Payroll in Sweden – Complete Guide for Foreign Companies.

Payroll in Sweden – Complete Guide for Foreign Companies

Expanding your business to Sweden or hiring Swedish talent remotely can be an exciting opportunity. However, understanding the local payroll system is essential to stay compliant and avoid costly mistakes.

In this article, we explain everything foreign companies need to know about payroll in Sweden — from registration and taxes to employee rights and available payroll solutions.

Step 1: Understand the Basics of Swedish Payroll

Payroll in Sweden includes more than just paying salaries. As an employer, you're responsible for:

• Withholding income tax (A-skatt) from employees

• Reporting monthly payroll to the Swedish Tax Agency (Skatteverket)

• Paying employer social security contributions (arbetsgivaravgifter)

• Issuing payslips and maintaining payroll records

These obligations apply even if you're a foreign company without a permanent establishment in Sweden.

Step 2: Employer Costs in Sweden

Swedish employer costs include:

• Social security contributions: Around 31.42% of gross salary

• Vacation pay: Minimum 12% if paid out monthly

• Pension contributions: Often required by collective agreements

• Insurance premiums: Like occupational injury or parental leave insurance

These costs can vary depending on the employee’s age and the sector your company operates in.

Step 3: Registration Requirements

Before hiring, a foreign company must:

• Register as an employer with Skatteverket

• Obtain a Swedish corporate ID number

• Report payroll via PAYE tax declarations

• Submit monthly employer reports and tax payments

This process can be complex and often requires assistance from a local payroll expert or accountant.

Step 4: Legal Compliance and Labor Law

Sweden has strong employee protections. Employers must follow:

• Swedish Employment Law

• Collective Bargaining Agreements (if applicable)

• Notice periods, sick pay, and working hour limits

• GDPR compliance in handling personal data

Ignorance of these laws is not an excuse — even foreign companies must comply fully.

Step 5: Payroll Solutions for Foreign Companies

If you don’t want to set up a Swedish entity, there are two common solutions:

a) Employer of Record (EOR)

An EOR hires employees on your behalf and takes care of payroll, compliance, and taxes — while you still manage the work. This is ideal for testing the market or hiring a small team.

b) Outsourced Payroll Partner

If you already have a Swedish entity, a payroll provider can manage your reporting, payslips, and compliance, letting you focus on business growth.

Step 6: Payslips and Reporting

Payslips must be issued monthly and include:

• Gross salary

• Deductions (taxes, pension, etc.)

• Net pay

• Employer information and payment date

Reports to Skatteverket must be submitted monthly, even during periods with no salary payments.

Conclusion: Get It Right from the Start

Handling payroll in Sweden requires local knowledge, proper setup, and continuous reporting. Whether you set up a company or work with an EOR, having a clear understanding of employer responsibilities is key.

Need help with payroll in Sweden?
We assist foreign companies with setup, compliance, and full payroll administration — with or without a local entity.

Before you move on, I just want to briefly tell you about the photo shown.

This is Ales Stenar – Sweden’s own Stonehenge, located on a windswept hilltop overlooking the Baltic Sea in southern Skåne.
The monument consists of 59 large boulders arranged in the shape of a ship, believed to date back to the late Iron Age – likely around the Viking era.

Its purpose remains a mystery: burial site, sun calendar, or ancient monument? No one knows for sure.
But most researchers today acknowledge the theory that Ales Stenar functioned as a giant solar calendar, aligned with the sun’s position at solstices and equinoxes.
It’s a must-see for history buffs, spiritual wanderers, and anyone who enjoys dramatic coastal views.