SWEDEN GUIDE
EMPLOY IN SWEDEN WITH EASE
- Access and hire global talent & deploy them anywhere in the world
- Remove restriction from only hiring from local markets
- Enter any international market without the requirement of opening a local entity
Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.
Expanding to countries such as Sweden – which is characterized by a well-educated workforce, favorable employment and tax laws, an outstanding infrastructure network, and leading sectors in motor vehicles, telecommunications, pharmaceuticals, industrial machines, forestry, iron, and steel – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.
Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved. Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.
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Sweden – The Economy
Sweden is a constitutional monarchy and a parliamentary democracy, with legislative power vested in the 349-member unicameral Riksdag. It is a unitary state, currently divided into 21 counties and 290 municipalities.
The economy of Sweden is a highly developed export-oriented economy, aided by timber, hydropower, and iron ore. These constitute the resource base of an economy oriented toward foreign trade. The main industries include motor vehicles, telecommunications, pharmaceuticals, industrial machines, precision equipment, chemical goods, home goods and appliances, forestry, iron, and steel.
Traditionally, Sweden relied on a modern agricultural economy that employed over half the domestic workforce. However, today Sweden focuses on further developing its engineering, mine, steel, and pulp industries, which are competitive internationally, as evidenced by companies like Ericsson, ASEA/ABB, SKF, Alfa Laval, AGA, and Dyno Nobel.
The vast majority of Swedish enterprises are privately owned and market oriented. There is also a strong welfare state, with public sector accounting up to three-fifths of GDP. In 2014, the percent of national wealth owned by the government was 24%.
Sweden also has the second highest total tax revenue behind Denmark, as a share of the country’s income.
Sweden maintains a Nordic social welfare system that provides universal health care and tertiary education for its citizens. It has the world’s eleventh-highest per capita income and ranks very highly in quality of life, health, education, protection of civil liberties, economic competitiveness, income equality, gender equality, prosperity, and human development.
Sweden has achieved a high standard of living under a mixed system of high-tech capitalism and extensive welfare benefits.
Sweden also has significant international ties – it joined the European Union on 1 January 1995, but has rejected NATO membership, as well as Eurozone membership following a referendum. It is also a member of the United Nations, the Nordic Council, the Council of Europe, the World Trade Organization and the Organization for Economic Co-operation and Development (OECD).
Small and Medium-Sized Companies
SMEs play an important role in the Swedish ‘non-financial business economy’, as they generate 61.2% of value added and 65.2% of employment, against the EU averages of 56.4% and 66.6%, respectively. Micro firms (0-9 people employed) account for 23.8% of employment, approximately 6 percentage points lower than the EU average of 29.7%.
Swedish SME productivity, defined as value added per person employed, is approximately €65,000, far exceeding the EU average of €44,600.
On average, Swedish SMEs employ 3.0 people, which is below the EU average of 3.9.
Two of the most important SME sectors are wholesale and retail trade and manufacturing, together contributing 35.3% of SME value added and 35.4% of employment.
