How to Set Up an Entity in Sweden

Sweden is an attractive location for foreign companies to establish a local presence. With no laws discriminating against foreign investors (100% foreign ownership allowed), setting up your own business entity in Sweden is generally considered straightforward – procedures are efficient and transparent, and the process is designed to facilitate new enterprises.

That said, founders can expect a fair amount of red tape. You must obtain a Swedish ID number, pass strict KYC checks, deposit SEK 25,000 in share capital, and sign up for taxes and employer obligations, among other obligations. Compliance is also highly stressed, with incorporation documents required to be in Swedish (or officially translated), at least one director must meet local residency rules, and employer contributions sit around 31%.

On the other hand, the benefits of having your own Swedish entity are significant: you gain full autonomy and control over local operations, can directly hire employees under your company’s name, and enjoy strong legal protections in a stable EU market. Overall, Sweden’s combination of a business-friendly environment and clear regulations makes setting up an entity appealing for companies eyeing Nordic expansion.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does "opening an entity" mean in Sweden?

In Sweden, "opening an entity" means formally registering a business as a legal entity so it can operate locally. This typically involves either incorporating a Swedish company or registering a branch of a foreign company. The process gives the business a legal identity in Sweden (with a Swedish corporate registration number) and allows it to enter contracts, hire employees, and pay taxes in Sweden. For most foreign investors, opening an entity means establishing a Swedish private limited company (Aktiebolag, or AB) or, alternatively, a branch office (filial) of the foreign company. In both cases, the entity must be registered with the Swedish Companies Registration Office and the Swedish Tax Agency to become legally operational.

Entity overview in Sweden

Most companies can be registered online through a single digital portal (Verksamt) that coordinates with multiple agencies. Below is a summary comparison of key features of entity setup in Sweden:

Step-by-step guide: How to open an entity in Sweden

Step 1: Choose the right structure

Start by selecting the legal structure that best suits your expansion strategy. For most foreign companies hiring in Sweden, the preferred option is a private limited company (Aktiebolag or AB). An AB is a separate Swedish legal entity with limited liability, which means the foreign parent’s liability is capped at the share capital contributed. It’s suitable if you plan to have a long-term presence, hire local employees, and retain profits in Sweden. By contrast, a branch (filial) is an extension of your foreign company in Sweden – it has no independent legal personality and no capital requirement. A branch can be quicker to set up since it doesn’t require new share capital, but the foreign parent company remains fully liable for branch obligations. Other structures like partnerships or sole proprietorships are generally not used by foreign corporations (a sole proprietorship requires an individual founder).

Step 2: Verify business name availability

Choose a unique name for your Swedish entity and check that it’s available. All limited companies in Sweden must have a distinct name and must include the suffix “Aktiebolag” or “AB”. You can search existing company names through the Bolagsverket database (using the online service “Find company information”). The government also provides a digital tool called “Help choosing a company name” on the Verksamt platform. Once you have a suitable name, you effectively reserve it by including it in your registration application – the name will be reviewed and approved as part of the incorporation process, and upon registration it will be protected nationwide for your company’s use.

Step 3: Prepare incorporation documents

Next, gather and draft the required founding documents for your entity. In Sweden, a limited company’s formation must be documented with specific paperwork. The key documents include:

• Memorandum of Association – a formation agreement signed by the founder(s) on the date of incorporation. It states the intent to form the company, details of the initial shareholders and share subscription, and confirms that the required share capital is paid. (If there is only one founder/shareholder, the memorandum can be a unilateral document.)
• Articles of Association – the company’s constitutional documents outlining its name, registered office in Sweden, business objectives, share capital, number of shares, board structure, and fiscal year, among other rules. Sweden provides standard templates that most companies adopt with minor customization.
• Bank certificate of deposit – an official statement from a bank showing that the share capital (at least SEK 25,000) has been paid into a dedicated account. The bank will issue a certificate of paid-in capital, which must be included in the application.
• Founder’s share subscription list – a document listing all initial subscribers to shares (often incorporated into the memorandum if only one or few founders). This confirms how many shares each founder is taking up and is used if the company has multiple subscribers at formation. If a founding shareholder is a foreign corporate entity, you might need to prove that company’s existence with a registry document and provide a board resolution authorizing the Swedish entity setup.

All documents not in English or Swedish should be accompanied by certified translations.

Step 4: Register with Bolagsverket

With your documents ready, you can formally register the entity with Bolagsverket. This filing is the core step that legally creates your company or branch. Sweden offers an online one-stop service on the Verksamt portal (in Swedish) where you can fill out the incorporation application and upload documents. Many foreign investors without a Swedish BankID (electronic ID) opt to register by mailing the paper form Form 816 “Registration of a new company”. A filing fee must also be paid.

