Are you a large foreign company, for example in the construction sector, considering establishing operations in Sweden? Navigating Swedish legislation and its extensive tax system can be overwhelming. Below is an overview of key steps and rules to know before starting your operations. Note that requirements may vary depending on the scope and type of business.
At Revea, we are an accounting and auditing firm in Stockholm that helps both Swedish and foreign entities daily with accounting, auditing, tax issues, payroll management, and financial advisory. Feel free to get in touch if you need support or advice on any of the topics below.
Income Tax Liability
A first step for foreign companies is to determine the type of tax liability:
- Legal Entities (foreign companies): Have limited tax liability in Sweden, meaning tax is only levied on income from operations or a permanent establishment in Sweden.
- Individuals (sole proprietors): Generally have limited tax liability as long as they are not residents or permanently present in Sweden. If you move here and register, you become unlimitedly tax liable, meaning all income – both Swedish and foreign – is taxed in Sweden.
If your company is only temporarily or partially present, you might sometimes avoid certain taxes thanks to international tax treaties. It is wise to always check the applicable double taxation agreements between Sweden and your home country.
Limited vs. Unlimited Tax Liability – Summary Table
<table>
<thead>
<tr>
<th>Type of tax liability</th>
<th>Scope of taxation</th>
<th>Who does it apply to?</th>
</tr>
</thead>
<tbody>
<tr>
<td>Limited tax liability</td>
<td>Tax on income from Swedish activities</td>
<td>Foreign legal persons and natural persons not resident in Sweden or residing here for short periods</td>
</tr>
<tr>
<td>Unlimited tax liability</td>
<td>Tax on all income (both Swedish and foreign)</td>
<td>Natural persons residing in Sweden or permanently residing here</td>
</tr>
</tbody>
</table>
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Registration with the Tax Agency
A foreign company operating in Sweden may need to register for:
- F-tax (F-tax certificate)
- VAT
- Employer Contributions
- Preliminary Income Tax
This applies whether you are a legal entity (e.g., a limited company) or an individual (sole proprietor). To apply, you typically submit form SKV 4632 (Business Registration) or register online via verksamt.se – a joint platform run by the Tax Agency, the Companies Registration Office, and the Agency for Economic and Regional Growth. If you are a foreign company without a Swedish contact person with a Swedish personal number, you may need to submit your application directly to the Tax Agency’s foreign affairs department.
Identification Number and Branch Registration
- Swedish Organizational Number: The Tax Agency assigns a unique organizational number upon registration.
- Branch: If you establish a branch in Sweden, first contact the Companies Registration Office to determine if branch registration is required. You will then receive an organizational number directly from them.
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Preliminary Tax Declaration (PD) and Monthly Prepayments
Companies with tax liability in Sweden usually pay prepayment tax during the income year. You submit a preliminary tax declaration to the Tax Agency, which estimates your expected tax and sets monthly payments.
- Annual Income Declaration: After the income year, you submit an annual income declaration (e.g., by May 2 for legal entities) when your final tax is calculated.
- Adjustments During the Year: If circumstances change, you can submit a new preliminary tax declaration to adjust your monthly payments.
Tip: Monitor your business results continuously to avoid large outstanding taxes or overpayments.
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Annual Income Declaration
A foreign company with tax liability in Sweden must submit its annual income declaration.
- Legal Entities (similar to Swedish limited companies): Typically by May 2 of the year following the income year.
- Individuals (residing abroad): By May 31 of the year following the income year (this may vary if an individual becomes unlimitedly tax liable and registers).
In these declarations, you report your accounting results, deductions, and the preliminary tax paid.
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Social Contributions and Withholding Tax
1. Salary for Work in Sweden
- Permanent Establishment in Sweden: If you have a permanent establishment, you are considered a Swedish employer and must pay employer contributions and withhold preliminary tax (withholding tax) on salaries paid in Sweden.
- No Permanent Establishment: If you lack a permanent establishment, you generally do not withhold tax but may still be liable for social contributions on work performed in Sweden. In such cases, the employee reports their income through a preliminary self-declaration (SA tax).
2. Social Security and A1 Certificate
EU legislation and social security agreements between countries can affect where employer contributions are paid. If an employee is seconded to Sweden for a short period (e.g., less than 24 months) and holds an A1 certificate from their home country, you can often avoid paying Swedish employer contributions.
Checklist for Seconded Employees:
- Secure an A1 Certificate (or equivalent under bilateral agreements) from the relevant authority in the home country.
- Keep Copies of the certificates in your personnel records.
- Contact the Swedish Social Insurance Agency (Försäkringskassan) if unsure about the applicable rules.
3. Prepayment for Income Tax (Withholding Tax)
- SINK (Special Income Tax for Non-Residents): If employees stay in Sweden for less than 6 months, they may sometimes be taxed under SINK – a final withholding tax of 25% without deductions.
- Regular Income Tax: If the stay exceeds 6 months, or if the employee becomes a permanent resident, regular Swedish income tax applies according to tax tables.
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VAT (Value Added Tax)
A "foreign entrepreneur" under VAT law is a business that lacks a permanent establishment in Sweden. VAT registration may still be required if:
- You sell goods or services to private individuals in Sweden.
- You conduct VAT-liable activities in Sweden and are not covered by reverse charge (where the buyer would otherwise pay the VAT).
In many cases, you can voluntarily register for VAT. This can be advantageous if you frequently make purchases in Sweden and wish to deduct input VAT.
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F-tax Certificate (Approval for F-tax)
Why is the F-tax certificate important?
- It demonstrates that you are responsible for your own tax and social contributions on payments for work performed.
- The client does not need to withhold tax or pay employer contributions on invoices from you if you have an F-tax certificate.
A foreign company can obtain F-tax even if not all income is taxed in Sweden. However, you may need to provide evidence of your tax history and that you have no outstanding tax debts in your home country. Sometimes, a certificate from the tax authorities in your home country is also required.
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Deregistration and Changes to Company Information
When you cease operations in Sweden or make significant changes (e.g., change of address or representative), it is important to notify the Tax Agency and, if applicable, the Companies Registration Office.
- Deregistration: Done using form SKV 4639 or electronically via verksamt.se.
- Changes: You may need to submit a new preliminary tax declaration to adjust your prepayment tax if business activity decreases or ceases.
Failure to deregister when ceasing to file declarations may result in fees and estimated tax assessments from the Tax Agency.
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Get Help from Revea – Your Financial Partner in Sweden
Establishing a business in Sweden can be complex, especially regarding tax matters, accounting, and employer responsibilities. Our consultants at Revea in Stockholm have extensive experience helping foreign companies – particularly in the construction sector – meet all financial and legal requirements.
- Accounting and Financial Statements: We handle ongoing accounting, financial statements, and annual reports in accordance with Swedish standards.
- Auditing and Quality Assurance: Our authorized auditing team supports you with statutory audits and internal controls.
- Tax and Legal Advisory: We guide you through income tax, SINK, VAT, employer contributions, and double taxation treaties.
- Payroll Management and Personnel: We take care of payroll, tax deductions, and social contributions so you can focus on your core business.
Want a reliable partner to guide you through Swedish regulations, handle necessary registrations, and ensure everything is set up correctly from day one? Contact us at Revea – we’re happy to explain how we can help your company successfully establish itself in Sweden.
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Contact Us
Do you have questions about taxes, declarations, or any other aspect of establishing your business in Sweden?
Feel free to contact us at Revea for a no-obligation discussion and quote. We help you save time, reduce risks, and ensure a smooth start in the Swedish market.
Phone: +46 (0)8 20 31 87
Email: info@revea.se
