Sweden is an attractive place for companies to expand into, especially with its growing economy and voice in European employment and foreign policy issues. However, the country has strong worker protections and labor unions that can make it difficult to set up your Sweden payroll.
Instead of going through the process on your own, Globalization Partners can take the confusion out of hiring, taxation, and setting up your payroll by handling all compliance matters on your behalf. We’ll hire employees and add them to our established payroll, so you can focus on growing your company.
Taxation Rules for Payroll in Sweden
Employers have multiple taxation obligations for each of their employees. Sweden’s social insurance — which covers sickness, disability, retirement, and more — is financed mainly through contributions from employers, which typically amounts to around 31.42% of an employee’s gross salary. However, foreign employers contribute a little over 21% of the employee’s gross pay.
When you set up your Sweden payroll, you also have to make sure the correct taxes are coming out of your employees’ pay. Employers are responsible for deducting income tax, which varies based on how much an employee makes. Workers must pay municipal tax at varying rates depending on where they live.
Payroll Options in Sweden
Your company has four main options when establishing Sweden payroll:
- Internal: Larger subsidiaries that plan on staying in Sweden for a long time may want to invest in setting up their own Sweden payroll. This option is the most expensive, as you would need to hire the necessary staff and learn all of the country’s employment laws.
- Remote: If you already have an established payroll for your parent company, you can add your employees in Sweden to the same payroll. However, you will have different employment compliance guidelines to follow for the two sets of employees.
- Sweden payroll processing company: Some smaller companies choose Sweden payroll outsourcing with a local company based in the country. You will still be held compliant for any of the company’s mistakes.
- Outsourcing with Globalization Partners: Finally, you can work with a global PEO such as Globalization Partners. We’ll hire employees on your behalf and add them to our payroll, and we’ll take on the risk as the Employer of Record.
How to Set up Sweden Payroll
Before you can hire employees or set up your Sweden payroll, you’ll have to establish a subsidiary. Companies need to register the company and business name, which can take two to four weeks. Then you must create a bank account in Sweden, deposit the company shares, and register with the Swedish tax office.
Entitlement and Termination Terms
Before you hire employees and add them to your payroll, it’s best practice to draft an employment contract that details any entitlement and termination terms. Employers must provide an employee two weeks of advance notice before giving notice of termination. Notice periods often depend on tenure or any agreements from trade unions that may cover employees.
Sweden Payroll Processing Company
When you expand, you need a Sweden payroll option that fits your company’s goals. Let Globalization Partners help with our Sweden payroll outsourcing services. Contact us today to learn more.