Sweden

Registrations and Establishing an Entity

To process payroll in Sweden, businesses must register:

• With the Swedish Companies Registration Office (Bolagsverket)
• With the Swedish Tax Agency (Skatteverket)

Timeline:

• 2–4 weeks to register
• 15 weeks if registering only as an employer

Banking

Local bank accounts are not mandatory for payroll, but preferred for domestic transfers.

Working Week

• Standard: Monday to Friday
• Max hours: 40 hours/week
• Overtime: Max 50 hours/month, 200 hours/year

Employment Law

• Annual Leave: 25 vacation days + 16 public holidays and 6 de facto holidays (often include half-days)
• Vacation Pay:
  • By praxis: 0.8% of monthly salary per vacation day
  • Legal minimum: 0.43% of monthly salary per day
  • Additional 12% vacation allowance for variable pay paid out in the prior year
• Maternity Leave: Shared parental leave of 480 days (paid)
• Paternity Leave: 10 days within 60 days of child’s birth
• Sick Leave:
  • Day 1: Unpaid (karensavdrag)
  • Days 2–14: 80% employer-paid
  • Day 15+: Paid by National Social Insurance Agency (Försäkringskassan)
  • If an employee returns to work and falls sick again within 5 days, no new unpaid day applies
• Collective Agreements: Often apply, governing wages and benefits

Income Tax

• Tax applies at municipal, county, and national levels
• Residents taxed on global income
• Non-residents taxed on Swedish income (SINK rate: 25%)

Social Security Contributions

• Employer: 31.42% of gross salary
• Employee: 7% (deducted via tax credit)

Deadlines

• Contributions due monthly (by 12th or 17th depending on the month)
• Annual tax returns required for residents
• FOS (tax file) updates received from Skatteverket and uploaded to payroll systems for correct withholding

Payroll Process

• Monthly payroll standard
• Payslips can be issued online (GDPR compliant)

Reporting

• Monthly PAYE tax returns submitted per employee
• Annual reconciliation and income certificates
• Employer applies tax updates from FOS files received each year
• Records must be retained for 7 years

New Starts

• Written contract or written terms of employment within 1 month
• Non-citizens require tax ID and may need work/residence permits
• Work/residence permits for non-EU citizens must be approved before arrival in Sweden
• Employer is responsible for filing the permit application

Leavers

• Final salary paid month after termination
• No formal requirement to notify authorities of termination

Employee Benefits

• Common: Health care allowance (up to SEK 5,000/year, max SEK 1,000 per occasion)
• Company cars and some benefits treated as taxable
• If health benefit exceeds SEK 5,000 annually, the entire amount becomes taxable

Expenses

• Net reimbursements not taxable if meal costs excluded
• Documented expenses are preferred for tax purposes
• Net reimbursements with meals included become taxable

Requirements

• EU/EES citizens: No permit needed
• Non-EU: Must apply for work/residence permit prior to arrival
• Employer must submit application before entry to Sweden

Permit Types

• Standard Work Permit
• Working Holiday Visa (for eligible countries)

Family Members

• Can be included for stays over 6 months

• Health care benefit limits: SEK 5,000/year, SEK 1,000/instance
• Collective agreements dictate specific employment terms
• Variable pay (e.g., bonuses) affects vacation pay calculations

Further Information

For more information, or assistance with Sweden tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.