Are you dreaming about pursuing a career as a freelancer in Sweden? Whether your expertise is in website development, accounting, marketing or something else, there are great career opportunities available to you in this charming Nordic country. By freelancing in Sweden, you will be in complete control of your daily work schedule and activities. From choosing what projects you take on to setting your rate to match your true value, there are wonderful benefits associated with freelancing in Sweden. However, before you can lock in these and other benefits, you need to know how to open a freelance business in Sweden.
How to Start Working as a Freelancer in Sweden
There are two primary options available when you want to become a freelancer in Sweden. You can work as a sole proprietor or through a limited liability company. As a sole proprietor, you are personally responsible for all liabilities that your freelancing business takes on. However, you do not need to verify that you have the startup capital to start working as a sole proprietor. If you choose to work as a sole proprietor, you will need to register your new business through the Swedish Companies Registration Office to protect it from use by others. You also must register your business with the Swedish Tax Office. If you will be responsible for paying VAT, this must also be done through the Swedish Tax Office.
If you decide to run your business as a limited liability company, you must prove that you have at least 25,000 SEK when you register your business. As is the case with a sole proprietor, your business must be properly registered with both the Swedish Companies Registration Office and the Swedish Tax Office. When you register through the tax office, you will be given a unique ID number that will be necessary for filing taxes. When registering, you must do so as an employer. This is because you will be an employee of the LLC and will be giving yourself a salary.
Taxation Obligations for Freelancers in Sweden
Both LLCs and sole proprietors are required to pay income, social welfare costs and VAT. Depending on your income level, your national income tax rate may be 0% or 20%. There is also a municipal income tax of 32%. The cost of social security tax in Sweden is 31.42%. This is based on the taxable remuneration. If you operate your freelancing business in Sweden through an LLC, you are required to pay the same national, municipal and social security taxes. The tax rates hold steady for both types of business entities.
VAT Obligations for freelancers in Sweden
Another tax that you should be aware of is the value-added tax, or VAT. It is required for both sole proprietors and LLCs. This tax is payable to the Swedish tax agency. The standard VAT rate in Sweden is 25%. A select and limited group of activities may qualify for a reduced rate of 0%, 6% or 12%. You must register to pay VAT in Sweden if your annual turnover reaches or exceeds 30,000 SEK. To register for VAT, you will need to provide identity documentation, business registration documentation and business income data to the tax authority.
Understanding the detailed VAT tax system in Sweden can be challenging. At Xolo, we want you to remain compliant with all tax rules and regulations. At the same time, we are focused on simplifying the taxation process for you. Learn more through this VAT guide for freelancers in Sweden.
Deductions for Freelancers in Sweden
There are a few beneficial tax deductions for freelancers in Sweden. For example, you will not pay taxes on any VAT that you collected. You will, however, have to pass the collected tax along to the Skatteverket, or tax agency. All of your overhead, such as computer software, office supplies and more can be deducted. You can also deduct the cost of your business space, utilities and other similar expenses. The tax rate will be applied to the remaining balance after all of the deductions are taken into account.
How to Invoice as a Freelancer in Sweden
The VAT agency in Sweden has specific rules related to tracking VAT collected or paid through invoices. The invoices must be generated for all applicable transactions and prepared according to standard accounting principles. All of the invoices that you created are required to be kept on file at your business location for seven years. Most invoices are paper documents, but electric invoices are available in some instances.
Each invoice that you prepare needs to have specific information on it. For example, all invoices need a sequential number, your business’s VAT number and the date of issuance. Information about the goods or services must be provided, including the number of items sold, a description of the item and the cost. Buyer and seller contact information needs to be provided. The VAT rate and amount as well as the gross amount of the invoice must be clearly written. Other information that may be required in some cases is related to the reverse charge mechanism and the contact info for the fiscal representative. Be aware that you may qualify for a simplified invoice if the total of all supplies is less than 4,000 SEK.
Launch Your Business as a Freelancer in Sweden
Have you decided to become a freelancer in Sweden? Before you register your business and start using your skills and knowledge as a freelancer, you must decide which type of entity you want to choose. As a sole proprietor, there are no minimum capital requirements to meet. You are also directly responsible for all debts that your business incurs. In Sweden, sole proprietors can have employees. If you opt to run your business as an LLC, you will be classified as an employee of the entity. You will need to file separate business and personal tax returns because of this. There is a minimum capital requirement in place. The tax rates are the same as those for a sole proprietor, and you can have employees.
After you select an entity that is suitable for your needs, you need to know how to open a freelance business in Sweden. The steps are the same regardless of whether you are a sole proprietor or you run an LLC. These steps include:
- Prepare a business plan outlining your goods or services and their rates, your marketing plan, your projected budget and other relevant matters.
- If you are relocating to Sweden from another country, you must apply for a residence permit. This is done through the Swedish Migration Agency or through your home country’s Swedish embassy.
- Register your business name with the Swedish Companies Registration Office.
- Register your business with the Swedish Tax Office. If you will run an LLC, you will be given a unique tax identification number for your business. If you must register for VAT, you will also receive a VAT identification number.
- Open a business account with a Swedish bank.
Did you know that you do not need to live in Sweden to run a freelancing business? Xolo Leap is an innovative product that enables you to start and manage your new business from any location through e-Residency. We’ll handle the hard and boring parts of establishing your solo Estonian business and provide you with tools to automate your administration tasks. From anywhere on the planet, you’ll be able to run your own EU business with the help of our tools and accounting experts.
Become and Work as a Freelancer in Sweden
Your life can change dramatically when you open a freelance business in Sweden. You will be able to optimize the true value of your professional knowledge and skills in a fulfilling and lucrative way. More than that, you can decide if you want to work part-time or full-time hours, and you can set your schedule. By doing so, you can strike a harmonious balance between professional responsibilities and personal interests and goals. The good news is that starting a freelancing business in Sweden is relatively easy to do. You simply need to obtain a residence visa, register your business appropriately and launch your new business.
Get your Freelance Career in Sweden Started Today
Now that you have decided to become a freelancer in Sweden, you may be eager to get started. While you understandably need to prepare a business plan and take steps to register your business, you also need to think about how you will actually run your business. At Xolo, we help our customers to achieve their professional goals through our products. Xolo Leap has exceptional features and a team of accounting experts that can save you time with various aspects of launching and managing your business of one.