You must also prepare to disclose any individuals who ultimately own or control more than 25% of the company’s shares or voting rights. This beneficial ownership registration can be done in the same online filing with Bolagsverket or separately. Once Bolagsverket’s registry is updated, your company’s basic details become publicly searchable in the Swedish companies register.

Bolagsverket will review the documents for compliance with the Swedish Companies Act. If everything is in order, the company is registered and you will receive a Certificate of Registration (Registreringsbevis) and the corporate identity number (organisationsnummer). If any issues are found (e.g. name conflict or missing information), Bolagsverket may send a request for clarification or reject the application – in which case you have the right to appeal or correct and re-submit.

Step 5: Register for tax and social security

After incorporation, register your entity with the Swedish Tax Agency (Skatteverket) for all relevant taxes before it can start doing business and hiring employees. This usually involves a single combined application (called “F-tax and VAT registration”) to obtain:

• F-skatt (F-tax status)
• VAT (Moms) registration – if selling goods or services that are subject to VAT
• Employer registration – register as an employer (Arbetsgivare) so that it can remit payroll taxes and social security contributions.

You can apply for all of the above through form SKV 4620 “Företagsregistrering” (Company Registration), which is available as an e-service (in Swedish) or by paper. Once registered, you’ll be ready to start making preliminary tax payments (monthly corporate tax installments based on expected profits) and be ready to charge VAT on your sales.

Step 6: Open a corporate bank account

Opening a company bank account in Sweden is a critical step to enable your entity to conduct business (receive revenues, pay local salaries and suppliers). Swedish banks adhere to strict EU anti-money laundering rules, and they will require thorough KYC (Know Your Customer) documentation on the company’s ownership, the directors, and the nature of the business. Expect to provide certified copies of passports for ultimate beneficial owners and directors, proof of address, details on the parent company (if applicable), and the newly issued registration certificate of the Swedish company.

It’s important to note that opening a bank account can be the most time-consuming part of the setup. Banks in Sweden often take several weeks to review and approve new corporate accounts for foreign-owned companies. Some banks offer a “start-up account” service where they issue the share capital deposit certificate first, then fully activate the account after incorporation. Having a board member or representative in Sweden can sometimes ease the process, but it’s not strictly mandatory. While Swedish law doesn’t force you to bank in Sweden, in practice a local account is extremely helpful – it allows you to pay Swedish taxes, salaries, and invoices in SEK easily. Make sure to also order a Bankgiro number (a Swedish clearing system for business payments), as this is commonly used by companies for domestic payments.

Step 7: Set up payroll and employment compliance

If you plan to hire employees in Sweden, you must ensure your company is ready to meet all employment law requirements from day one of employment.

• Register as an employer: You will need to start filing monthly employer PAYE returns (called employer declarations, to report wages paid and taxes/social fees due) as soon as you have staff on payroll.
• Prepare compliant employment contracts: Swedish labor law (including the Employment Protection Act, or LAS) sets out strict rules on employee rights, notice periods, and probation, so have locally compliant contracts in Swedish or bilingual form. It’s wise to consult an HR legal expert for compliant hiring.
• Enrollment in social insurance: Employers must withhold income taxes and contribute social security premiums. You should also register your employees with Försäkringskassan (social insurance) so they have access to benefits like parental leave and healthcare coverage.
• Work environment and insurance: Ensure you have mandatory workplace insurance if applicable (for example, occupational injury insurance is often required, typically arranged through a private insurer).
• Compliance with working conditions: Sweden has strong employee protections, including regulations on working hours, minimum vacation (at least 25 days of paid leave per year), and possibly collective bargaining agreements in some industries. Make sure to set up a payroll system or provider that can handle Swedish payslip requirements, tax withholdings, and reports.
• Pension contributions: Many employers offer a supplementary pension plan.

Post-registration obligations

After incorporation, your entity must maintain ongoing compliance to avoid penalties and operational risks. Key obligations include:

After incorporation, companies in Sweden must stay compliant with local governance, tax, and employment laws. Typical requirements include:

