Setting Up a Company in Sweden as an Expat – What to Consider About Tax and Legal Forms

Relocating to Sweden can be overwhelming on many fronts. You’ll need to find suitable housing, register with various authorities, and settle into a daily routine. Some people move to Sweden for love, others due to a job offer, or simply to live in a Scandinavian country. Regardless of the reason, it’s not uncommon for someone to want to continue their business or self-employment activities after moving to Sweden—or even to start a new business there. This article outlines the different business vehicles available in Sweden, as well as how each is taxed—both at the entity level and at the owner level.

What Business Vehicles Are Available in Sweden?

There are several legal forms available for operating a business in Sweden. The most common by far is the aktiebolag (limited liability company). In an aktiebolag, the shareholder is only liable for the share capital contributed. It's also a flexible vehicle, as there’s a natural separation between the company and the individual running it.

One key advantage is that a limited liability company allows for dividend distributions, which are generally not available in other vehicle types. You can also choose to retain earnings within the company for reinvestment or future withdrawal. In short, this form allows for more robust tax planning opportunities.

Apart from aktiebolag, another common vehicle is the handelsbolag (general partnership). Under Swedish law, a handelsbolag is not a separate taxable entity. Instead, the partners are taxed personally on the business's profits—regardless of whether profits are distributed. In tax terms, a handelsbolag is transparent, similar to a UK LLP or a US LLC (depending on tax treatment). There is no required capital contribution for setting up a handelsbolag, making it a potentially lower-cost option. That said, the minimum share capital for a Swedish aktiebolag is SEK 25,000 (approx. USD 2,500 or EUR 2,250).

There is also a special form of partnership called a kommanditbolag (limited partnership). This is essentially a handelsbolag with one or more komplementärer (general partners) who have unlimited liability, while other kommanditdelägare (limited partners) have liability only up to their investment. The tax treatment of a kommanditbolag is the same as for a general partnership.

Lastly, a person can operate as an enskild näringsidkare (sole trader). This means the business is run by an individual in their personal capacity, which entails a higher level of personal financial risk. This form is common for newly started businesses and is relatively simple to set up.

How Are the Different Swedish Business Vehicles Taxed?

A Swedish limited liability company (aktiebolag) is taxed on its profits at the corporate tax rate of 20.6%. From 2026, this rate is expected to be reduced to 20%. The tax applies regardless of whether the profits are distributed, although deferral mechanisms may be available.

As mentioned above, a general partnership (handelsbolag) or limited partnership (kommanditbolag) is not taxed at the entity level. Instead, taxation takes place at the partner level. If the partner is a natural person, taxation follows the same rules as for sole traders.

For 2025, the following rates apply to individuals earning income from a partnership or sole proprietorship:

• Profit up to SEK 625,800 is taxed at approximately 30% municipal income tax.

• Profit exceeding SEK 625,800 is taxed at an additional 20% national/federal income tax, bringing the total to around 50%.

  
  

In addition to income tax, partners and sole traders are generally liable for Swedish social security contributions, which are very high. At higher income levels, the effective tax rate including social security fees can reach 60–70%.

Can I Just Keep Using My Foreign Company While Living in Sweden?

Possibly—but it depends on a number of factors. Even if your business vehicle is incorporated abroad, your activities in Sweden may trigger corporate tax liability in Sweden. The company may also be required to register with the Swedish Tax Agency (Skatteverket) and comply with Swedish legislation more generally.

In many cases, it's simpler to establish a Swedish vehicle. However, there may be situations where continuing to use a foreign company is beneficial. A case-by-case analysis is essential, factoring in the country of incorporation, the applicable double tax treaty (skatteavtal) with Sweden, and the nature and duration of the activities in Sweden.

Do I Have to Charge Swedish VAT?

A common misconception is that VAT obligations depend on whether a company is Swedish. It's particularly widespread (and incorrect) to assume that a U.S. LLC wouldn’t need to charge VAT to customers in Sweden or the EU.

In reality, VAT liability depends primarily on the nature of the goods or services provided, and where the supply is considered to take place under EU VAT rules. An individual VAT analysis is required in each case to determine whether VAT must be charged, and if so, at what rate.

Will I Be Taxed in Both Sweden and My Home Country?

Yes, dual corporate tax liability is possible, especially when operating through a foreign company from Sweden. In such cases, a double tax treaty (skatteavtal) should be applied to avoid double taxation on the same income.

The same applies to shareholders and owners of a business. Tax residency and source of income can result in multiple tax jurisdictions claiming taxing rights over the same income. Sweden generally takes a strict view on applying tax treaties to transparent entities like partnerships, but treaties may still apply in some cases.

Even sole traders may be exposed to taxation in Sweden and other countries. In such cases, the relevant tax treaty must be applied, often requiring an analysis of tax residence under the treaty, and in some cases, whether the individual is deemed to have a permanent establishment in one of the jurisdictions.

Is It Complicated to Start a Swedish Company as an Expat?

Not particularly. A Swedish limited liability company can be formed entirely online via Bolagsverket (the Swedish Companies Registration Office), provided you have BankID (a Swedish electronic ID).

You can also purchase an off-the-shelf company, a pre-registered company ready to be taken over by a new owner. This is a common method used in Sweden to speed up the incorporation process.

At nomadtax, we often assist international clients in establishing Swedish aktiebolag. Sometimes the client handles most of the process independently, especially if they have a Swedish partner, with our support as needed.

How Much Does It Cost to Start a Swedish Company?

Setting up a Swedish aktiebolag is relatively inexpensive. The registration fee with Bolagsverket is SEK 2,400. You’ll also need to contribute the minimum share capital of SEK 25,000. Additionally, registering the beneficial owner (verklig huvudman) costs SEK 250.

If buying an off-the-shelf company, prices vary depending on the provider, but SEK 10,000 is a reasonable estimate.

How Is Dividend Income from a Swedish Company Taxed in Sweden?

Dividends from a Swedish aktiebolag are taxed in the hands of the shareholder. If the recipient is a Swedish tax resident, then Sweden’s so-called 3:12 rules apply. These rules generally allow for 20% taxation on dividends up to a certain threshold, with excess amounts taxed as salary income (up to approximately 50%).

There are various strategies available to optimize the tax treatment under the 3:12 rules.

If the shareholder is not tax resident in Sweden, dividends are subject to a 30% withholding tax (kupongskatt), which is often reduced to 15% under an applicable tax treaty.

How Is Salary from a Swedish Company Taxed?

Salary income is taxed progressively:

• Up to SEK 625,800, municipal income tax of approx. 30% applies.

• Above that threshold, an additional 20% national income tax applies (i.e. ~50% total).

  
  

Swedish companies must also pay employer social security contributions, known as arbetsgivaravgifter, on salary payments. The standard rate is 31.42%, though there are some (limited) exemptions and reduced rates available.

Are You Planning to Move to Sweden and Continue Operating Your Business?

Feel free to contact us at nomadtax for professional advice on how to structure your business when moving to Sweden. Proper planning can help you avoid unnecessary tax exposure and ensure that both you and your business comply with Swedish legal requirements.

Want to read more about tax aspects of relocating to Sweden as an expat? Have a look at our guide to Swedish taxes for expats.