Why Setup an LLC (Limited Liability Company) in Sweden

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Sweden is a Northern European Scandinavian country. It fringes Norway toward the west and north and Finland toward the east, and it connects with Denmark by a bridge/tunnel crossing the waterway Öresund in the southwest.

It is officially called the “Kingdom of Sweden”. Politically, it can be described as a “unified constitutional monarchy with a parliament”.

Sweden joined the European Union (EU) in 1995. As part of the Union, Sweden provides access to a market of 28 countries and 510 million consumers.

Sweden is the third biggest nation in the European Union by region. It ranks as the best-performing economy in the world, the fastest growing country in Europe, the second most business-friendly country and second when it comes to the quality of life and green living.

According to the World Bank’s Ease of Doing Business index, the country consistently ranks among the top 10 worldwide for its connectivity, governance, investment in R&D, and business climate.

Company law in Sweden allows for several kinds of businesses to be set up, however, the most popular form is the Aktiebolag (A.B. – Limited Liability Company)

The main advantage granted by this form of business is that the liability of its members is limited to the extent of their contribution to the capital. Share capital may be based in cash or with assets which are valued by a professional appraiser or an accountant. The share capital must be fully paid up at the time of registration.

The main features of an Aktiebolag (A.B. – Limited Liability company):

  • The most popular type of business in Sweden
  • the minimum initial share capital required to set up a Swedish LLC will be 50,000 SEK, approximately €5,600.
  • Only one Director and Shareholder are required for a Sweden Company Registration.
  • Owner’s liability is limited to assets of the company
  • Irrespective of size and whether it is private or public, a limited company has to file annual accounts with the Patent and Registration Office
  • An LLC has to file an annual report with the Companies Registration Office within seven months of each financial year-end.
  • The annual report has to be audited

The corporate tax rate is 22% lowered from 26.3 percent in 2013. The country also benefits from a business-friendly corporate tax structure. Corporate tax is levied on the worldwide income of companies resident in Sweden and also on profits which come from activities carried out in Sweden.

Regarding VAT there are three applicable rates in Sweden, 25 % and reduced rates of 12% and 6%. Reduced rates (12%) apply to food (not including alcoholic beverages and tobacco) and books, newspapers, and magazines (6%). The VAT is reported and paid on a quarterly or monthly basis.

There are a number of incentives available to both Swedish and foreign-owned companies, such as:
  • Financial incentives (such as loans and grants).
  • Favorable tax regimes (such as tax relief for foreign experts and key personnel).