Sweden

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ a worker in Sweden, outlining the potential cons.

HQ country employment & payroll

While the person is in Sweden, they are employed and payrolled directly by the company’s HQ entity.
Cons: This may appear attractive, but it generally isn’t legal in the long term. HQ payroll won’t be possible if the person is not a tax resident in the HQ country.

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in Sweden and invoice for their work. There is no direct employment relationship.
Cons: In Sweden, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

Direct local employer setup

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.
Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

Employment through a local entity established by an Employer of Record for the purposes of employment

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The Employer of Record helps to hire and pay employees.
Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work.

Setting up a local company in Sweden is relatively straightforward. However, the difficult part comes after the initial setup when payroll needs to be calculated and run every month, taxes filed, benefits extended, change of rules and regulations followed.

When you hire employees in Sweden, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with local employment law in Sweden is fundamental for the correct running of your business – not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, working hours regulations.

As with every other country, certain costs are associated with employing a worker in Sweden that come on top of the gross salary you are offering. A Swedish employer must make social security contributions based on each employee’s total taxable remuneration monthly. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

While an Employer of Record is the most typical way for legally employing a worker in a different country where the company doesn’t have an entity, in Sweden, the model doesn’t exist. Instead, an Employer of Record directly employs a worker through a company specifically established for that purpose. The employee then provides their services to the client company. We are responsible for:

• informing you about any pre-employment requirements
• ensuring their employment is compliant with Swedish employment law
• informing you about the length of the maternity leave, paternity leave, public holidays, illness benefits, medical benefits
• providing a locally compliant employment agreement
• processing local payroll
• filing employment-related tax returns
• issuing payslips to the employee
• distributing salary payments
• payments to the local tax authorities

Customers that work with Boundless in Sweden are responsible for the following:

• sourcing and recruiting their own workers
• managing the employee’s day-to-day work load
• contributing to the personal / professional development of the employee through their work
• following any guidance we give on employment and HR best practices or legal obligations in Sweden, such as the employment contract, public holidays, annual leave, sick leave, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
• ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including Sweden. They ensure the Sweden employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in Sweden, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

Any new employee that is locally employed through an Employer of Record that has set up a company specifically for the purposes of employing on behalf of customers, gets full employment rights and benefits as specified in Swedish employment law. They get a locally compliant employment contract, statutory maternity leave, annual leave, illness benefits, any relevant tax credit, and many more.

In Sweden, both employers and employees have to pay taxes. Swedish employers make social security contributions, which includes General payroll contribution, Retirement, Health insurance, Labour market fee, Parental Insurance, Survivors Pension, and Work injury. Employees make pension contributions, and pay national income tax and municipal income tax. To get a clear overview of both employee and employer taxes, use our salary breakdown calculator.