Setting Up a Swedish AB: The Complete Tax Playbook
Setting Up a Swedish AB: The Complete Tax Playbook
From 3:12 rules to R&D deductions — everything a foreign entrepreneur needs to know about Swedish corporate taxation.
Why a Swedish AB?
Sweden consistently ranks among the world's most innovative economies. It's home to more unicorns per capita than almost any other country, it offers direct access to the EU single market, and its corporate tax rate of 20.6% is one of the most competitive in Northern Europe.
The standard vehicle for doing business in Sweden is the Aktiebolag (AB) — a limited liability company where shareholders' risk is capped at their invested capital. Whether you're a solo founder building a SaaS product, a foreign company expanding into the Nordics, or an EU entrepreneur looking for a stable, transparent business environment, the AB is almost certainly the right structure.
But Sweden's tax system has layers. The corporate rate is straightforward, but the rules governing how you extract profits — particularly the 3:12 rules for closely held companies — are among the most complex in Swedish tax law. And they just changed on 1 January 2026.
This guide walks you through the full picture: formation, corporate taxation, the new 3:12 framework, R&D incentives, VAT obligations, and what foreign founders need to watch out for.
Formation: How to Incorporate an AB
Requirements
Incorporating a Swedish AB is relatively fast and accessible, even for non-residents. Here's what you need:
Minimum share capital: SEK 25,000 for a private AB (privat aktiebolag). This must be fully paid up — either in cash deposited into a Swedish bank account or through non-cash contributions valued by an appraiser — before registration. Public ABs (publikt aktiebolag) require SEK 500,000, but most small businesses will use the private form.
Shareholders: Only one is required. The shareholder can be of any nationality and reside anywhere in the world.
Board of directors: At least one board member (styrelseledamot) and one deputy (styrelsesuppleant) are required. At least 50% of board members must reside within the EEA. If no directors are EEA residents, the company must appoint a Swedish-resident representative (delgivningsmottagare) to receive official communications.
Company name: Must be unique, include "AB" or "Aktiebolag," and be approved by Bolagsverket (the Swedish Companies Registration Office). Certain words like "bank," "insurance," or "group" require special permission.
Registered office: A Swedish address is required.
The Registration Process
- Draft founding documents: Articles of Association (bolagsordning) and Memorandum of Association (stiftelseurkund)
- Deposit share capital into a Swedish bank account and obtain a bank certificate
- Register with Bolagsverket — either online via the Verksamt portal (requires Swedish BankID) or by mailing Form 816. A filing fee applies.
- Receive your registration certificate and corporate identity number (organisationsnummer) — typically within 1–3 weeks
- Register with Skatteverket (Swedish Tax Agency) for F-tax (F-skatt), VAT (moms), and employer status if hiring
Beneficial ownership: Any individual owning or controlling more than 25% of shares or voting rights must be registered with Bolagsverket's beneficial ownership register.
Practical note for foreign founders: Opening a Swedish business bank account as a non-resident has become significantly more involved due to EU anti-money laundering regulations. Expect enhanced KYC requirements, in-person or video identification, and a processing time of 2–8 weeks. Budget for this.
Legal basis: Swedish Companies Act (Aktiebolagslagen, ABL 2005:551); Swedish Companies Ordinance (Aktiebolagsförordningen 2005:559).
Corporate Tax: The Basics
Sweden's corporate tax system is clean and flat — no municipal surcharges, no variable rates, no sector-specific exceptions on the headline number.
The Rate
20.6% on taxable profit. This rate has been in effect since 1 January 2021 (reduced from 21.4%). A proposal to reduce it further to 20% was discussed in 2025 but was not implemented in the final 2026 budget. The rate remains 20.6%.
All income of a corporate entity in Sweden is treated as business income — there's no separate category for capital gains or investment income at the company level.
Who Pays
Resident companies (incorporated in Sweden or with effective management here) are taxed on worldwide income. Non-resident companies are taxed only on Swedish-source income, typically through a permanent establishment (fast driftställe).
Filing and Payment
Companies estimate their annual profit and pay preliminary tax (F-skatt) monthly based on that forecast. After the financial year ends, a corporate income tax return (inkomstdeklaration) is filed with Skatteverket — due within six months of the financial year-end (typically 1 July for calendar-year companies). A final assessment is issued, and any difference is settled.
Annual Report
Every AB must file an annual report (årsredovisning) with Bolagsverket within seven months of the financial year-end. The report must be in Swedish and use SEK or EUR. Companies with more than three employees must appoint an auditor. Failure to file within 11 months can trigger liquidation proceedings.
Double Taxation Treaties
Sweden has an extensive network of double taxation treaties covering over 80 countries. These are critical for foreign-owned ABs to avoid being taxed twice on the same income. The treaties typically reduce withholding tax on dividends, interest, and royalties paid to foreign shareholders.
