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Open a Startup in Sweden

Open a Startup in Sweden

Investors who open a startup in Sweden benefit from a welcoming regime, a good business climate and opportunities for development and growth. Our company formation experts offer assistance and guidance to investors who are interested in opening a startup in the country. Tech startups in Sweden, as well as other types of startups, are flourishing, with Spotify being just one example of a valuable startup.

Moving to Sweden for investment purposes, starting a company as a foreign entrepreneur, or opening a startup as a Swedish national is straightforward and simple when enlisting the help of a team of experts, such as our own.

If you want to open a company in Sweden, starting with our help is an easy way of making sure that you follow all of the steps, staring with choosing the right business form. For startups in Stockholm that are already running, our team can provide the needed, ongoing assistance. Read below to find out more about the company formation steps and the solutions we provide to local and foreign investors in Sweden.

The incorporation steps for a startup in Sweden

Starting a business in Sweden is straightforward and it involves the same steps both for local and foreign investors. Our team of company formation specialists summarizes the main stages of company formation below:

  1. Choose the business form: the limited liability company is the most common business form for startups, however, our team can give you details about the characteristics of all the available business forms;
  2. Register the business name: while registering the business name is not mandatory, it is highly advisable as this is the sole manner in which investors can protect their chosen name; a name registration fee applies;
  3. Prepare the company documents: investors will need to draw up the Articles of Association for the startup in Sweden;
  4. Register the business: all companies in the country are registered with the Swedish Companies Registration Office; additionally, the company is registered with the Swedish Tax Agency.

Additional steps include opening a bank account in Sweden for the new company and applying for any special permits and licenses that may be needed in the industry in which the startup will operate.

Part of creating a startup in the country will also have to do with hiring employees. Payroll in Sweden is not in place as a tax per se, however, social security contributions are mandatory for the employer (up to a certain percentage and according to the age of the employee). Employers in Sweden register for the pay as you earn regime (PAYE). This also applies to startup founders who open a limited company and work for it. Our team can give you complete details about the requirements for employers, as soon as you are ready to hire staff in the country. 

All new businesses in Sweden benefit from having a sound business plan.

As previously mentioned, companies can benefit from registering their business name in Sweden. Startups can take advantage of this registration, thus making sure that they will be clearly recognizable and that their name remains a unique one in Sweden. Hiring employees is another key step for investors who open a startup in Sweden.

All companies are required to observe the Employment Protection Act, and conclude an employment agreement. Four types of such agreements are recognized by law in the country and they are designed to suit various employment types, from temporary work to the work performed by employees over the age of 67.

Investors who set up a company in Sweden can rely on our assistance for the registration of the company. Discussing several matters beforehand, such as the business plan, can be advisable in case of start-ups which have scalable business models and are often based on an innovative business idea. You can reach out to our team of advisors before you start the company formation process. 

Startup financing in Sweden

Some startups in Stockholm will need one or more years before they become profitable. This means that, at least for a short period, the company may need to look for means of financing other than the founder’s own funds. Apart from the capital invested by each of the shareholders, the company can also apply for a bank loan or apply for one of the grants available in Sweden for investments and employment or for research and development.

Tech startups in Sweden can take particular advantage of some of these grants, provided by the Swedish Tax Agency, the Swedish Energy Agency or the Swedish Environmental Protection Agency, among others. Below, our team of company formation agents in Sweden lists examples of grants that can be accessed by startups and other companies:

  • The Swedish Energy Agency: offers grants for companies with projects that can reduced the emissions of industrial processes; for R&D, the value can be 25-100% of the project costs, in case of large companies and groups; a grant for energy efficiency improvement is offered by the same agency and it allows companies to receive maximum 30% of the eligible investment costs and 50% of the total project planning cost;
  • The Swedish Public Employment Service: offers grants of up to SEK 252,324 (approx. 23,700 EUR) per employee to companies that hire unemployed individuals or persons who are new in Sweden;
  • The Taxation of Research Workers Board: offers grants to companies employing foreign citizens, social fees based on 75% of the salary;
  • The Swedish Tax Agency: offers the reduction of social fees for employees active in the research and development field.

Other grants and programs are available for R&D focused startups in Stockholm and in other Swedish cities. Please keep in mind that the information about the aforementioned grants should be used for informative purposes. Each of the grants is subject to conditions and eligibility requirements set forth by the agency that offers it.

Our local team can give you more details if you are interested in applying for these.

Corporate taxation and compliance in Sweden 

We remind investors that a startup in Sweden will be taxed on its worldwide income, as such:

  • 20.6% corporate income tax rate;
  • 0% withholding tax on dividends paid to residents/ 30% in case of nonresidents on dividend distributions from Swedish companies (in most cases);
  • 25% standard value-added tax;
  • 0%,6% and 12% reduced value-added tax rate.

The startup’s income year will be the same as the financial year and most companies choose to use a year that ends on December 31st, although other 12-month periods can be used for this purpose.

The corporate income tax is based on the net income of the company earned in the previous year and companies have four different dates on which they can file the annual corporate income tax return, according to the date on which their financial year ends.

Preliminary corporate tax returns are filed a month before the start of the tax year and the final tax assessment is made within six months from the final date for the tax return filing (the company will either receive a refund or will pay a final balance). Penalties apply for late filing and surcharges are in place if the taxpayer omits information.  Our team specializing in company formation in Sweden can give you more details about taxation and accounting.

Particular advantages for a startup in Sweden

An advantage for startups in Sweden is the human capital. The wide range of experts, and the number of universities graduates each year, ensures that startups in Stockholm and in the rest of the country have access to a talented pool of potential employees. What’s more, tech startups in Sweden have access to incubators, and the advantage that the country has a very large smart-device usage rate, among the highest in Europe.

The Swedish Incubators & Science Parks has a number of projects, among which we can mention the Swedish Innovation Arena, through which various actors in the startup scene can better collaborate and develop tools for businesses and growth. In addition to the advantages for startups, all companies in Sweden benefit from a stable economy and access to the European Union, with a focus on the Nordic market.

We provide complete company incorporation services, can provide you with details about a virtual office in Sweden, and much more. Contact our team if you are ready to open a startup in Sweden.