Most people travelling abroad for a holiday, to work, to visit friends or for cultural reasons require documentation to enter a country. Nations strictly protect their borders and compliance with their rules and regulations is paramount. Each applicant is responsible for their own paperwork before entering, and this includes Sweden.
For companies committed to international expansion, experts are available to help. Bureaucracy can prove the undoing of many companies when it comes to work permits, visas, and immigration law. Moving potential employees or existing staff across the world would need a dedicated HR team, whereas specialists are already up and running and ready to assist.
Bradford Jacobs is a Professional Employer Organization (PEO) and Employer of Record with networks for recruiting, payroll, and immigration documentation. We have operated in this field globally for more than 20 years, including in Sweden. We can have your employees settled with the correct paperwork within days rather than the months it may take – all red-tape unraveled!
What Types of Work Visas, and Permits for Sweden are there?
First it is important to determine what paperwork is required. Some countries’ nationals are visa-exempt for business purposes, holidays, or visits.
European Union (EU), European Economic Area (EEA) nationals and those from the Nordic countries do not require a visa or work permit to enter Sweden, live and work there. These nationalities have ‘the right of residence’. They do not need to register with the Swedish Migration Agency. However, they are required to be on the Swedish Population Register to receive a Personal Identity Number (PIN) and register for tax with the Swedish Tax Agency.
Other foreigners from outside the EU, Third Country Nationals (TCNs), may require an Entry Visa unless on an exempt list which allows 90 days in a 180-day period without a visa. Those not travelling visa-free will have to apply for the Schengen visa (three months in any six-month period). Circumstances, this may be extended with a Visitor Visa.
However, generally TCNs need to apply for a Work Permit if they intend to live and work in Sweden, which can take from one month to a year depending on how smoothly the process goes. They will also be given a Residence Card to be able to enter Sweden, which can take around four weeks. Those visa-exempt persons can enter the country and apply for their Residence Card at the Swedish Migration Agency when they have received approval for their Work Permit.
Requirements to live and work in Sweden
Work Permit – permission to work.
Residence Permit Card – which gives right of residence for duration of permit and can also serve as an entry visa when produced with passport.
Main Work Permits
General Work Permit for those applying outside Sweden who have a qualifying job offer
EU Card for highly qualified workers – combined permit and residence
Intra Company Transfer (ICT) permit for foreigners outside of the EU to work at a branch of their corporate group within Sweden
Requirements for Work Permit with a confirmed job offer from an employer in Sweden
A Labor Market Test has been completed for the job position e.g., advertised in the Swedish Public Employment Service (Arbetsförmedlingen) and EU/EEA job bank EURES – for up to 10 days previous to the offer, giving priority to those local and EU citizens
A monthly minimum gross salary offered of SEK 13,000 (€1,270; US$1,433)
Health insurance to cover employee until the employer arranges life, health, injury insurance and pension for employee
Have a valid passport from home country
Approval from relevant trade union
Note: There are a few exceptions (for some nationalities) who do not require a work permit, so it is important to check:
A ‘working holiday’. This requires a one-year ‘working holiday visa’ instead of work permit
If employment is for less than 90 days, some nationalities do not require a work permit but may still need an entry visa
Dealing with tax, payroll, and employment regulations for your staff from overseas is always a tricky process and poses complications that demand expert guidance. Sweden is no exception.
With over 20 years’ experience in the front rank of international payroll providers, Bradford Jacobs ensures our clients comply with every level of tax and employment law across the globe. Our ‘expertise’ is vital for foreign companies expanding into Sweden.
By using our PEO service, we will take care of the complicated legwork so that you can focus on your business goals. Bradford Jacobs’ dedicated specialists remove the burdens of worrying about these complications while you focus on building your business in a new territory
Overview of Taxes in Sweden
* Although a member of the European Union, Sweden is not in the European Monetary Union ‘Eurozone’ and has the Krona, SEK, as its currency.