| Country | Sweden |
| Capital | Stockholm |
| No. of States/Provinces | 25 |
| Principal Cities | Stockholm, Gothenburg, Malmö, Uppsala, Västerås, Örebro, Linköping, Helsingborg, Jönköping, Norrköping |
| Language(s) | Swedish |
| Local Currency | Swedish krona (SEK/kr) |
| Major Religion | Christianity |
| Date Format | yyyy/mm/dd |
| Time Zone | Central European Standard Time (GMT+1) |
| Country Dial Code | +46 |
| Population | 10,206,931 |
| Border Countries | Norway (West), Finland (Northeast), Baltic Sea (South) and Gulf of Bothnia (East) |
| Tax Year | Jan 1st – December 31st (calendar year) |
| VAT % | 25% |
| Minimum Wage | N/A |
| Taxpayer Identification Numbers | Tax ID (Skatteregistreringsnummer) VAT Number Social Security Number (personnummer) |
| Leading Sectors | motor vehicles, telecommunications, pharmaceuticals, industrial machines, precision equipment, chemical goods, home goods and appliances, forestry, iron, and steel |
| Main imports | Cars ($8.75B), Crude Petroleum ($6.93B), Refined Petroleum ($6.32B), Vehicle Parts ($5.77B), and Broadcasting Equipment ($4.87B) |
| Main exports | Cars ($11.8B), Packaged Medicaments ($8.04B), Refined Petroleum ($7.56B), Vehicle Parts ($5.22B), and Broadcasting Equipment ($3.89B) |
| Main trading partners | Germany, Norway, United States, Denmark, Finland, Netherlands, and China |
| Government Type | Unitary parliamentary constitutional monarchy |
| Current Prime Minister | Carl XVI Gustaf (King), Magdalena Andersson (Prime Minister) |
The Main Sectors of the Swedish Economy
The country focuses on the following key sectors, which all have a significant impact on the country’s economy:
- Agriculture – Blessed with significant natural resources, agricultural output in Sweden exceeds domestic consumption, although the country imports a significant amount of food items. Approximately 6.8% of the country’s total land area which is equivalent to 6,894,100 acres of land is arable, and they are under temporary or permanent crops.
The majority of farmers in the country are the elderly, and most farms do not have successors to continue farming in the country has become a major concern for the government. In the recent past, the government has introduced a policy to try and merge small farms into large units of approximately 25 to 50 acres of land.
The majority of farmers in Sweden are small scale who support the fishing industry and forests, and as of 2000, about 54% of the farms were below 50 acres. Some of the crops cultivated in the country include potatoes, barley, wheat, rye, vegetables, and fruits. - Manufacturing – Sweden has an efficient export-oriented manufacturing industry which contributes significantly to the country’s economy.
There are few employees in the private manufacturing industries compared to employees in the public manufacturing industries. Privately owned companies in the country account for about nine-tenths of the industrial output.
Automotive is the largest sector of the manufacturing industry which accounts for almost half of the industrial value-added. The aerospace and automotive manufacturing plants are located in the southern part of the country, and automakers such as Saab and Volvo are recognized globally.
The electronics and electric plants are located mainly in Västerås and Stockholm. The city of Stockholm is the largest producer of communication equipment in the country while small plastic and metal processing plants are found in the southern part of the country.
Stenungsund, which is located on the Western coast of the country, is famous for the petrochemical industry. Biotechnology and pharmaceuticals are some of the fastest-growing sub-sector in the country, and they are located near the top leading medical research centers in the country. - Tourism – Tourism in Sweden accounts for a relatively small portion of the country’s economy. In Sweden, 7.1% of household income is spent on local tourism. Most of the tourists who visit Sweden are primarily from neighbouring countries such as Norway, Denmark, and Finland. Other countries with a significant source of tourists to the country include the United Kingdom and Germany.
Some of the attractions in the country including the Vasa Museum and Drottningholm Palace Theatre.
Other attractions include literature, Swedish art, music, and modernism. The country has 13 UNESCO World Heritage sites. Most tourists visit the country in the summer months when temperatures are relatively high. - Trade & Finance – Exports from the country contribute about one-third of the GDP, and currently, the country export finished goods which are dominated by engineering products such the telecommunication equipment, cars, and hydroelectric power plant equipment.
The country also exports chemical and biotechnology and high technology equipment. Most of these products exported mainly to the United Kingdom Germany, Denmark, Finland, and Norway which account for about two-thirds of the country’s export market.
The country’s imports are generally diversified compared to exports. Initially, petroleum was the single most critical import, particularly before the 1980s when it accounted for almost 1/4th of the total value. The country imports most of its products from Norway, Netherlands, Denmark, and the UK. - Cybersecurity – The digital sector accounts for +/-20% of Sweden’s GDP, among the highest shares in the world. The security sector generated €150 million revenue in 2020 and is expected to grow at 13.7% annually.
