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Set up AB (LTD) Company in Sweden

Updated on Tuesday 21st September 2021

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The Swedish limited company (aktiebolag or AB), or the LLC in Sweden, is a legal structure separate from its founders and also one of the most commonly used business forms in the country. The distinct separation between the corporation and its founders is one of the main advantages for those who choose to open this business form.
 
The Swedish AB can enter into agreements, sue or be sued, and has its own responsibilities as well as rights. The shareholders are only liable for the debts and obligations of the corporation to the extent of the capital they have invested in the company, hence the limited liability.
 
The process to set up an AB is Sweden is a fairly simple one, and it is even more straightforward for EU citizens. 
 
In this article, our Swedish company formation experts list the most common traits of the LLC in Sweden, the main set up steps as well as the most important taxes this company is subject to. If you need more details about this business form, or about other types of companies in the country, we invite you to reach out to our specialists.
 

The private and the public LLC in Sweden

 
The limited company has two forms: private or public. There are several important differences between the two and our team summarizes these below:
 
 
Private limited company
Public limited company
Shares
Cannot be sold to the public
Can be sold to the public
Minimum capital
SEK 25,000
SEK 500,000
Members
1
3
Management
Optional managing director; recommended to have an auditor, only mandatory in some cases
Must have a managing director as well as an appointed auditor
 
As seen from the table above, there are important differences between the two forms of the LLC in Sweden. In practice, the private AB company is used by small or medium-sized companies and the public form is used by large corporations.
 
The conditions for the managing director are to be over 18 years of age, not be bankrupt, or prohibited in any way to carry out a business. The managing director must reside within the EEA, however, one can apply for an exemption to this rule.
 
It should be noted that the managing director has more liability for the LLC, compared to the shareholders. He or she can be held personally liable for the debts of the company, for example for unpaid taxes.
 

Steps for limited company creation in Sweden

 
When opening a new business entity, investors are required to follow a number of key steps. The same applies both for the private and the public AB in Sweden.
 
We list these steps below:
 
  1. Prepare the documents: these are the new company’s Articles of Association and the Memorandum; they include information about the business for, the members, the duration of the company, its scope and name, etc.;
  2. Make the capital payment: the founders submit their capital contribution that amounts to the minimum capital requirements for the chosen form, private or public; the capital is deposited into a bank account and the contribution can be made both in cash and in kind;
  3. Apply for registration: once the documents are drafted and signed and the capital is paid, the founders fill in the form for registration with the Companies Registration Office;
  4. Receive the registration conformation: once the company is approved for registration with the Office, it will be assigned a registration number and a certificate of registration (in Swedish).
 
After registration, investors who open an LLC in Sweden will wish to register as employers with the Swedish Tax Agency, as well as follow the steps needed to obtain special permits and licenses. For example, companies that engage in certain finance and insurance services need to obtain an authorization from the Swedish Financial Supervisory Authority.
 

AB company taxation in Sweden

 
The LLC in Sweden is subject to the following taxes:
 
  • - 20.6% corporate income tax rate;
  • - 30% Swedish withholding tax on dividend distributions from Swedish companies (for foreign companies);
  • - 25% standard value-added tax and two other reduced rates of 12% and 6% plus a 0% rate for certain types of goods and services;
  • - 31.42% aggregate social security contributions paid by the employer;
  • - 4.25% standard tamp duty payable on the purchase or transfer of real estate.
 
All companies in Sweden prepare an annual report and file it with the Swedish Companies Registration Office. A small limited liability company will be subject to lighter annual report requirements, for example, the auditor report may not be required in all cases. The tax year has a 12-month period and companies has four dates to file the corporate income tax return based on the period during which their financial year ends. For example, for an LLC in Sweden for which the tax year ends between 31 January and 30 April, the return is filed no later than 1 November for the paper for or 1 December for electronic returns, the year in which the financial year ends.
 
If you wish to know more about the limited company in Sweden, as well as if you need specialized assistance for setting up a private or a public LLC, you can contact our company formation agents in Sweden. We provide complete company incorporation packages and help foreign investors set up their Swedish business.
 

Meet us in Stockholm


Call us now at +44 203 287 0408  to set up an appointment with our lawyers in Stockholm, Sweden. Alternatively you can incorporate your company without traveling to Sweden.

As a BridgeWest client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Sweden.

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