Want to expand into the European market? Sweden is one of the best countries to start a business. Among all European countries, Sweden ranks within the top five most lucrative and stable economies. According to the International Monetary Fund, the Gross Domestic Product of Sweden is expected to increase by 50%, from USD537 billion (2020) to USD806 billion (2026).
As a member state of the European Union (EU), doing business in Sweden will also allow the benefit of easy access to fellow EU member states.
The Swedish government has enacted several policies that make it easier and more efficient for entrepreneurs to conduct business within the country, such as establishing platforms that allow taxes to be filed online. The country is also a major technological hub, with many pharmaceutical and tech companies making Sweden their home.
As mentioned earlier, Sweden boasts a very competitive economy. The country has a very stable political climate and one of the most secure banking systems. Sweden also has a highly developed and ever-expanding infrastructure that facilitates the ease of exchange of goods and services. Moreover, the country enjoys a reputation for creating high-quality and sustainable products that are good value for money.
Besides being a member of the EU, Sweden is within proximity to many Nordic countries. It allows entrepreneurs to readily interact with countries such as Norway and Denmark, which are some of the biggest economic powerhouses in the world.
The type of government in Sweden is a parliamentary representative democratic constitutional monarchy. The Prime Minister, elected by the Speaker of the Riksdag, heads the executive branch of the government. Meanwhile, the Riksdag (or parliament) serves as the legislative branch of the government. Finally, the Supreme Court of Sweden runs the judiciary branch of the government.
Before setting up a business, you first need to familiarize yourself with the different business types recognized by Sweden. In general, there are five common business entities in Sweden:
As of 2021, the company tax is set at a rate of 20.6%. The income tax is determined by the amount of money earned within the year. If an individual earns up to SEK 523,200, they will not be required to pay the national tax but only the municipal tax, which ranges from 29-35%. If a person earns above SEK 523,200 within the year, they will have to pay the 20% national tax plus the 29-35% municipal tax. The highest combined tax rate is 56%.
Sweden also imposes Mervärdesskatt (Moms) or VAT, with the standard rate being 25%.
The typical working hours in Sweden are 40 hours per week, with the maximum legal limit being 48 hours per week. Workday usually begins between 8 – 9:30 AM and ends at 5 PM.
Overtime is limited to, at most, 50 hours per month and no more than 200 hours within a single year. Overtime pay is 50 – 100% of the employee’s regular salary.
All employees are entitled to 25 days of vacation leave according to a law enacted by Sweden known as the Annual Leave Act. Additionally, under this law, all employees are required to have a four-week long vacation during the period between June and August.
Vacation pay will be based on an employee’s basic monthly salary.
The Swedish Sick Pay Act covers information about sick leave in Sweden. An employer must pay their employees who are absent due to illness for up to a maximum of 14 days. Sick pay is roughly 80% of an employee’s normal salary. After 14 days, the employee can report to the Försäkringskassan, the Swedish government agency that deals with social insurance.
Mainly tax-funded, Sweden’s decentralized healthcare system is considered one of the best in the world. The general population enjoys good health, with a life expectancy of 84 years old.
Meanwhile, Sweden employs payment caps for all medical services. Prescription drugs are capped at SEK 2350 per year. After the cap is reached, all prescription drugs will be free.
Hospital visits, which also include ambulance services, range between SEK 150-400 per visit. It also covers all services such as tests and X-rays. After reaching a total of SEK 1150 in hospital fees in a year, each subsequent visit will be free. Dental services are free for all Swedish citizens under 23 years old.
When considering starting a business or expanding to a new region, like the Sweden, it is important to have a good understanding of local regulations and processes. Having a partner like INS Global makes entering a new market quick and easy. We are able to take the administrative burden away from your company. We can help your business across a range of different fields such as PEO (which allows your business to hire employees without setting up a separate entity), recruitment, payroll administration and many more. INS Global aims to simplify your global expansion, by providing your business with high quality expertise. Contact us today and let us make your global expansion easy.