Additional information about the requirement for foreign companies’ to register a branch in Sweden

The Swedish Construction Federation welcomes foreign companies as members. To become a member the foreign company must meet our admission criterions. To meet the criterions the foreign company needs to have a permanent establishment in Sweden (according to Swedish Tax law as well as the applicable tax treaty), register a branch in Sweden and file income tax returns with the Swedish Tax Agency (Skatteverket).

There are two main reasons for this requirement.

  1. There is only a need for membership in the federation for companies that are operating in Sweden on a long-term basis. Companies that plan to do short-term work in Sweden should sign a collective bargaining agreement with the union instead of applying for membership in the federation.
  2. The admission criterions should not be lower on foreign companies than on domestic companies. The Swedish Construction Federation promotes the professional reputation of the industry by safeguarding ethical business practices and construction quality. All member companies are, thus, obliged to fulfill all the criterions, not only when applying for membership, but also during the term of membership. Without this criterion, we are not able to determine whether the foreign company fulfills some of the other criterions or not.

If the admission criterions are met the foreign company may become a member. It is the foreign company which becomes a member, and not the branch. The branch (and permanent establishment) is simply an evidence of long-term presence in Sweden.

Branch
A foreign company wishing to operate in Sweden without registering a Swedish subsidiary may open a branch. A branch is a foreign company's local office in Sweden. However, a branch is a part of the foreign-based company, not a separate legal entity. A foreign company does not establish a limited company (aktiebolag) in Sweden by registering a branch. A branch has a Swedish company registration number and is subject to Swedish law, but it is not a legal entity.
A foreign company that chooses to register a branch, need to meet certain requirements. This applies for both the branch and the foreign-based company connected to it. Here are some examples:

  • The branch must keep its own accounting records, kept separate from the foreign-based company’s accounting records. 
  • Every year the branch must file an annual report for the foreign-based company and in some cases for the branch as well.
  • A Swedish income tax return must be prepared for the branch, and filed with the Swedish Tax Agency.
  • Taxes (income tax, social security charges, VAT etc.) and other charges must be paid as required.
  • The foreign-based company must follow the rules that apply in Sweden.

More information about setting up a Swedish branch can be found on the Swedish Companies Registration Office’s website and the Swedish Tax Agency’s website.


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