Taxable income in SEK, Euros (€) and US Dollars (US$)
Residents’ Income Tax:
Up to SEK 523,200 (€51,081, US$57,807)
Over SEK 523,200 an additional
Non-resident Income Tax
Social Insurance Taxes:
Employees contribute to state pension fund
(Deductible from tax liability)
Corporate Income Tax (CIT):
Depends on varying rates according to tax treaties
Value Added Tax standard rate
Reduced rates of 12% and 6% for various categories
Capital Gains Tax:
Sweden Individual Tax – Single, Married
Tax liability is based on residency rules and individuals can be either resident or a non-resident for tax purposes. Residency hinges on being permanently domiciled in Sweden, being resident for more than six months and whether a former resident tax liability is still active on return to the country. Residents are taxed on worldwide income, non-residents on income earned in Sweden. Spouses are taxed independently and file separate returns.
* Although a member of the European Union, Sweden is not in the European Monetary Union ‘Eurozone’ and has the krona, SEK, as its currency.
Taxable income in SEK, Euros (€) and US Dollars (US$)
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.
Moving into 2022, the Swedish economy is poised for growth. Already tagged as the ‘jet engine for Scandinavia’s start-up’ culture, Sweden is looking for consumer spending, exports, and investment to drive the economy further forward.
The country ranks among the world’s most prosperous nations with a standard of living and social and health care that takes it to the top of the lifestyle ladder. Sweden matches high quality of life with stunning landscapes of lakes, forests, and islands – the capital Stockholm is built around 14 lakes with the city connected by 57 bridges.
In the employment market, the impressive pool of human resources boasts a well-educated and highly skilled workforce. But incoming companies tempted to set up a subsidiary will find adjustments need to be made – and quickly. The demanding employment market is framed by strictly applied laws and regulations … and they cannot be ignored or side-stepped.
Starting a Business into Sweden
Foreign companies starting a business in Sweden typically prefer the option of a limited liability company known as an aktiebolag and regulated by the Swedish Companies Act (aktiebolagslag).
The necessary stages for starting the business include:
Register the company with the Swedish Companies Registration Office (Bolagsverket) to obtain an individual ID number
Register with the Tax Agency (Skatteverket) for income and corporate taxes, Value Added Tax, if applicable, and F-tax for self-employed, if necessary
Deposit minimum share capital of SEK 25,000 (€2,440, US$2,762) in the bank to receive the deed of deposit
Obtain possible extra permits or registrations according to the type of business being incorporated
Register names and details of all ‘beneficial owners’, i.e., founders and shareholders who own or control the limited company, with the Companies Registration Office
Register employees with the Tax Agency (Skatteverket) to receive their personnel identity number (personnummer) for assessing entitlements such as maternity, pension, sickness and unemployment benefits
Register employees with the Tax Agency for withholding and remitting income tax
Register company and employees with the Swedish Social Insurance Agency (Fӧrsäkringskassan)
Companies posting employees in Sweden must also register with the Swedish Work Environment Authority (Arbetsmiljöverket) if the assignment lasts more than five days. Failure to register risks a fine of SEK 20,000 (€1,952, US$2,209)
Ensuring employees receive written agreement or formal contract within 30 days of starting work to comply with the Swedish Employment Protection Act
Expanding Business into Sweden
Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance?
Drawing up an international expansion blueprint is not enough. Your business plan will have to answer all these questions.
Sweden welcomes foreign investment, but the employment market is complicated by its mix of laws and collective agreements affecting employee benefits and entitlements. There are other questions too: where will you find distributors, manufacturers, and offices?
