Not many businessmen intend to register a company in Sweden, though there are cretain advantages.
Over the past century, Sweden has been the peaceful and neutral country that is probably due to its reliability and success. Stable economic situation with the apparent priority on foreign trade. Such a legal field is very attractive for investors to enter new markets. The government focuses on its own system with quite high tax rates and its socially oriented system. We recommend that you are first consulted by the specialist to avoid unpleasant situations.
Peculiarities of companies
To operate in trade field, people more often choose the Limited Partnership, than LLC (Limited Liability Company).
Main differences are:
The whole package of services is offered.
At least 2 partners to avail: 1 partner with limited liability, with possible offshore entities and 1 person – with general liability.
No need for personal visit.
No requirements to authorized capital. This capital shall be formed on deposits, and its size shall be specified by participants themselves.
The local corporate tax is not used where all profit is distributed among partners in the offshore jurisdiction.
Application of local firms
The Swedish limited partnership for trading
The Swedish limited partnership is known for its variability and clarity of the tax system. When the partners are non-residents, and the partnership operates only outside the territory of the country, there is no local corporate tax. The local LP is a partnership with 2 types of partners: with general and limited liability, and these two types of partnerships allow the possibility of being a natural person and legal entity, which is very convenient.
The general partner manages the company and divides the profit gained by the enterprise in previously specified shares and at the same time bears full responsibility for all debts of the company.
Partners with limited liability, as well as shareholders, are solely responsible. They cannot manage the partnership and bear responsibility only for the company debts (at least 10 Euro or 100 SEK) as part of their personal contribution.
Such partnerships are often registered as a trading company with the potential possibility to get the local VAT number. However, this applies to those only where one partners is a Swedish resident. Such partnership is allowed opening bank accounts outside the country (we offer bank accounts in Cyprus, Latvia and Denmark. Local accounts with banking institutions are available to those companies only that trade within Sweden).
Taxes for companies
It is normally rated at 26.3%. For companies described above, it may be excluded where the partners operate exclusively outside the territory of the state.
In the situation where the profit was transferred from resident firms and in situations where it is possible to use the “tax exemption”:
1. in case of a subsidiary in the status of a tax resident in the country where the corporate tax rate approximates to that in Sweden 2.
in case where ownership shares is at least 25%, the rate is 0%.
In cases when “tax exemption” cannot be applied, the tax rate equals to 26.3%.
Capital gain tax.
Capital gains on sale of shares are often subject to corporate tax rated at 26.3%. Tax exemptions may also be used under conditions above.
There is no tax on interest payments.
Dividend Tax – A standard rate of 30% can be potentially reduced as per the special double taxation agreement or any EU directive. Dividends paid by a local holding company may be exempt from tax, where all conditions of the requirements are met:
1. The main company is taxed on profit rated at 15.4%
2 All shares are held in the company as business assets
3. The parent company has share of at least 25% of the Swedish firm
Royalty tax is not normally withheld. However, there is a possibility that under royalties can consider the profit received by the permanent representation, and therefore can be taxed 26.3%.
VAT or Value added tax – the normal rate for trading operations in Sweden is 25%.
There is the double taxation agreement signed with 80 states.
If you intend to register a company in Sweden, please contact our specialists for more information.