5th largest country in Europe
Sweden is with its area of 450,000 square kilometres the fifth largest country in Europe. The population is about 9 million.
Government
Sweden is a constitutional monarchy; the head of state is King Carl XVI Gustav whose functions are representative and symbolic. Legislative power lies with the parliament, (the Riksdag), and the executive power with the government, led by the Prime Minister.
Standard of living
Most Swedes understand and speak English and enjoy a fairly good standard of living. GDP per capita in 2008 reached approximately 37,500 US$.
Restrictions
As a member of the European Union, Sweden has few limitations for foreign companies wishing to enter the Swedish market. Customs and excise duties are harmonised within the Union and EU citizens are allowed to live and work here without permit requirements. There are no currency exchange restrictions although reporting requirements exist.
Finance
Sweden has well developed financial markets and the banking system is excellent. Stockholmsbörsen is the official capital market and there are a few alternative smaller markets as well.
Business entities
Starting a business is relatively easy. Readymade limited companies are available for purchasing off the shelf and can be ready for trading within days although formal registration may take up to a couple of months. The minimum share capital in a private limited company is 100,000 SEK, which has to be paid in full. For a public company the limit is 500,000 SEK. Other requirements are that more than half of the board of directors be citizens of the European Economic Area. The company’s accounts must be filed annually and are publicly available after filing. There are no thin capitalisation rules (except for financial institutions) but certain rules and responsibilities apply if the share capital falls short of 50 percent of the registered capital.
Financial reporting
Accounting standards are converging towards international standards. However they can still deviate significantly as the Swedish accounting standards come from a very tax driven environment. A statutory audit is required for all limited companies regardless of size.
Labour
Wages in the labour market are about average from a European perspective although social security contribution costs are at the higher end with approximately 33 percent. Pension costs add a further eight percent making the total over 40 percent. Social security contributions are paid through monthly returns. Employees are entitled to five weeks paid holiday per twelve months worked and the employer pays 80 percent of the salary for the first two weeks in case of illness. Trade unions enjoy a very strong position in the labour market.
Tax
The rate of company tax is 26,3 percent and there are appropriation possibilities taking the effective rate down to approximately 21 percent. Companies within a group (owned by more than 90 percent) may distribute profits among them and make use of losses. In general, losses can be carried forward indefinitely. Tax returns are filed annually. Sweden has double taxation treaties with over 80 countries regulating transfer of dividends from a Swedish company. There are no withholding taxes within the European Union and in most other cases they are subject to the double taxation treaty. However, the general withholding tax rate is 30 percent.
VAT
The standard VAT rate is 25 percent with a reduced rate of 12 percent applying to foodstuffs and hotels, and 6 percent on newspapers and transportation of persons. The tax paid on purchases can be offset against the tax collected on sales, which is payable through monthly VAT returns.