Sweden Business Facts
Capital – Stockholm
Population – Nearly 10.5 million by end of 2021
Regions – Three regions. Norrland – a forest area. Central Sweden or Svealand. Götaland including Småland in the South. There are 21 counties
Official language – Swedish
Economy and world ranking – GDP US$550 billion Ranked 24th
Leading sectors by GDP – Service 65.6%, industry 21.5%, and agriculture 1.4% end of 2020. Leading industries include engineering, telecommunications, automotive industry and pharmaceuticals
Main exports include – Cars and vehicles; pharmaceuticals and packaged medicaments; petroleum and mineral oils; telecommunication and transmission apparatus; vehicle parts
Main imports include – Cars and vehicles; telecommunication and transmission apparatus, crude petroleum and oils; motor vehicle accessories; data processing machines
Main trading partners – Germany, Norway, Netherlands, Denmark, US, China
Government – Constitutional monarchy, parliamentary system, representative democracy
Currency – Swedish krona SEK
Advantages and Challenges of the Sweden Market
Advantages of expanding into the Swedish market include:
Workforce: Well-educated, highly skilled, and motivated
Communication: Wide use of English language
Economy: Strong and stable, diverse, innovative, and competitive on the world stage
Business: Ranks 10th out of 190 nations in the World Bank’s 2020 ‘Ease of Doing Business’ report
Taxation: Corporate Tax at 20.6 is among the lowest in the European Union (EU)
Innovation: Rates highly in all innovation indexes
Start-ups: Stockholm and Gothenburg are the hot spots … Skype and Spotify were launched as start-ups in Sweden
Challenges of expanding into the Swedish market include:
Taxation: High personal rates help fund strong social and health welfare programs, but could dissuade talent from overseas
Expenditure: High cost of living
Red Tape: Complex employment laws and collective agreements provide a rigid framework of protection for employees, based on legislation, collective and trade union agreements
Limited Company / Subsidiary or Branch in Sweden?
International companies targeting Sweden for expansion will generally choose a limited liability subsidiary, known as an aktiebolag or AB, and regulated by the Swedish Companies Act (aktiebolagslag).
They have independent legal status from the parent company, which is generally free from responsibility for any debts or liabilities of the subsidiary. Subsidiaries can have a different name from the parent company, pursue different business activities and form their own contracts.
Branches (filial) in comparison, are an extension of the parent company and are not a separate legal entity.
Foreign companies hiring employees in Sweden must operate within a framework of legislation that relies on both collective agreements as well as case law and European Union (EU) directives to provide safeguards and entitlements for the workforce.
However, unlike many European nations Sweden’s employment market does not have a comprehensive labour code. Individual legislation includes the Employment Protection Act, Working Hours Act and Sick Pay Act, for example, alongside statutes prohibiting discrimination and promoting equal pay for men and women. Additionally, the Swedish Work Environment Authority oversees employees’ welfare in the workplace.
These considerations come into play during the first stages of hiring and onboarding – drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in to steer you through this crucial element of recruitment.
General requirements apply to all contracts. These include:
Employers provide employees with a written contract or agreement within 30 days of starting work. The contract covers specific conditions of the employment. Oral contracts are considered equally binding legally but more difficult to enforce in the case of dispute
There is no legal requirement to provide the contract in a particular language. Foreign employees are entitled to fully understand the terms of the contract and should ask for a translation if they have insufficient Swedish to understand the terms
Contracts should include full details of employer and employee, job type and location, paid vacation arrangements and other benefits, type of contract (permanent or fixed term), notice and termination details, any relevant trade union or collective agreements, and fringe benefits
Other issues must be dealt with before companies move into the ‘contract phrase’. These include:
Registering employees with the Swedish Tax Agency (Skatteverket) to receive a personnel identity number (personnummer) and for assessing entitlements such as maternity, pension, sickness and unemployment benefits
Registering employees with the Tax Agency for withholding and remitting income tax and social insurance payments
Registering with the Swedish Social Insurance Agency (Fӧrsäkringskassan)
Note: Companies posting employees in Sweden must register with the Swedish Work Environment Authority (Arbetsmiljöverket) if the assignment lasts more than five days. Failure to register risks a fine of SEK 20,000 (€1,952, US$2,209)
Employment Contracts in Sweden
Apart from the specific terms of contracts, employees must be given a written agreement or formal contract within days of starting work detailing basic information such as full names and addresses of the parties, location of work, description of role, salary and payment schedule and all statutory benefits and entitlements.
The Swedish Employment Protection Act formally recognizes only two types of contracts: permanent open-ended and fixed term.
