Are you looking at expanding into the Swedish market? This article is written to give you the answers to the 8 most common questions we get from non-Swedish residents planning to setup a Swedish legal entity.
Revideco is a one-stop-shop for accounting and audit services, with more than 20 years of experience of international clients. We provide a full range of services to both large international companies, as well as smaller startups. We are proud to say that we are often considered as an alternative to the larger and more known “big” firms. We provide fast reaction, high quality, and a reasonable price tag. We have many international clients co-operating with us today and we are looking to find new clients to co-operate with.
1 Legal entity – Limited liability company (“AB”) or branch office?
The first decision to make is if the entity in Sweden should be an AB or a branch office. The AB is a limited liability company, a separate legal entity. A branch office is not a separate legal entity, and the parent company therefore holds full liability for its obligations. The registration process may be slightly more complex for a branch office, but on the other hand no share capital is required. Out of a tax perspective there is no major differences, but depending on the tax rules in your home country losses in a branch office might be deductible in the parent company.
2 AB registration – Off the shelf or not?
If you plan to start an AB you can either buy an off-the-shelf AB or start an AB from scratch. Buying an AB enables you to get ownership and registration overnight and you can start doing business faster, but the cost is higher. To register a company from scratch you normally use the website verksamt.se. Registration of a branch office can be managed from the same link.
A word of advice: there are some pitfalls. Call or e-mail us if you need help!
3 Share capital – in kind or cash?
Starting an AB requires a share capital of minimum 50 000 SEK. The share capital is normally paid in cash, but it’s possible to do it with other assets. We recommend cash, since the administration otherwise tend to be excessive. Don’t do it with other assets without taking advice.
4 Board of directors – Any residency issues?
If all members of the board of directors are residing outside of Sweden, the AB must have a representative in Sweden (resident) who can accept notifications on behalf of the company. We can help you with this service.
A managing director and deputy managing director of an AB must reside within the European Economic Area EEA. At least 50% of the AB’s board members must also reside within the EEA and the same rule applies for the deputy board members. There is also a possibility to apply for exemption of the residency requirements. At Revideco we are able to handle exemption applications. Just let us know if we can be of assistance.
5 VAT, employee and tax registration, how do you get started?
When the AB or branch office is formally registered, the entity needs to make a tax registration for company tax, VAT and register as an employer, depending of the business. There is normally a lot of considerations to be made here, and we have a lot of experience to guide you through this process.
6 Any mandatory obligations?
An AB does have mandatory obligations regarding for example the documentation of shareholders meetings, maintenance of a list of shareholders and statutory filings. The board of directors and the managing director does also have a set of obligations stated by law that they should be aware of.
Both an AB and a branch office have to publish their Annual report officially every year.
7 Accounting and bookkeeping, do you need a local service provider?
According to Swedish law the original vouchers and books should be available in Sweden and can only be sent cross border if a special permit is granted. Therefore entities with an existing accounting facility abroad need to make special arrangements to handle this. Even if you have handled this, and do the bookkeeping abroad, almost every entity needs local help to file tax returns and make the annual report. Something we do for a lot of clients!
8 Need to appoint an auditor?
Smaller branch offices and AB’s are exempted from the requirement of appointing an auditor. If an entity has exceeded at least two of the following criteria the last two financial years it must appoint an auditor. The entity must have exceeded the same two criteria both financial years.
- average number of 3 employees,
- a balance sheet total of more than 1500000 SEK,
- an annual turnover of more than 3000000 SEK.
If you are planning to have a larger business than this, it’s often most efficient to appoint an auditor from the very beginning.
At Revideco we cooperate with accountants, chartered accountants, CPAs, CFOs and shared service centers from all over the world. We are accustomed to provide information on Swedish law, Swedish GAAP and specific Swedish regulation and we work as Swedish group auditors as well with other group auditors on a continuous basis. We strive to find the most efficient solution for one and each of our local as well as international clients
Click here if you would like to book a meeting with us, or contact one of our international contact persons directlly.