Sweden is an attractive place for companies to grow, specifically with its developing economy and strong voice in European employment and international policy issues. However, the country has several worker protections and labor unions that can make it difficult to establish your Sweden payroll.
Instead of going through the process on your own, G-P can take the confusion out of hiring, compliance, and payroll through our Employer of Record model.
Taxation rules in Sweden
Employers have multiple taxation obligations. Sweden’s social insurance — which covers sickness, disability, retirement, and more — is financed mainly through contributions from employers, and typically amounts to around 31.42% of an employee’s gross salary. However, international employers contribute a little over 21% of an employee’s gross pay.
When you establish a Sweden payroll, employers are responsible for deducting income tax, which varies based on how much an employee earns. Employees must pay municipal tax at varying rates depending on where they live.
Sweden payroll options for companies
Companies have 3 main options when establishing a Sweden payroll:
- Internal: Companies that plan on staying in Sweden for a long time may want to invest in establishing their own subsidiary to run payroll internally. This option is the most expensive, as you would need to hire an HR team and learn all of the country’s employment laws to ensure compliance.
- Sweden payroll processing company: Some smaller companies may choose to outsource payroll with a local company based in the country. With this option, you will still be held liable for any compliance mistakes.
- G-P: The easiest way to run payroll in Sweden and stay compliant is partnering with an Employer of Record like G-P. With us, you can rest assured that all employees will be paid on time, freeing you to focus on other important aspects of your business.
How to establish a payroll in Sweden
Before you can hire employees or establish a Sweden payroll, you’ll have to establish a subsidiary. Companies need to register their business name, which can take 2 to 4 weeks. Then, create a bank account in Sweden, deposit the company shares, and register with Sweden’s tax office. However, companies can bypass entity setup by partnering with an EOR like G-P.
Entitlement and termination terms
Before hiring employees and adding them to your payroll, it’s best practice to draft an employment contract that details any entitlement and termination terms. In Sweden, notice periods often depend on tenure or any agreements from trade unions that may cover employees.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.
