for a limited company within 11 months from the end of the financial year, there is the risk for the company to be liquidated. Late filing is calculated in terms of 7 months from the end of the financial year, 9 months from the end or 11 months from the end of the financial year.

Late filing is subject to a fee of SEK 6,250 and, when a return is still not submitted within 5 months of the filing deadline, additional fees of up to SEK 18,750 can apply. When taxpayers omit information or submit false data, they are subject to a surcharge of 40% of their tax due.

The annual report contains basic information about the company, such as the profit and loss account, the balance sheet, the auditor’s report, cash flow statements, consolidated accounts and others.

The company you choose to incorporate in Sweden will need to comply with the current tax and accounting reporting requirements. These include those taxes for employers (the social security contributions), as well as the corporate tax and other applicable taxes. Payroll in Sweden is not levied as a separate tax. Our team can give you more information before or after you register the business. 

Closing a limited company

Local and foreign investors in Sweden can also rely on our assistance if they wish to cease the activities of a limited liability company. This is not a complex procedure when handled with our help and can be accomplished by the sale of shared, through liquidation, through a merger or through bankruptcy. Each of the processes listed above has its own particularities and can be suited for a certain situation (such as the case in which the company can no longer pay its debts).

Working with our team and getting assistance as needed is recommended. If you wish to know more about the limited company in Sweden, as well as if you need specialized assistance for setting up a private or a public LLC, you can contact our company formation agents in Sweden.

We provide complete company incorporation packages and help foreign investors set up their Swedish businesses.

Investments in Sweden

Investments in Sweden are increasing, as shown by data provided by the country’s Statistical Institute. The data briefly outlined below by our team summarizes some of the statistics for the third quarter of 2023:

  • The enterprises’ investments increased in Q3 2023, compared to the same period in 2022; the increase was of 6%;
  • Total investments in Q3 amounted to SEK 95.1 billion.

If you would like to start a company in Sweden in 2024, do not hesitate to contact us.