• Tax and financial reporting: Submit an annual corporate income tax return to Skatteverket. VAT returns are filed monthly or quarterly depending on turnover, and employer payroll tax reports are filed monthly. Annual financial statements must be prepared under Swedish accounting standards and submitted to Bolagsverke. Failure to submit can result in late fines, and if overdue by 11+ months, may initiate liquidation proceedings
• Corporate registers: Maintain up-to-date records of directors, shareholders, and beneficial owners. Any changes must be officially reported to the authorities. For instance, changes in the board or articles of association should be filed with Bolagsverket without delay (typically within a matter of weeks). Similarly, if the beneficial ownership of the company changes, an updated filing to the Beneficial Ownership Register is required.
• Compliance tracking: Monitor all tax, licensing, and corporate filing deadlines through a compliance calendar or automated reminder system.
• Licenses and renewals: Most general businesses in Sweden do not need a license to operate, but you may be required to obtain local municipal business licenses, industry-specific permits, or professional registrations. Renew as required.
• Recordkeeping: Under the Swedish Bookkeeping Act, accounting records (ledgers, invoices, receipts) must generally be kept for seven years. Payroll records and HR documents should also be kept for at least 7 years (longer for pension documentation). Digital storage is allowed.
• Employment law compliance: Adhere to all applicable labor, benefits, social security, and data protection regulations in your ongoing operations. This means maintaining compliant employment contracts and updating them if laws change (for instance, Sweden updated its employment laws in recent years to align with the EU Work-Life Balance directive – always use up-to-date contract templates).

Taxes and financial considerations

When operating a Swedish entity, you must manage several ongoing tax and accounting obligations:

• Corporate income tax: Sweden’s corporate income tax (CIT) rate is a flat 20.6% on profits. Companies pay preliminary tax in monthly installments based on an estimated profit for the year, and file an annual corporate tax return after the fiscal year to reconcile actual tax due. The standard tax year is the calendar year, but companies can choose a different fiscal year.
• VAT (Moms): The standard VAT rate is 25% on most goods and services. Businesses must register for VAT if their taxable turnover exceeds the small-business exemption threshold (SEK 120,000 per year, approximately USD 11,000 for 2025).
• Payroll and social contributions: Employers in Sweden are responsible for deducting income taxes from employees’ salaries and paying employer social security contributions. The employer contribution is about 31.42% of gross salary. You must submit an Employer Declaration each month detailing each employee’s income and withheld taxes/social fees.
• Accounting standards: Swedish companies must keep books and prepare financial statements in accordance with Swedish GAAP (generally accepted accounting principles), as outlined in the Annual Accounts Act and guidelines from the Swedish Accounting Standards Board. Small and mid-size companies typically use the K2/K3 accounting frameworks.

Discover how Climate-KIC navigated complex restructuring with Deel.

Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into Sweden—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in Sweden?
2–4 weeks. In ideal cases, Bolagsverket can process a company registration in as little as a week, but additional time is often needed to handle tasks like opening a bank account and obtaining tax registrations.

What is the minimum capital required?
To register a private limited company (AB) in Sweden, you must have at least SEK 25,000 in share capital (approximately USD $2,500). This capital can be in cash or in-kind assets and is deposited into the company’s bank account during incorporation. Branch offices of foreign companies have no minimum capital requirement since they are not separate legal entities.

Can foreign companies own 100% of an entity in Sweden?
Yes. Sweden imposes no restrictions on foreign ownership – a Swedish company can be 100% foreign-owned.

Do I need a local director or representative?
Sweden does not require a local citizen director, but there are EEA residency requirements for management. At least half of the board members (and any managing director) must reside within the European Economic Area. If your company’s directors/MD will all live outside the EEA, you must apply for a dispensation (exemption) from Bolagsverket and appoint an authorized local contact person to receive official documents on the company’s behalf.

How much does it cost to register an entity?
Typically around SEK 1,900–2,500 (USD 180–250) depending on if you file online or on paper. You may also incur costs for notarizing documents or obtaining certified translations (if your documents are not in English/Swedish). Find out more details on setup cost with our Entity Setup Calculator

Can I hire employees before the entity is fully registered?
Typically, no – you need the entity established and registered for taxes before you can run a payroll in Sweden. Hiring individuals (issuing employment contracts and paying salaries) is generally not allowed until your company or branch exists legally and has an employer registration. However, Deel’s Employer of Record (EOR) service lets you hire and pay talent in Sweden immediately, even while your own entity setup is in progress. Using Deel as an interim solution, your employee would be officially employed by Deel’s local entity in Sweden and seconded to you – ensuring full compliance until your entity is ready.

Can Deel help me open an entity in Sweden?
Yes. Deel Entity Setup manages the end-to-end process — from incorporation to payroll compliance — in over 100 countries, including Sweden. Deel’s local experts handle documentation, filings, and legal requirements on your behalf, making the Sweden entity setup smooth and stress-free. We assist with everything: registering with Bolagsverket and Skatteverket, setting up payroll and benefits, and ensuring you meet ongoing obligations. This allows you to focus on your business while we take care of the local bureaucracy.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant. If you’re using Deel, our team handles payroll, benefits, filings, and compliance obligations on your behalf. For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.