Permanent, Open-ended Employment Contracts (tillsvidareanställning): The preferred contract type in Sweden, with an indefinite timescale until the contract is ended by mutual agreement or by following termination regulations. Under the Act, all employment contracts are deemed permanent unless contractually agreed otherwise.
Fixed-term Employment Contracts (tidsbegränsad anställning): The Act recognizes four types of fixed-term contracts: general, as applying to a particular project or specific timescale; temporarily substituting another member of staff; seasonal employment; hiring a person over 67 years of age. However, general or temporary fixed-term contracts which exceed two years over five years automatically become indefinite. Similarly, repeated fixed term contracts that have no more than six months between them are considered continuous and become open-ended.
Probationary Periods (provanställning): Permanent contracts typically start with a trial period of up to six months for employer and potential employee to assess suitability.
Collective Bargaining Agreements (CBAs):
Collaboration is a key mover in the employment market and collective agreements play a significant role in improving employees’ benefits and entitlements above statutory minimums. In general, collective agreements are voluntary written arrangements between an employer or employer organization and a trade union organization covering the rights of employees. The main employers’ association in Sweden is the Confederation of Swedish Enterprise.
The National Mediation Office, answerable to the Ministry of Employment, promotes long-term agreements on wages and salaries to encourage stability in the market.
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Sweden might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Sweden including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Sweden, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.
What are the Employee Benefits in Sweden?
Benefits and entitlements for Swedish employees are based on a framework of statutes, European Union (EU) directives, case law and collective and trade union agreements. Foreign companies hiring employees in Sweden must operate within this fluid arrangement of legislation that provides safeguards and guarantees for the workforce.
However, unlike many European nations Sweden’s employment market does not have a comprehensive labor code. Individual legislation includes the Employment Protection Act, Working Hours Act and Sick Pay Act, for example, alongside statutes prohibiting discrimination and promoting equal pay for men and women. Additionally, the Swedish Work Environment Authority oversees employees’ welfare in the workplace.
Minimum guaranteed benefits, either from legislation or agreements, include:
Termination, severance, and notice periods
Maternity allowances and benefits
The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
What Compensation Laws exist in Sweden?
The employer-employee relationship in Sweden is based on a mix of contractual arrangements, statutes, European Union (EU) directives and case law. Collective and trade union agreements also feature and are drawn up in conjunction with the Confederation of Swedish Enterprise.
The Employment Protection Act (1982) lays down mandatory benefits for employees covering such as termination and dismissals, notice periods and other areas of employment, as well as contracts. The Act’s provisions can be improved by Collective Bargaining Agreements (CBAs), but not diminished
The Annual Leave Act (1977) stipulates a minimum 25 working days’ leave per year and also provides rules on calculating vacation pay as well as pay in lieu of taking vacation days. Again, CBAs can improve benefits
The Working Hours Act (1982) restricts working hours generally to 40 per week and no more than 48. It also covers rest periods and restrictions on overtime. The Act excludes managerial and executive staff
The Sick Pay Act (1977) enforces mandatory requirements in favor of the employee and employers’ obligations
The Parental Leave Act covers maternity benefits and leave for mothers and fathers before and after the birth of their children
The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Statutes and binding collective agreements apply to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours.
Drawing up contracts is tricky enough, but in Sweden it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties for ignoring these responsibilities.