Standard withholding tax on dividends paid to non-residents: 30% (kupongskatt), but often reduced to 15% or lower under applicable tax treaties.
Legal basis: Swedish Income Tax Act (Inkomstskattelagen, IL 1999:1229); PwC Tax Summaries — Sweden.
The 3:12 Rules: How Owners Get Taxed on Dividends (2026 Update)
This is the most important — and most complex — part of Swedish corporate taxation for founders and owner-operators. The rules changed significantly on 1 January 2026.
What Are the 3:12 Rules?
The "3:12 rules" (fåmansföretagsreglerna or trestolvareglerna) govern how dividends and capital gains from closely held companies (fåmansföretag) are taxed in the hands of their active owners. Named after a now-repealed section of older tax legislation, the nickname has stuck.
The problem they solve: In Sweden, capital income (like dividends) is normally taxed at 30%, while employment income faces progressive taxation up to approximately 52–55% at the margin (including municipal and state tax). Without special rules, owner-operators of small companies would simply pay themselves minimal salaries and extract all profits as low-taxed dividends — converting employment income into capital income.
How they work: The 3:12 rules create a threshold amount (gränsbelopp) — the maximum amount of dividends that can be taxed at the favorable 20% rate. Anything above the threshold is taxed as employment income (up to approximately 52–55%, though without social contributions). Amounts above roughly SEK 7 million are taxed as capital income at 30%.
What Changed on 1 January 2026
The Swedish Parliament (Riksdagen) approved the new 3:12 rules on 26 November 2025 as part of the 2026 Budget Bill. The changes affect approximately 540,000 shareholders in 400,000 companies and result in an estimated total tax reduction of SEK 1.1 billion.
Here are the key changes:
1. One rule replaces two
The old system had two methods to calculate the threshold: a "simplified rule" (förenklingsregeln) and a "main rule" (huvudregeln). You picked one each year. From 2026, there is a single unified calculation with two components:
- Basic amount (grundbelopp): 4 income base amounts (4 × SEK 80,600 = SEK 322,400 in 2026). This is shared proportionally across all of a shareholder's holdings in closely held companies. You can only claim one basic amount across all your companies.
- Salary-based allowance (lönebaserat utrymme): 50% of total salaries paid by the company that exceed 8 income base amounts (SEK 644,800 in 2026), distributed among qualifying shareholders.
2. Salary withdrawal requirement abolished
Under the old rules, you had to pay yourself a certain minimum salary to qualify for the salary-based portion of the threshold. This requirement is gone. It's replaced by a salary deduction — meaning the salary base simply has a floor (8 income base amounts) below which it doesn't generate additional allowance. This simplification is a significant win for shareholders in companies with many employees.
3. Saved allowance: no more indexation
Previously, unused threshold amounts carried forward with an annual interest uplift. From 2026, saved allowance is carried forward at nominal value — no indexation, no interest. This is a downside for shareholders who have been accumulating unused allowance.
4. Shorter quarantine periods
The "waiting period" (karenstid) — relevant for dormant holding companies (trädabolag), the outsider rule, and the "same or similar activity" test — has been shortened from 5 to 4 years. This reduces lock-in effects and makes restructuring more flexible.
5. K10 now mandatory every year
From the 2026 tax year (filed spring 2027), owners of qualified shares must file the K10 form with their income tax return every year — even if no dividends were received and no shares were sold.
What This Means in Practice
For a solo founder running a profitable AB with no employees:
- Your basic allowance at 20% tax is SEK 322,400 per year — up from roughly SEK 204,000 under the old simplified rule. That's approximately SEK 100,000 more in low-taxed dividends.
- No salary withdrawal requirement means less administrative hassle.
- But if you own shares in multiple companies, the basic amount must be split proportionally.
For a founder with employees:
- Total salaries above SEK 644,800 generate a salary-based allowance at 50% of the excess.
- All shareholders can now benefit from the salary base, regardless of their ownership percentage or personal salary level.
Legal basis: Swedish Budget Bill 2026 (Budgetpropositionen 2025/26:1); Riksdagen approval 26 November 2025; Chapter 56–57, Swedish Income Tax Act (IL).
R&D Tax Incentives
Sweden's R&D tax incentive (forskningsavdraget) is one of the most practical tools for companies investing in innovation — and the rules were simplified from 1 January 2026.
How It Works
The R&D deduction allows employers to reduce employer social contributions (arbetsgivaravgifter) by approximately 20% of the gross salary paid to employees engaged in research and development work. This is not a corporate income tax deduction — it's a direct reduction of payroll charges, which means the financial benefit is immediate and cash-flow positive.
Cap: SEK 36 million per year per corporate group.