Compliance Highlights
- The Swedish Tax Agency (Skatteverket) – manages civil registration of private individuals and collects taxes such as personal income tax, corporate tax, VAT, and excise tax.
- The Swedish Work Environment Authority – a regulatory authority, with a mandate from the government and the Riksdag (parliament) to see that all laws about work environment and working hours are followed by companies and organizations.
Payroll – Tax Contributions and Benefits
Income Tax:
Tax liability is based on residency. Individuals are considered liable if they are permanent residents, live in Sweden for more than six months or if they have a still-active former tax residency in the country. Residents are taxed on their worldwide income, non-residents on their income sourced in Sweden. Residents are taxed at 32% at municipal level on their first SEK 523,200 (€51,081, US$57,807). Income exceeding that amount is then liable for a further 20% tax applied at national level.
Health and Social Insurance: Sweden’s Ministry for Health and Social Affairs is responsible for administering social care through insurance schemes covering areas such as the sick and elderly, family and childcare and disability support. Health care is not free but not overly expensive. National health care is universally available and in the absence of public insurance it is funded by taxes at state, county council and municipal level. All residents, including expats, have access.
Employers contribute the equivalent to 31.42% of employees’ salaries (no cap) to the Swedish Social Insurance Agency (Fӧrsäkringskassan) and this also applies to foreign employers with or without a permanent establishment in the country. Employees contribute 7% of their salary towards their state pension but receive corresponding tax relief.
Sick Leave: The Swedish Sick Pay Act decrees that for the first 14 days the employer pays ‘sick pay’ at 80% of salary, up to an hourly maximum SEK 810 (€79, US$89.50). The employee must provide a medical certificate if ill for more than one week. After 14 days, ‘sick pay’ becomes ‘sickness benefit’ from the Swedish Social Insurance Agency (Fӧrsäkringskassan), also at 80% of salary.
If the employee is expected to be ill for at least 60 days, the employer must after 30 days draw up a rehabilitation plan to assist the employee’s return to work.
Paid Vacations: The Annual Leave Act stipulates a minimum of 25 days’ vacation annually, with days for part-time workers calculated accordingly. Those starting new employment after August 31 receive only five days paid vacation until April 1 of the following year. Contracts or collective agreements can allow for extra days.
Entitlement to vacation is separate from entitlement to vacation pay, which is calculated on the ‘qualifying year’ before the following ‘vacation year’, which run from April 1 until March 31. Qualifying pay is based on monthly salary and any supplements and bonuses, regulated by the Annual Leave Act, and adjusted if the individual has been an employee for less than a full qualifying year. Employees not qualified for vacation pay still receive their minimum vacation.
Public Holidays: Employees are entitled to 13 paid public holidays (listed below). Public holidays occurring on a weekend will remain on that day. Swedish law contains no provisions on pay for hours worked on a public holiday.
New Year’s Day – January 1
Epiphany – January 6
Good Friday – March / April
Easter Sunday – March / April
Easter Monday – March / April
Labor Day – May 1
Ascension Day – May (40 days after Easter Sunday)
Whitsun – June
National Day of Sweden – June 6
Midsummer’s Day – June
All Saints’ Day – November 5
Christmas Eve – December 24
Christmas Day – December 25
St Stephen’s Day – December 26
New Year’s Eve – December 31
Maternity / Paternity / Parental Benefit and Leave: Mothers take seven weeks each before and after birth, with fathers entitled to 10 days paternity leave taken at the same time as the mother. Mothers can begin drawing benefit 60 days before the birth. Benefit for parental leave is paid by the state for 480 days (roughly 16 months) for a single child. Within this allowance, 390 days of ‘sickness benefit days’ are based on 80% of salary capped at SEK 1,006 (€98, US$111) while the remaining ‘minimum level’ days are paid at SEK 180 (€17.60, US$20) per day.
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