Establish a Subsidiary in Sweden

A foreign company can activate on the Swedish market through its subsidiaries. These are locally registered companies, in which the sole owner can be a foreign legal entity (these are the wholly owned subsidiaries or, as needed, they can be partly owned by a foreign legal entity).

The main characteristics of the Swedish subsidiary

1. A company is considered a Swedish subsidiary only if a big part of its capital or a majority of voting shares is owned by the foreign company;
2. A subsidiary opened in Sweden is considered a legal entity and may conclude contracts or hire personnel without the foreign company’s approval;
3. The subsidiaries are established as limited liability companies in Sweden, where the liability of the members is determined by their contribution to the capital;

1. The private company cannot sell its shares to the public;
2. The minimum capital for the private limited company is 25,000 SEK and 500,000 for the public limited company;
3. The private company has at least 1 board member while the public one has at least 3 members;
4. The public company needs to appoint a managing director and an auditor while these steps are optional for the public company.

The steps to open a subsidiary in Sweden

1. Prepare the company documents: these are the articles of association and the memorandum of the company, drawn up both in the case of the private and the public limited company;
2. Subscribe: the parent company abroad will then purchase shares in the company and will be listed as a shareholder in the company in its constitutive documents; the amount is deposited in the corporate bank account;
3. Sign the company documents: once the articles of association and the memorandum are drawn up and the shareholding structure is determined, the founders sign the constitutive documents;
4. Register the subsidiary: the company is registered with the Swedish Companies Registration Office (Bolagsverket) by using a special form and submitting the needed documents; the application for registration can be submitted no later than 6 months after the articles and the memorandum were signed.

Subsidiary taxation in Sweden in 2023

• - Corporate income tax rate: 20.6% - this is the standard corporate income tax rate applicable to all companies in the country; there is no reduced or branch tax rate;
• - Withholding tax: 0% in case of residents and 30% in case of foreign companies on dividend distributions from Swedish companies (subject to certain exemptions or reductions under a tax treaty; Sweden has concluded more than 100 income tax treaties);
• - Value-added tax: the standard rate is 25% and there are also two reduced rates of 12% and 6%; some types of goods and services are zero-rated and other are exempt.
• - Others: social security contributions of 31.42% (in some cases), real property tax, and stamp duty.