Sweden has a population of over 10 million people with rising industries in the automotive, precision equipment, iron and steel sectors. Multi-national companies find many opportunities for growth and expansion in Sweden, along with challenges of managing a workforce there.

To form a company entity in Sweden, you must have a Swedish bank account, apply with the Swedish Companies Registration Office and Swedish Tax Agency to receive a Registration Certificate. The standard corporate tax rate is 21%, and estimated tax payments must be made monthly throughout the year.

Payroll and Tax Considerations:

  • There is no statutory minimum wage in Sweden, but starting wages are determined in a collective agreement between unions and employers
  • Overtime hours may not exceed 48 hours over four weeks, 50 hours per calendar month, and 200 hours per calendar year
  • Sweden has no statutory severance pay requirements relative to the termination of an employee, but it is usually stipulated in employment contracts and collective bargaining agreements
  • An individual who is considered an unlimited tax resident is taxed on worldwide income, while a limited tax resident pays taxes on income earned in Sweden only
  • Swedish citizens and foreigners who have been residents for at lease 10 years are deemed residents for income tax purposes until they can prove that all important ties with Sweden have been broken
  • Key terms and provisions of employment must be in writing
  • Employers must use a PAYE (Pay As You Earn) system deducting tax from employee pay and submitting to the Swedish Tax Agency for all employees
  • Employers must also pay contributions to social security with the National Agency for Social Insurance

HR and Statutory Requirements

  • Employees are entitled to 25 days of paid annual leave per year, starting from the first year of employment and they can carry over 5 days to the following year
  • Employees are entitled to sick pay for the first 14 days of sickness except for the first day, known as the “waiting day”
  • Employers are required by law to pay sick pay to the employees during days 2 – 14 of illness. After 2 weeks, the employee can apply for sickness benefits from the Swedish Social Insurance Agency. The maximum benefit is SEK 810 per day
  • Female employees are entitled to 14 weeks maternity leave including 7 weeks before the estimated time of delivery and 7 weeks after the delivery
  • An employer is not obligated to pay employees during maternity leave, in which case maternity benefits are covered by the Swedish Social Insurance Agency. Benefits are paid as 80% of income, up to a maximum of SEK 759 per day
  • A non-pregnant partner can take a temporary leave of ten working days. The leave is doubled for twins and tripled for three kids. This leave can be used at any time during the first 60 days after childbirth
  • The standard retirement age is 65 years. Sweden has 3 types of pensions available including general pension, supplementary pension, and guaranteed pension

Holidays in Sweden

  • January 1 – New Year’s Day
  • January 6 – Epiphany
  • April 15 – Good Friday
  • April 17 – Easter Sunday
  • April 18 – Easter Monday
  • May 1 – Labour Day
  • May 26 – Ascension Day
  • June 5 – Pentecost
  • June 6 – National Day of Sweden
  • June 25 – Midsummer
  • November 5 – All Saints’ Day
  • December 25 – Christmas Day
  • December 26 – St. Stephen’s Day
  • December 31 – New Year’s Eve

If you’re just getting started in Sweden, or would like to improve payroll and compliance, we can help. Our cloud-based payroll platform with customized reporting gives you real-time views of your payroll costs across 150+ countries. We have a dedicated US-based service team and direct access to in-country experts in Sweden to help when questions come up. Simplify your payroll, reduce compliance headaches, and ensure you stay ahead of local regulations in Sweden. To learn more, click here