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Dive deeper into Sweden
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Global Payroll Team
Written by Global Payroll Team
Last updated May 1, 2026
Expert Reviewed
Sweden map

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Mercans offers complete payroll, PEO and HR services in Sweden

One of the most competitive economies in Europe and a country that consistently ranks highly for innovation, sustainability and business climate, Sweden remains globally competitive thanks to its open market economy, strong institutions and highly developed education system.

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Doing Business in Sweden

Due to a stable and strong economy, Sweden continues to present an attractive location for foreign investment and remains highly business friendly. The country offers a transparent regulatory environment, a highly skilled workforce, advanced digital infrastructure and a strong innovation ecosystem.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Sweden is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banking Hours: Monday – Friday from 10:00 am – 3:00 pm

Working Week

The standard working week is generally from Monday to Friday, with ordinary working time usually set at 40 hours per week.

Labor Law

Strict labor laws and collective agreements ensure workers have strong protections in place. Sweden’s labor market framework combines statutory protections with a central role for collective bargaining on pay, overtime, pensions, and many day-to-day employment conditions.

Main Industries

Motor vehicles, telecommunications, pharmaceuticals, industrial machinery, precision equipment, chemicals, home goods and appliances, forestry, iron and steel

GDP Growth

1.5%

Dates & Numbers

yyyy/mm/dd

Official State Name

Kingdom of Sweden

Population

10.59 million

Capital

Stockholm

Major Languages

Swedish

Currency

Swedish Krona kr

Internet Domain

.se

International Dialing Code

+46

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Sweden
Stockholm, SE
2:35 am, May 2, 2026
14°C
clear sky
48 %
Wind Gust: 7 mph
Clouds: 8%
Sunrise: 4:46 am
Sunset: 8:42 pm

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Payroll

While there is no statutory national minimum wage in Sweden, trade unions and employers’ organizations often regulate minimum pay through collective agreements. Local laws, regulations and business practices may also depend on the sector and applicable collective bargaining arrangement.

It is acceptable to provide employees with online payslips

Payslip

Accounting and payroll records must generally be kept for 7 years

Reports

25 days per year

Annual Leave

Paid sick leave is generally compensated by the employer for days 2 – 14, subject to a qualifying deduction on day 1. For more than 14 days, benefits are paid by social security.

Sick Leave

480 days of parental leave per child and 10 days of temporary leave in connection with birth or adoption for the non-pregnant parent

Maternity & Paternity Leave

1 month notice

Employee Termination

13th month payments are not compulsory. Paid as a bonus at the employer’s discretion or under a collective agreement

13th month salary

There is no official national minimum wage

Minimum Wage

Overtime compensation is usually regulated by the employment contract or collective agreement rather than a single statutory formula

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In Sweden, overtime pay or time off in lieu is commonly determined by the applicable collective bargaining agreement or individual employment terms

Overtime

The terms relating to this payment are outlined in the employment contract / collective agreement. There is no general legal obligation to pay any severance

Severance Pay

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Tax and Social Security

There are multiple social services programs including nationwide health programs and other benefits. Swedish residents are generally subject to tax on their worldwide income and capital gains, while employers must report and pay employer contributions and deducted taxes to the Swedish Tax Agency.

Tax

Various taxes may apply such as excise duties, real estate taxes, stamp duty, payroll-related taxes and VAT. Individual tax is comparatively high, and a national income tax layer applies above the relevant threshold in addition to municipal tax.

20.6%

Corporate Income Tax

50%+

Personal Income Tax

25%

Salary Tax

25%

VAT

Social Security

Social insurance is administered by the Swedish Social Insurance Agency and the Swedish Pensions Agency.

38.42%

Social Security Rate

31.42%

Social Security Rate for Employers

7%

Social Security Rate for Employees

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Employment Law

There are a number of laws governing the employment relationship, including the Employment Protection Act, the Work Environment Act and the Working Hours Act. Collective bargaining agreements also play a major role in regulating employment conditions.

Employment Agreement

Typically, written employment agreements are put in place and must set out the key conditions relating to the position. The term is usually indefinite, although fixed-term employment may be used in the circumstances permitted by law.

Working condition

Regular working time may not exceed 40 hours per week. If the nature of the business demands, deviations may be made within the limits of the Working Hours Act and any applicable collective agreement.

Leaves

Swedish parents are offered 480 days of parental leave per child. Workers have at least 25 days of annual holiday leave. The level of pay during leave depends on the type of leave and the applicable social insurance rules.

Employment termination

Regulations for termination of employment are set out in the Employment Protection Act, which protects employees from wrongful dismissal and limits the freedom of employers to lay off staff. Most collective agreements also contain regulations regarding layoffs and dismissal. An employer and employee can also agree on terminating employment through a voluntary agreement.

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1 month

Minimum notice period for terminating an employee

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11

Total number of public holidays

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40

Working hours per week

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No entitlement

Total number of days for Compassionate & Bereavement Leave

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Immigration

Work permits are not required if the individual has a permanent residence permit, certain research or study-based residence permissions, or is a citizen of an EU/EEA country or Switzerland. In all other cases, a work permit is generally required in order to work in Sweden.

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Residency permits

Companies that operate international payroll should take note that an individual must generally be offered a job before they are able to obtain a work permit. As a rule, the permit must be granted before the person begins working in Sweden. Certain occupations and the citizens of certain countries are subject to special regulations for working in Sweden.

Work Permit validity

Two years

Required Documents

Valid passport

An employment offer that complies with the terms set by Swedish collective agreements or which are standard for the occupation

A monthly salary offered of at least 29,680 SEK before taxes and on par with the position

The offer of employment includes medical insurance, life insurance, occupational injury insurance, and occupational pension insurance

Compliant, reliable, error-free and touchless payroll in Sweden

Build the best team and hire top talent compliantly in Sweden. Get in touch with Sweden payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Sweden and how does it work for foreign companies?

    An Employer of Record in Sweden enables global companies to hire local employees without establishing a legal entity. The EOR becomes the official employer, managing employment contracts, payroll, taxes, benefits, and compliance with Swedish labor and employment regulations.

    Why should businesses use an EOR instead of establishing a legal entity in Sweden?

    Using an EOR in Sweden allows businesses to enter the market quickly and cost-effectively. Companies avoid the complexity of entity setup and administration while ensuring full compliance with Swedish tax, labor, and social security laws.

    How does payroll outsourcing in Sweden ensure compliance with tax and labor laws?

    Mercans’ payroll outsourcing services in Sweden handle accurate salary processing, income tax deductions, and statutory contributions in line with national regulations. All payroll processes comply with Swedish Employment Protection Act and local reporting standards.

    Can an Employer of Record in Sweden hire employees and manage work permits for international companies?

    Yes. An EOR in Sweden can hire both local and foreign employees on behalf of international companies. The service includes managing employment contracts, work permit applications, and compliance with Swedish immigration and labor legislation.

    What are the main benefits of using EOR and payroll services in Sweden for global expansion?

    Key benefits include fast market entry, reduced setup and administrative costs, full legal compliance, access to local HR and payroll expertise, and the flexibility to scale teams without forming a local entity.

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