Minimum threshold: Under the old rules, an employee needed to spend at least 15 hours per month on R&D to qualify. The 2026 reforms propose removing this rigid hourly threshold and simplifying the qualification criteria.
What Changed in 2026
The definitions of "research" and "development" have been broadened:
- The previous requirements for R&D work to be "systematic" and "highly skilled" have been removed, as these were found to create excessive documentation burdens and unpredictable outcomes.
- The definition of "development" now requires only a purpose of developing or improving products — rather than developing "new or significantly improved" products, which was a higher bar.
- The reforms aim to make the incentive accessible to a wider range of companies, particularly SMEs that were previously deterred by the complexity of proving eligibility.
The Expert Tax (Expertskatt)
Sweden also offers tax relief for foreign experts, researchers, and key personnel recruited from abroad. Under the expert tax rules:
- 25% of salary is tax-free (proposed to increase to 30% from 2026)
- Applies for up to 7 years of Swedish residency
- The employee must not be a Swedish citizen (proposed change: Swedish nationals who haven't lived in Sweden for 10+ years may also qualify)
- Application must be filed with the Taxation of Research Workers Board (Forskarskattenämnden) within 3 months of starting work in Sweden (proposed extension to 6 months)
For tech companies and R&D-heavy businesses, combining the R&D employer contribution reduction with the expert tax for key foreign hires creates a powerful cost advantage.
Legal basis: Social Contributions Act (Socialavgiftslagen, 2000:980), Chapter 2, Section 31; Government investigation SOU 2025:2 "Tax Incentives for Research and Development"; Setterwalls analysis (January 2025); EY Sweden Tax Alert (October 2025).
VAT Obligations
Registration
A Swedish AB must register for VAT with Skatteverket if its taxable turnover is expected to exceed SEK 120,000 per year (as of 2025). Registration is typically done as part of the post-incorporation tax registration.
Rates
| Rate | Applies To |
|---|---|
| 25% | Standard rate — most goods and services |
| 12% | Food, hotel accommodation, restaurant services (proposed temporary reduction to 6% for food from 1 April 2026 under bill Prop. 2025/26:55) |
| 6% | Books, newspapers, cultural events, passenger transport |
| 0% | Exports, intra-EU supplies of goods (zero-rated, not exempt) |
Filing
VAT returns are filed monthly (if annual turnover exceeds SEK 40 million) or quarterly (if below). Small businesses with turnover under SEK 1 million can file annually.
Cross-Border Considerations
If you sell goods or services to customers in other EU countries, standard EU VAT rules apply: reverse charge for B2B, and OSS (One-Stop Shop) for B2C distance sales. Non-EU sellers into Sweden may need a fiscal representative — which is a service Veroskat provides.
Legal basis: Swedish VAT Act (Mervärdesskattelagen, ML 2023:200, effective from 1 July 2023, replacing the previous 1994 act).
Employer Obligations
If your AB hires employees — including yourself as a working shareholder — you take on significant payroll obligations.
Employer Social Contributions (Arbetsgivaravgifter)
The full employer contribution rate is 31.42% of gross salary and benefits. This covers pension, health insurance, parental insurance, labor market contributions, and more. For employees aged 67+ at the start of the year, only the pension contribution of 10.21% applies.
These contributions are reported and paid monthly via the PAYE tax return (arbetsgivardeklaration) filed with Skatteverket.
Income Tax Withholding
As an employer, you must withhold preliminary income tax (preliminärskatt) from employee salaries based on tax tables provided by Skatteverket. The combined marginal tax rate on employment income ranges from approximately 29–33% (municipal tax only) up to 52–55% (including state income tax on income above approximately SEK 615,000).
The Total Cost of Employment
A quick illustration: if you pay an employee a gross monthly salary of SEK 50,000:
- Employer contributions: SEK 15,710 (31.42%)
- Total cost to the company: SEK 65,710/month
- The employee receives approximately SEK 34,000–37,000 after income tax withholding, depending on municipality
This is important context for the 3:12 discussion — the total tax wedge on employment income is high, which is precisely why the low-taxed dividend threshold matters so much to owner-operators.
Legal basis: Social Contributions Act (Socialavgiftslagen, 2000:980); Skatteverket — Employer Contributions (official guidance).
Holding Structures and the Participation Exemption
Sweden is widely used as a holding company jurisdiction within the EU, largely thanks to the participation exemption (näringsbetingade andelar):
- Capital gains on the sale of qualifying shares in subsidiaries are fully tax-exempt at the corporate level
- Dividends received from qualifying subsidiaries are also tax-exempt
- To qualify, the holding company must own at least 10% of the shares (or the holding must be connected to the company's business operations), and the shares must not be listed on a regulated market (with some exceptions)
This means a Swedish AB can sell a subsidiary and reinvest the proceeds into new ventures without triggering corporate tax on the gain — one of the most powerful tax optimization tools available in the EU.