Compensation, entitlements, and benefits include:
National Minimum Wages: There are no nationally applied minimum wages in Sweden. Salaries are agreed either contractually between employers and staff or through trade union or CBA agreements. By mid-2021 the average maximum hourly rate was SEK 183 (€17.87, US$20.22) with an average hourly minimum of SEK 134 (€13.08, US$14.81)
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 of 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
Working Hours and Breaks: The Working Hours Act states full time workers cannot exceed 40 hours in a standard week up to a maximum of 48 including overtime, on-call time and additional hours for other reasons. The Act is based on European Union directives. Workers should receive 36 hours of continual rest in seven days. Employees should not work more than five hours without a break and are entitled to leave the workplace for lunch breaks
Overtime: Overtime depends on collective agreements and the particular business and sector. The Employment Protection Act (EPA) nevertheless restricts overtime to 50 hours in a month or 200 over 12 months, including time spent on call. Outside of collective agreements, overtime depends on contracts but can range between an extra 50% and 100% of hourly pay for additional hours worked. Some employers offer extra vacation days in lieu of remuneration
Paid Vacations: The Annual Leave Act stipulates a minimum of 25 days’ vacation annually, with days for part-time workers calculated pro rata. Employees starting 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. Vacation pay 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 Act and adjusted if the individual has been employed for less than a full qualifying year. Employees not entitled to vacation pay still receive their minimum vacation
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 income 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. Both parents can share a maximum of 30 ‘double days’ during the first 12 months after birth, so if the full quota is taken 60 days will come off the 480-day allowance. In the case of multiple births extra parental leave days are 660 days for twins, 840 days for triplets and 1,020 days for quads.
Termination and Severance: Employers must prove ‘just cause’ for termination over personal reasons, such as poor performance or misconduct. Employers must give at least two weeks’ notice to the employee and trade union of the intention to terminate employment, allowing time for consultations; termination cannot begin until these have been completed. Termination or redundancy for economic reasons such as restructuring, or closure must comply with stringent controls applied by the EPA and cannot violate the Discrimination Act or the Parental Leave Act. If five or more employees are affected by potential redundancy at the same time the employer must inform the Swedish Public Employment Service in writing. There is no mandatory requirement for severance pay although it is common in medium to large companies, especially at the managerial or executive level.
Notice Periods: Under the Employment Protection Act the statutory minimum notice period is one month, which increases by one month for each two years’ service to a maximum of six months for 10 or more years’ employment. Swedish case law has established that the CEO / COO level of staff is always entitled to six months’ notice. During probation periods either party can terminate with two weeks’ notice and without giving a reason
Hiring the right talent in Sweden to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in Sweden yet. Our PEO and EOR service can be the solution for your company.
Recruitment can be a tricky business, especially when a company is venturing into unfamiliar countries and exploring new markets. This is the perfect occasion to bring in a specialist to oversee the process for you.
Bradford Jacobs’ benchmark platforms as a Professional Employer Organization (PEO) have worldwide reach and include a total understanding of the challenging complexities of Sweden’s economy and employment market. You can trust Bradford Jacobs to put the brightest talent in place for your company.
The Recruitment Process in Sweden
Swedes take pride in their egalitarian society, and it is a philosophy that is found in the workplace, where the management hierarchy tends to be flat and mirrors the liberal and open-mined attitude to international trade. Sharing ideas is encouraged – even if it is the boss who always makes the final decision.
The recruitment process, too, can be open-minded. Rather than receiving a CV and written references, some employers prefer phone numbers of previous bosses to hear what they had to say about a candidate, rather than be hung up on grades and qualifications.
Similarly, employers are happy to take a phone call from job seekers asking relevant questions about the position and like the candidate to emphasize how much they want to work for the company as well as wanting the job.
The services sector, primarily financial and business services, account for around 80% of employees in Sweden. The Public Employment Agency and Migration Agency highlight sectors with skills shortages, such as architecture, civil engineering, construction, interpreters, lawyers, and medical secretaries.
In-comers can be reassured that Sweden provides a comprehensive framework of regulations and statutes that safeguard the rights of employees.
Recruitment is the first stage of making your company operational and competitive in Sweden. It is vital to know where to locate the finest talent to be a perfect fit for your company’s global expansion plans.
