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Working in Sweden as a Sole Trader or Company

Tax and advantages/disadvantages comparison

d185150
post 7.Feb.2018, 10:37 PM
Post #1
Joined: 7.Feb.2018

Hello,

I'm currently employed in the UK but I will be (all going well) moving to Sweden this year to live with my girlfriend.

I want to stay in "employment" with my current employer, they've had advice from their accountant that it would probably be best if I either registered as a sole trader or set up a company in Sweden, then invoiced the UK company every month.

I understand as a Sole Trader I would be liable for everything (no protection) and there's potentially much less protection in terms of benefits etc. (holiday, sick days). From the research I have done it seems like I would also be taxed more as a Sole Trader due to paying the part the employer usually pays (social tax?).

I'm not fully understanding how the director of a company works in relation to tax and salary.

Can anyone help me with working out what tax would be paid (either yearly or monthly) as a Sole Trader vs Director of a company?

If I were invoicing the company, the pre-tax amount would be 35 500 SEK per month roughly (excluding any VAT if applicable).

If there's any more information I can provide, or if anyone can point me to the relevant websites I'd really appreciate it. I will be looking to get an accountant either way, and probably some legal advice... but it would be good to know a bit more first, especially in terms of the amount I'd be getting after all the taxes.

Thank you
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Svedallas
post 7.Feb.2018, 10:42 PM
Post #2
Joined: 21.Apr.2016

QUOTE (d185150 @ 7.Feb.2018, 10:37 PM) *
Hello,I'm currently employed in the UK but I will be (all going well) moving to Sweden this year to live with my girlfriend.I want to stay in "employment" with m ... (show full quote)


These are things you should do yourself first. Its called research
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d185150
post 7.Feb.2018, 10:50 PM
Post #3
Joined: 7.Feb.2018

Thanks - I don't know if you managed to read the message fully, but I did say "From the research I have done...".

Unfortunately I'm not an accountant nor have any experience in how taxation works in Sweden. Research got me the basic details but when it comes to taxation in regards to directors in companies there wasn't as much detail, or detail that I could use to calculate the difference in tax vs a sole trader.

I was hoping that someone that has experience with the Swedish tax system and either sole trader / director of company would be able to provide insight.
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Svedallas
post 7.Feb.2018, 11:16 PM
Post #4
Joined: 21.Apr.2016

QUOTE (d185150 @ 7.Feb.2018, 10:50 PM) *
Thanks - I don't know if you managed to read the message fully, but I did say "From the research I have done...".Unfortunately I'm not an accountant nor have ... (show full quote)


Look at the past threads.

Do you think there are accountants here, no.
You have a phone. Perhaps pick it up and make calls.
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d185150
post 7.Feb.2018, 11:22 PM
Post #5
Joined: 7.Feb.2018

QUOTE (Svedallas @ 7.Feb.2018, 10:16 PM) *
Look at the past threads.. Do you think there are accountants here, no. . You have a phone. Perhaps pick it up and make calls.


Thank you - I have already looked through many of the threads in relation to what I'm asking. However they either don't get an answer, or someone, like yourself, says to visit/search previous topics (which generally leads in circles or doesn't cover what I'm asking).

I'm not asking for an accountant either, but seeking someone with experience of the Swedish tax in relation to Sole Trader & Directory of company (sole trader I mostly understand). As I mentioned initially, I would seek an accountant when I have more of an understanding of what I want to pursue.

Yes I do have a phone, unfortunately I feel like there should be some novel idea of where a topic can be discussed, with answers or guidance posted in a way that people in the future could find it (whereas they probably won't have access to my phone call history).