Legal basis: Chapter 24, Swedish Income Tax Act (IL); Chapter 25a, IL (capital gains on qualifying shares).
What Foreign Founders Need to Know
Residency and Work Permits
If you're a non-EU citizen, you'll need a work permit to operate your AB from Sweden. The standard route requires a monthly salary of at least SEK 35,500 (2026) and terms consistent with Swedish collective agreements. An "Entrepreneurship Visa" track is in development, expected to be fully operational by mid-2026, potentially bypassing some work permit queuing times.
BankID
Sweden runs on BankID — the digital identity system used for everything from tax filings to signing contracts to logging into your bank. Without it, you'll face friction in nearly every administrative process. Getting BankID requires a Swedish personnummer (personal identity number) and a Swedish bank account.
Allabolag.se
Sweden is a high-transparency society. Your AB's financial statements, board composition, revenue, and profit are publicly visible on sites like Allabolag.se. This is normal and expected — in fact, a company without a visible track record may struggle to find suppliers, partners, or clients.
Transfer Pricing
If your AB is part of an international group, Sweden applies OECD transfer pricing guidelines. Transactions between related entities must be at arm's length, and Skatteverket actively scrutinizes multinational arrangements. Documentation requirements are significant.
How Veroskat Can Help
Setting up a Swedish AB is straightforward. Optimizing how you operate it — particularly around the 3:12 rules, R&D deductions, and cross-border VAT — is where expertise matters.
Veroskat provides:
- VAT registration and compliance in Sweden — we handle your declarations, Intrastat, and periodic reporting
- Fiscal representation for non-EU businesses operating in Sweden
- Strategic tax advisory — navigating the 3:12 framework, holding structures, and R&D incentives
- AI-powered VAT advisor — instant answers to your Swedish tax questions
Whether you're a foreign founder incorporating your first AB or an established business optimizing your Swedish operations, we're here.
Sources & References
Swedish Companies Act (Aktiebolagslagen, ABL 2005:551) — Primary legislation governing formation, governance, and dissolution of Swedish limited companies.
Bolagsverket (Swedish Companies Registration Office) — bolagsverket.se — Official registration authority for AB formation, annual reports, and beneficial ownership.
Skatteverket (Swedish Tax Agency) — skatteverket.se — Official guidance on corporate tax, VAT, employer contributions, and F-skatt registration.
Skatteverket — Employer Contributions — Full rate 31.42% of gross salary; reduced rate 10.21% for employees aged 67+ — Official guidance
Swedish Income Tax Act (Inkomstskattelagen, IL 1999:1229) — Corporate tax rate 20.6% (Chapter 65, Section 10); closely held company rules (Chapters 56–57); participation exemption (Chapters 24, 25a).
PwC Tax Summaries — Sweden — Corporate tax rate confirmation and Pillar Two implementation — PwC
PwC Sweden — New 3:12 Rules Enter into Force on 1 January 2026 (December 2025) — Detailed analysis of the new threshold calculation, abolished salary withdrawal requirement, and shortened quarantine periods — PwC Blog
Schjødt — Changed Tax Rules for Owners of Closely Held Companies — Analysis of the 2026 Budget Bill proposals on 3:12 rules — Schjødt
Lindahl — Government Proposal on Simplification of the 3:12 Rules — Overview of the legislative consultation paper — Lindahl
Eaktiebok — K10 & the 3:12 Rules from 2026 — Practical guide to the mandatory K10 filing changes — Eaktiebok
Swedish Budget Bill 2026 (Budgetpropositionen 2025/26:1) — Approved by Riksdagen on 26 November 2025, including 3:12 reform, R&D deduction changes, and expert tax updates.
EY Sweden — The Swedish Government's Proposed Changes to R&D Tax Incentives (October 2025) — Analysis of broadened R&D definitions and the expanded investigation remit — EY
Schjødt — Proposal Regarding Changed Rules on Swedish R&D Tax Relief — Summary of proposed amendments to the forskningsavdraget — Schjødt
Setterwalls — Several Proposals to Change Tax Rules Affecting Employers and Employees (January 2025) — Overview of R&D deduction and expert tax rule reform proposals — Setterwalls
Swedish VAT Act (Mervärdesskattelagen, ML 2023:200) — Effective 1 July 2023, replacing the 1994 act. Standard rate 25%, reduced rates 12% and 6%.
Social Contributions Act (Socialavgiftslagen, 2000:980) — Employer contribution rates and R&D deduction provisions.
This article is for informational purposes only and does not constitute legal or tax advice. Swedish tax law is complex and individual circumstances vary. For guidance specific to your situation, contact Veroskat.
Last updated: January 2026