Foreign companies intending to open a limited liability subsidiary (aktiebolag) in order to recruit staff and then run payroll, must follow strict procedures to register and onboard employees. Procedures include:
Register the company with the Swedish Companies Registration Office (Bolagsverket) and the Tax Agency (Skatteverket) for income and corporate taxes
Minimum share capital of SEK 25,000 (€2,440, US$2,762) to be deposited in the bank to receive deed of deposit
Register names and details of all ‘beneficial owners’, those who own or control the limited company
Register employees with the Swedish Tax Agency (Skatteverket) to receive a personnel identity number (personnummer) and for assessing entitlements such as maternity, pension, sickness and unemployment benefits for employees
Register with the Swedish Social Insurance Agency (Fӧrsäkringskassan)
Companies posting employees in Sweden must register with the Swedish Work Environment Authority (Arbetsmiljöverket) if the assignment lasts more than five days. Failure to register risks a fine of SEK 20,000 (€1,952, US$2,209)
Comply with payroll regulations to transfer employees’ salaries electronically by the 25th of the month, the 20th in December
Ensure employees receive a written agreement or formal contract within 30 days of starting work to comply with Swedish labor legislation
Legal Checks on Employees in Sweden
Scope: There are no statutory regulations covering pre-hire checks. However, employers are restricted in obtaining background on medical or criminal records by the constraints of the European Union’s General Data Protection Regulation (GDPR). Applicants can supply such information although there is no legal requirement.
Education and References Checks: Allowed with the applicant’s consent.
Criminal Record Checks: May be required for specific occupations, such as in childcare or teaching. Should not be processed electronically due to data privacy laws.
Credit Checks: May be carried out by the employer if relevant to the position, such as for cashiers or accountants.
Discrimination: Employers cannot ask questions reflecting discrimination over pregnancy, for example, or membership of trade unions.
Medical Checks: Genetic tests are prohibited but employers can ask for medical examinations and drug or alcohol tests and can refuse to hire applicants who will not undergo such tests.
Required: Applicants must comply with all work permit and visa immigration requirements.
Basic Facts on Hiring in Sweden
Companies hiring staff for expansion into Sweden must comply with a framework of rules and regulations on employment and taxation that are applied at state and municipal level. Some areas are not subject to mandatory state regulations, which is when collective and trade union agreements and directives from the European Union (EU) can come into play.
To comply with Sweden’s labor legislation, employees must be given a written agreement or formal contract within 30 days of starting work detailing essential information – name of employer, address of workplace, salary, type of work, basic entitlements for example
There are no mandatory language laws for contracts, but employees should fully understand the language in which their employment terms are explained
Employers with 10 or more employees must have a written policy on the workplace environment. If more than 25 employees, written policies must explain measures in place to prevent discrimination and promote equality
The Sweden Employment Protection Act recognizes two main types of contracts: open-ended indefinite contracts and fixed-term contracts, with the emphasis on long-term, indefinite contracts. Probationary periods up to a maximum of six months are permitted from the start of the contract
After hiring and onboarding, employers must be aware of other considerations:
Minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.
To hire employees, companies must follow strict procedures to set up a legal entity in Sweden to run their own payroll. These include:
Register the company with the Swedish Companies Registration Office (Bolagsverket) and the Tax Agency (Skatteverket) for income and corporate taxes, Value Added Tax and F-tax for self-employed, if necessary
Minimum share capital of SEK 25,000 (€2,440, US$2,762) must be deposited to receive bank’s deed of deposit
Register names and details of all ‘beneficial owners’, i.e., those who own or control the limited company
Register employees with the Tax Agency to receive a personnel identity number (personnummer) for assessing entitlements and benefits
Company registration with the Swedish Tax Agency for withholding and remitting employees’ income tax and registration with the Swedish Social Insurance Agency (Fӧrsäkringskassan)
Companies posting employees in Sweden must also register with the Swedish Work Environment Authority (Arbetsmiljöverket) if the assignment lasts more than five days. Failure to register risks a fine of SEK 20,000 (€1,952, US$2,209)
Comply with payroll regulations to transfer employees’ salary electronically by the 25th of the month, the 20th in December
To succeed in business in Sweden, it is vital for both employers and employees to have a strong understanding of the business culture.
As a global PEO (Professional Employment Organisation) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Swedish work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Sweden to start your expansion well-informed.
Sweden rates among the world’s most prosperous nations with a standard of living that takes it to the top of the lifestyle ladder. Sweden matches high quality of life with stunning landscapes of lakes, forests, and islands – the capital Stockholm is built around 14 lakes with the city connected by 57 bridges.