I appreciate there may be several posts like this on the forum and you're tired of seeing them, but may I suggest you simply not reply if you have nothing constructive to add.
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Hanna Denize
post 7.Feb.2018, 11:39 PM
Post #6
Joined: 12.Mar.2013

Hi
Your UK company is right that it is best for you to start a business here. If you stay employed, you make things more complex for your UK employer and they probably do not want it.
When deciding between self employment (enskild firma) or employment in own limited company (aktiebolag) you should take into account other factors apart from salary and it is actually more complex than you think. In enskild firma you have to pay your own tax (varies depending on where you live and how much you earn) and you have to pay egenavgifter, sort of national insurance contributions. These are lower than the equivalent arbetsgivaravgifter that your limited company would have to pay on your salary. The tax deduction would be exactly the same in both types of business. But as said, there are other differences that you should consider.
I offer a one hour free consultation for people who want to start own business in Sweden so I could tell you more about it. The calculations of your salary would have to be however simplified and hypothetical and the real salary and tax would be different.
It is a very busy time in accounts because of VAT declarations but you can call me after the 26/02 or write me an email with your phone number. Go to www.dinvinst.com for contact details.
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yet another brit
post 7.Feb.2018, 11:54 PM
Post #7
Joined: 5.Jan.2013

There are (as noted) lots of threads on this already.

In a nutshell though, at the income level you mention, there is close to no practical difference between being a sole trader and employing yourself via a limited company. Because a sole trader pays employers tax too.

Employing yourself as a limited company : deduct business expenses, pay yourself a salary (on which you will pay personal tax as an individual) + employers tax. Company pays corporation tax on any profit remaining, but can optionally shift some untaxed money into a periodised fund. In the following year, some of that taxed profit (up to half of previous years salary, alternatively c150 kSEK, whichever is higher) can be paid as dividend. Mandatory 50 kSEK share capital to set up.

As a sole trader : deduct business expenses, optionally transfer some profit into a periodised fund. Pay a fixed sum on the remainder that is essentially the same as employers tax. What is left is added to your other income, and you then pay personal tax on it. Cannot pay dividend, but can (for first couple of years of operation) make a business loss and deduct that against other income tax (this is to encourage startups).

At 35k a month, you'll struggle to survive if that includes your employers tax. If your income is higher, it can make more sense to have a limited company as it becomes feasible to take some income as dividend the following year.

Put another way - corporation tax + dividend tax is significantly less than employers tax + personal tax, especially at higher personal tax rates. But if you have multiple income sources, and/or risk making a trading loss, then being a sole trader could be a better bet. Talk to an accountant...

In both cases, you'll end up paying full contributions into the state pension system, whether you want to or not (one reason why SE employment tax is higher than UK NI).

Simples, huh!
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d185150
post 8.Feb.2018, 09:18 PM
Post #8
Joined: 7.Feb.2018

QUOTE (Hanna Denize @ 7.Feb.2018, 10:39 PM) *
HiYour UK company is right that it is best for you to start a business here. If you stay employed, you make things more complex for your UK employer and they probably do not w ... (show full quote)


Thank you Hanna, that information is very helpful and I appreciate you taking the time to explain it. I will keep this thread for future so I can come back to contact you in a not so busy time!


QUOTE (yet another brit @ 7.Feb.2018, 10:54 PM) *
There are (as noted) lots of threads on this already.In a nutshell though, at the income level you mention, there is close to no practical difference between being a sole trad ... (show full quote)


And thank you "yet another brit" (I take it there's a lot of us in Sweden?!) for the thorough explanation. The 35k a month is probably not what I would be on, I cannot remember how I calculated it exactly but I believe I did make a mistake when making it pre-tax. I appreciate the time you took to explain the various aspects.
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sandon
post 12.Feb.2018, 08:50 AM
Post #9
Joined: 6.Jan.2007

As an accountant i would suggest the sole trader with those numbers.
Cheaper to start and cheaper to run, accounting COSTs will be lower no Bank account needed or 50 000kr in start up.

Doesn't cost a Crown to open a siole trader, less regulated and less reporting.

Drop me a line @ swaaccounting we can set up a Skype meeting and discuss your options .

Good luck with the venture
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