Sweden Subsidiary Entity Set Up

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Swedish Entity Set Up

Sweden welcomes foreign investment into its open and diverse economy. The World Bank ranked the nation 10th overall out of 190 nations in its 2020 ‘Ease of Doing Business’ report and ninth for starting a business. Even so, expanding overseas is a major step, especially for companies considering opening a legal entity in their new territory.

At Bradford Jacobs, we believe this adventure should be exciting instead of frustrating and time-consuming. By partnering with us, you create the possibility to bypass this process and utilize our expertise. By using our PEO service, we take care of the complicated paperwork.

In this guide, we will share which documents you need to establish an entity in Sweden, where you will need to register your business address and company’s name, as well as all the other the ins and outs of setting up an entity in Sweden.

How to set up a Swedish Subsidiary

Setting up a subsidiary in Sweden? First, choose the company type. Most typically the choice will be between a branch and a private limited liability subsidiary known as an aktiebolag, or AB, and regulated by the Swedish Companies Act (aktiebolagslag). The subsidiary is a legal entity entirely independent of the parent company and is incorporated in Sweden as a local company. Various documents and procedures must be completed to set up the subsidiary. These include:

  • Opening a bank account to deposit minimum share capital of SEK 25,000 (€2,430, US$2,740)
  • Register with the Swedish Companies Registration Office (Bolagsverket) to obtain the registration certificate and pay associated fees
  • Register with the Swedish Tax Agency (Skatteverket)
  • Required documents include Articles and Memorandum of Association, all of which to be signed by the founders / shareholders
  • Names and addresses of the shareholders, their shareholdings, and the shareholder structure of the company
  • Lodge the signed documents with the Registration Office no later than six months after the documents are signed
  • Check with the Financial Supervisory Authority if licenses are required, depending on the nature of the business
  • On receipt of the registration document, the company becomes a legal entity

Benefits of setting up a Swedish Subsidiary

Specific advantages for a foreign company opening a subsidiary in Sweden include not being responsible for the subsidiary’s debts or liabilities. Also, the foreign parent company’s financial statements and accounts do not need to be presented to Swedish authorities.

The subsidiary can operate under a different company name and can pursue separate business interests. It operates under Swedish law in the same way as local companies and is taxed on its worldwide income and liable for 20.6% Corporate Tax on business profits. The liability of the subsidiary’s shareholders is limited to their investment in shares.

Through its subsidiary, the parent company has the advantage of exploring the Swedish market and further afield among other Nordic countries and the European Union’s 27 member nations.

Other benefits for a subsidiary: 

  • Easier to obtain regulatory approvals, loans and finance and enter contracts with other Swedish and European Union companies 
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches 
  • Employees feel there is more stability and job security than from being with a branch 

In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the European economy.

However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Sweden.