The economy is also a major attraction for international companies and has steadily grown since the fiscal reforms of the 1990s. Sweden’s nominal Gross Domestic Product in 2020 was 541 billion US dollars, predicted to reach 550 billion by the end of 2021 and break 570 billion by the end of 2022. Sweden ranked 24th in the world in 2020 but 12th for GDP per capita.
Swedes take pride in their approach to equality, which also exists in the workplace. Management hierarchy tends to be fairly flat and mirrors a liberal and open-mined attitude to international trade. Sharing ideas is encouraged – even if it is the boss who generally makes the final decision.
The services sector, primarily financial and business, account for around 80% of employees in Sweden. The Public Employment Agency and Migration Agency highlight sectors with skills shortages, such as architecture, civil engineering, construction, interpreters, lawyers, and medical secretaries.
Job-seeking foreigners eyeing a move to Sweden will be entering a competitive employment market where the deep pool of human resources boasts a well-educated and highly skilled workforce. A large percentage of employment is temporary – so individuals hoping to make the transition to full-time must be prepared.
Now it is time to get down to business. So here are a few tips on taking the right steps and avoiding the pitfalls!
Language: English will quickly become the lingo for business meetings but, as always, a few Swedish phrases will go down well
Punctuality: Swedes get to work on time, leave on time … and expect business visitors to be on time for meetings
Attitudes: Avoid ‘going over the top’ with too many superlatives or displaying rank or status as Swedes are rarely impressed. Among colleagues, Swedes care about mutual wellbeing and look out for each other … but outside the office rarely mix their colleagues with personal friends
Business Meetings: Swedish companies tend to have a flat managerial hierarchy and views are shared and valued. But be precise with presentations – facts, charts and detail count
Negotiations: These will be thorough and detailed. Verbal agreements are legally binding in Sweden, so be careful what you shake hands on as it will be considered a deal. The contract simply confirms that
Greetings: Shake hands firmly at first meeting, use title and full name … but neither may be necessary at subsequent meetings as first names will quickly come into play. Don’t crowd as Swedes like some personal space and they don’t give much away by gestures or body language
Dress Code: Smart casual in the office for both sexes
Sweden’s Minimum Wage
National minimum wages do not apply in Sweden, where salaries are agreed either contractually or by Collective Bargaining Agreements (CBAs). By mid-2021 the average maximum hourly rate was SEK 183 (€17.87, US$20.22) with an average hourly minimum of SEK 134 (€13.08, US$14.81). Average monthly earnings per sector in 2020 included:
Finance and Insurance: SEK 53,200 (€5,194, US$5,878)
Professional and Scientific: SEK 44,100 (€4,305, US$4,872)
Hotels and Restaurants : SEK 26,200 (€2,557, US$2,894)
Probation Periods in Sweden
Employment contracts typically include the first six months as a trial period. During this period, either party can terminate without reason and giving two weeks’ notice.
Working Hours in Sweden
The Working Hours Act, in conjunction with European Union directives, stipulates full time employees must not work more than 40 hours in a standard week up to a maximum of 48 including overtime, on-call time and any additional hours.
Workers are entitled to 36 hours of continual rest in seven days. Daily rest of 11 hours includes the hours between midnight and 5am, effectively banning night work, unless allowed by collective agreements and approved by the Swedish Work Environment Authority. Employees should not work more than five hours without a break and are entitled to leave the workplace for lunch breaks. Employers must keep records of employees’ working hours.
Overtime in Sweden
The Working Hours Act does not provide any statutory rights concerning overtime, which are governed by collective agreements according to the relevant business and sector. Overtime cannot exceed 50 hours in a month or 200 annually, which includes time spent on call. Outside of collective agreements, overtime pay is a contractual matter but can range between an extra 50% and 100% of hourly pay for extra hours worked. Some employers offer extra vacation days in lieu of remuneration. Such arrangements must comply with the Employment Protection Act.
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