Doing Business in Sweden


There are few countries that can match Sweden's potential to benefit from the intensifying, technology-driven global competition. Sweden already hosts one of the most internationally integrated economies in the world. The nation's competitiveness is manifested by large flows of trade and foreign investment.

Globalization calls for an ability to change. Necessary restructuring of the Swedish economy is facilitated by the presence of a qualified, adaptable workforce. Sweden's developed welfare institutions and good relations between employers and labor unions provide the foundation for social cohesion when changes are desirable.

Sweden has long traditions in emphasizing the virtues of education. Schools and universities meet high international standards. The Swedish society is innovative and distinguished by the widespread and often ingenious use of information technology.

The country is a high expenditure on Research & Development (R&D) with 4.3% and USA comes on a 7:th place in a world. Due to consistent, long-term investments in R&D, higher education and Information and Communications Technology (ICT), Sweden is today recognized as one of the world’s most knowledge-based economies. Sweden invests more in R&D as a proportion of GDP than other OECD countries and foreign investors are offered attractive prospects for R&D.

Why do business in Sweden?

Foreign investors have discovered Sweden's many business and investment opportunities. Sweden offers access to new products and technologies, skills and innovations. Sweden also offers an attractive location, serving as a gateway to three distinct markets: Scandinavia (25 million consumers), Baltic Sea Region (100 million consumers) and European Union (350 million consumers).

Sweden is currently one of Europe’s top destinations for foreign investors. The main attractions are thought to be the country’s highly educated population and the ability of Swedish companies to think globally from the word go. Last year, Swedish companies attracted USD 1.07 billion in start-up and growth capital, according to the European Venture Capital Association.
  • Sweden’s business sector is unique for its large number of multinational corporations in relation to the relative size of the national economy.
  • Sweden's private equity market equates more than 1% of the country's gross domestic product (GDP), which means that this is the second largest private equity market in Europe.
  • Sweden comes in third place in growth competitiveness after Finland and USA. (Source: World Economic Forum, 2004)
  • When it comes to innovation capability Sweden comes in first place. (Source: World Investment Report 2005, Unctad)

Market potential

Sweden offers triple-market access: Scandinavia, the Baltic Sea/ Northern Europe region and the European Union with some 450 million consumers. It serves as an ideal spot for conducting high value-added operations in goods or services or for establishing competency centers to serve the whole region. Sweden is the main attraction when investing in the Baltic Sea region/Northern Europe. The geographical position, proximity to customers, widespread use of advanced technologies, a qualified workforce and a strong trading tradition within the region are important factors.

Sweden is often seen as a frontrunner in adopting new technologies and setting new consumer trends more broadly. Thus, in Sweden products and services can be tested where there are already demanding customers and high levels of technical sophistication. Nowhere else is average market take off so rapid. Third test market for new technologies after Iceland and Japan

In the last reported five-year period 2000–2004, Sweden was the 15th largest Foreign Direct Investment (FDI) recipient in the world with recorded inflows of $ 65 billion (€ 52 billion). Total FDI assets in Sweden amounted to 52 percent of GDP, which can be compared to an EU average of 32 percent.

Companies from all over the world are attracted to Sweden. Prominent investors in Sweden in the five-year period 2001–2005 originated from the US, Germany, the Netherlands and the other Nordic countries. Foreign interest is mainly focused on high tech segments in information and communication technologies (ICT), pharmaceuticals, energy, engineering and processing industries, although the services sector is rapidly gaining attention. (Source: Central Bank of Sweden 2006)
  • In 2005, 10,400 foreign-owned companies employed a total of 560,000 Swedes or 23 percent of all employees in the private sector.
  • High annual average GDP growth annual average change, percent 2.7% and expected to reach 3.6% in 2006 and 3.1% in 2007. (Source: National Institute of Economic Research, Eurostat, OECD, 2005)
  • Inflation has been low for the last decade and is expected to remain low (0.7 percent in 2005) due to a combination of falling import prices, rapidly increasing productivity in the Swedish industry and a weak labor market with limited wage increases.
  • Unemployment rate is predicted to fall to 5.0 percent in 2006 and further to 4.4 percent in 2007. (Source: National Institute of Economic Research, Eurostat, OECD, 2006)

A Competitive Cost Position

Over the course of recent decades, Sweden’s cost position has become increasingly competitive. Total salary costs in Sweden for a basket of 15 professional and administrative jobs are considerably below those found in Japan, Germany and France. Costs for manufacturing labor show an even more competitive pattern, with Swedish salary rates placed second-lowest among ten European nations assessed by a grouping of Swedish labor unions.
  • Competitive wage costs: 1.05 million euros Annual total wage cost including social charges for 15 different company positions including chief executive, project manager, controller, buyer, receptionist and production plant manager. (Source: Watson Wyatt, 2005)

Attractive corporate tax climate

  • Competitive corporate taxes
  • Capital gain exemptions on sales of subsidiaries
  • Tax-exempt intra-group dividends
  • Full tax relief on interest
  • Tax relief for foreign key personnel
  • Absence of thin capitalization rules
  • Comprehensive tax treaties for the avoidance of double taxation with most countries
At a flat 28 percent, Swedish corporate tax rate is significantly lower than in many other European countries and OECD nations. Possibilities to defer taxation of profit reduce Sweden’s effective corporate tax rate to about 25 percent. Sweden also scores well in regard to other business costs.

Sweden’s Productivity Growth

Sweden’s productivity increases in recent years have been substantial. According to the US Department of Labor, productivity in Sweden’s manufacturing sector outperformed countries such as the US, Japan and France. Furthermore, Sweden will experience further gains in productivity in the future (OECD).
  • Productivity growth rate 6.2%, after south Korea on 6.9%, annual average increase in manufacturing
  • Industrial production growth rate 1.6%

Sweden’s Trade Balance with the U.S. (2003)

The U.S. has a long history of being an important trade partner to Sweden and at present time the American market is Sweden's most significant export market. In 2003, the Swedish export to the U.S. rose with 2% and was estimated to approximately SEK 94 billions, which is equivalent to 11.5% of Sweden's total export. Sweden mainly exports cars, pharmaceuticals, telecommunication products and energy related products to the US; food and beverages is an increasingly important sector.