Payroll & Employment Guide: Sweden

Hiring in Sweden

When hiring in Sweden, employers must consider the applicable collective bargaining agreement (CBA), prepare written offers and contracts, register with the Swedish Tax Agency (Skatteverket), and ensure social-security registration. Sweden also has generous parental-leave and family protections that affect workforce planning and costs.

Key steps when hiring include:

• Identifying the relevant CBA for the role and sector, as wages and many conditions are set through collective bargaining.
• Registering as an employer with Skatteverket and setting up PAYE and employer contributions.
• Registering employees for social insurance and ensuring employer social contributions (~31.42% typical rate) are budgeted.
• Handling work and residence permits for non-EU/EEA nationals before start date.

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Employee Benefits

Sweden offers generous statutory and CBA-based benefits, especially around vacation, parental leave, and sickness. Employers often enhance this baseline with additional company benefits.

Mandatory Benefits:

• Annual leave: 25 working days of vacation per year, with vacation pay commonly calculated at around 12% of annual pay and paid during leave periods.
• Parental leave: up to 480 days of parental leave per child, shared between parents, with substantial social-insurance–funded benefits.
• Sick pay: Employers normally pay initial sick pay for short-term absences, after which the Swedish Social Insurance Agency (Försäkringskassan) may pay sickness benefits.

Common Employer Benefits:

• Occupational pension contributions, usually defined by CBAs.
• Health insurance top-ups or income protection insurance.
• Wellness allowances and other work–life balance benefits.

Designing a Swedish benefits package requires understanding the applicable CBA and local expectations around vacation, pensions, and wellness.

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Taxes in Sweden

Sweden has a progressive income-tax system that combines national and municipal taxes. Employers operate PAYE, withholding income tax and paying employer social contributions on top of gross salary.

Income Tax & PAYE:
Employers withhold preliminary tax (PAYE) based on the employee’s tax card and remit it to Skatteverket. Individual employees are then assessed on their final liability after year-end.

Employer Social Contributions:

• Employer social contributions commonly total around 31.42% of gross salary (indicative rate), covering employer social security and related charges.
• The precise rate can vary slightly depending on factors such as company size, industry, and benefit structure.

These taxes and contributions fund Sweden’s extensive welfare system, including pensions, sickness, and parental benefits.

Payroll in Sweden

Payroll in Sweden must be processed in SEK, reflecting PAYE tax, employer social contributions, and vacation pay accruals. Collective agreements heavily influence pay scales, overtime, and allowances.

Payroll Currency: SEK.

Payroll Cycle:
Monthly payroll is standard. Contracts should clearly specify the payment frequency and pay date.

Payslips & Deductions:
Payslips typically show:

• Gross salary and any variable pay (bonuses, overtime, allowances).
• Preliminary income tax withheld (PAYE).
• Any employee social contributions where applicable.
• Vacation pay accruals or paid-out vacation pay.
• Net salary, pay period, and payment date.

Reporting & Contributions:
Employers report income and contributions to Skatteverket and pay employer social contributions monthly, making sure deadlines and reporting obligations are met.

Looking for detailed guidance on PAYE, employer contributions, and vacation-pay handling in Sweden?

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Legal Regulations

Labour relations in Sweden are heavily shaped by collective agreements as well as statutory law. Many practical employment terms, including wages, hours, and benefits, are set in CBAs rather than being fully codified in statute.

Key Compliance Responsibilities:

• Follow applicable CBAs for wages, overtime, leave, and termination procedures.
• Register with Skatteverket as an employer and operate PAYE.
• Register with the Swedish Social Insurance Agency (Försäkringskassan) where required for parental-leave and sick-pay interactions.
• Respect rules on non-discrimination, working time, and employee privacy.

Total Employment Cost:
Employers should budget for gross salary plus employer social contributions of around 31.42% (indicative), plus the cost of vacation pay and any CBA-driven benefits.

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Work Permits & Visas for Sweden

Work-permit requirements in Sweden depend on nationality and the nature of employment. EEA/Swiss nationals enjoy free movement, while non-EEA nationals must hold valid work and residence permits.

EEA/Swiss Nationals:
Citizens of EEA countries and Switzerland can generally work in Sweden without a traditional work permit but may need to register their residence, depending on the length of stay and circumstances.

Non-EEA Nationals:
Non-EEA nationals usually require an employer-sponsored work and residence permit. The employer issues a formal job offer and supports the worker’s permit application. Once approved, the worker can reside and work in Sweden, and is typically entitled to parental and social-security benefits similar to local employees, depending on residency status.

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EOR & PEO Services in Sweden

Using an Employer of Record (EOR) or Professional Employer Organisation (PEO) in Sweden lets you hire quickly under local rules without setting up a Swedish entity or building internal HR and payroll infrastructure.

Employer of Record (EOR) in Sweden:

An EOR can:

• Issue Swedish-law–compliant employment contracts, aligned with relevant CBAs.
• Run payroll with PAYE and employer social contributions.
• Manage parental leave, sick pay, and social-insurance–related filings.
• Support work-permit sponsorship and compliance for non-EEA hires.

PEO Services in Sweden:

For companies that already have a Swedish entity, PEO services can support:

• Payroll operations and tax reporting.
• Benefits administration and vacation-pay handling.
• CBA interpretation and local HR advisory.
• Drafting and managing compliant employment documentation.

EOR and PEO models reduce risk, ensure compliance with Swedish labour rules, and speed up market entry.

EOR in Sweden

Payroll Calculator

Estimate gross-to-net pay, employer social charges (around 31.4%), and vacation-pay accruals in Sweden using Dhi ADT’s payroll calculator. Model different salary levels, benefit configurations, and CBA assumptions.

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