Selecting the correct legal structure is one of the first and most important decisions you’ll make when establishing a business in Sweden. Your choice will influence everything from taxation and liability to operational flexibility and administrative requirements. Understanding the different options—and how they align with your goals—will help you avoid costly restructuring later on.
Sweden offers several legal entity types suitable for both domestic and foreign entrepreneurs. Each has its own benefits, drawbacks, and compliance obligations. The key is to assess which option best supports your short-term launch strategy and long-term growth plans.
1. Aktiebolag (AB) – Limited Liability Company
The Aktiebolag (AB) is the most common and flexible structure for companies in Sweden, especially for foreign investors. It provides limited liability protection, meaning shareholders are only responsible for the company’s debts up to their invested capital.
- Minimum share capital: SEK 25,000 for private AB; SEK 500,000 for public AB.
- Liability: Limited to invested capital.
- Taxation: Corporate income tax at 20.6% (as of 2025).
- Best for: Companies planning long-term operations, employing staff, or seeking outside investment.
For many foreign companies, establishing an AB in Sweden signals credibility and stability to customers, partners, and authorities.
2. Filial – Branch Office
A branch office (Filial) is an extension of a foreign company, not a separate legal entity. It operates in Sweden but is legally part of the parent company abroad.
- Minimum capital: None required.
- Liability: Parent company bears full responsibility for branch obligations.
- Taxation: Profits from Swedish operations are taxed in Sweden.
- Best for: Companies testing the Swedish market or maintaining close integration with headquarters.
This structure is quicker to set up than an AB but may not carry the same local credibility, especially when dealing with Swedish customers or suppliers.
3. Handelsbolag (HB) – Trading Partnership
The Handelsbolag is a partnership owned by two or more individuals or legal entities. All partners are personally liable for the business’s obligations.
- Minimum capital: None required.
- Liability: Unlimited and joint liability among partners.
- Taxation: Profits are taxed as personal income for individual partners.
- Best for: Small-scale ventures with trusted partners where flexibility is more important than liability protection.
Because of unlimited liability, this structure is less common for foreign investors but may suit certain joint ventures.
4. Enskild Firma – Sole Proprietorship
An Enskild Firma is the simplest form of business structure, owned and operated by one individual. There is no legal separation between the business and the owner.
- Minimum capital: None required.
- Liability: Unlimited personal liability.
- Taxation: Profits are taxed as the owner’s personal income.
- Best for: Freelancers, consultants, or very small-scale operations.
While easy to set up, this structure offers no liability protection and is generally unsuitable for high-risk or capital-intensive ventures.
5. Kommanditbolag (KB) – Limited Partnership
The Kommanditbolag is a partnership with at least one general partner (with unlimited liability) and one limited partner (liable only up to their investment).
- Minimum capital: None required.
- Liability: Mixed—general partners have unlimited liability, limited partners have restricted liability.
- Taxation: Similar to a Handelsbolag, profits taxed as personal income.
- Best for: Partnerships where one partner invests capital but doesn’t want operational responsibility.
Factors to Consider When Choosing Your Entity
Before making a decision, evaluate these factors:
- Liability risk: How much personal exposure are you willing to accept?
- Capital requirements: Can you meet the initial investment needs?
- Tax impact: How will the structure affect your tax obligations both in Sweden and abroad?
- Operational control: How much flexibility do you require for decision-making and ownership changes?
- Market perception: Will your chosen entity inspire trust among Swedish clients and partners?
From Legal Form to Business Launch
Choosing the right legal entity in Sweden is not just a legal formality—it’s a strategic decision that impacts your brand, finances, and long-term growth. By understanding the advantages and trade-offs of each structure, you can select the one that aligns with your goals and risk profile. Whether you opt for a fully independent Swedish company or a branch office linked to your existing business, the right choice will provide a solid foundation for your success in the Swedish market.
Need tailored advice on entity selection? CE Sweden can guide you through the process, ensuring compliance and strategic alignment.
