Internago is a trusted payroll partner to many international companies, and we are often contacted regarding the costs of employing staff in Sweden - not just salaries but the total cost of employing someone. In this post, we are pleased to provide you with an introduction to this subject, covering the main aspects that need to be taken into account.
Registering as an employer in Sweden
Employers in Sweden need to register with the Swedish Tax Agency (Skatteverket). The main exception to this is if an employer is bringing an employee to Sweden for a certain amount of time only, after which they will return to the home country. In some of these cases - it does vary depending on the employee’s nationality - the employer does not have to pay social fees in Sweden, as they are considered to be paid in the home country.
Further information on foreign company registration can be found here.
What do personnel costs comprise?
In order to appreciate fully the cost of employing someone in Sweden, it is important to understand that there are a number of components, namely:
- Salary (lön)
- Social fees (arbetsgivaravgifter)
- Holiday pay (semestertillägg)
- Contract insurance, optional (usually dictated by union agreements)
- Special payroll tax, optional (särskild löneskatt på pensionskostnader (SLP)
The main additional cost for the employer, besides the base salary, is social fees /social security (arbetsgivaravgifter), which can vary but normally amount to 31.42% of gross salary (including holiday pay). The social fee is made up of:
- 10,21% Retirement fees (Ålderspensionsavgift)
- 0,60% Survivor protection (Efterlevandepensionsavgift)
- 3,55% Sick pay (Sjukförsäkringsavgift)
- 0,20% Occupational Injury fees (Arbetsskadeavgift)
- 2,60% Parental insurance fees (Föräldraförsäkringsavgift)
- 2,64% Labour market fees (Arbetsmarknadsavgift)
- 11,62% General salary fee (Allmän löneavgift).
Variations in social fees for certain age groups
At present (2022), a reduced rate of 19.73% in social fees applies to employees born between 1999-2003 with a gross salary of up to 25 000 SEK/month.
For employees who have turned 65 the employer pays an age related pension fee (ålderspensionsavgift) of 10,21% instead of social fees (arbetsgivaravgift).
If an employee only has a temporary contract (e.g. seasonal employment or probationary employment) the employer does not pay social fees but instead pays an additional 12% Holiday Pay with every monthly salary payout.
Contract insurance is not mandatory but required in union agreements, should an employer choose to enter into these. Contract insurance can also be bought from an insurance company to provide additional security for the employee. The cost is approximately 5% of the gross salary, of which 4% goes to employee’s pension savings.
There is also a special payroll tax (SLP, 24.26%) which employers pay on the cost of employees’ pension benefits (e.g the above mentioned 4% in respect of contract insurance).
More information about social fees can be found here.
How does holiday pay work in Sweden?
Holiday Pay (semestertillägg) is based on the legal right of every employee in Sweden to 25 workdays of paid holiday each year (although some collective agreements may require more). There are different ways to calculate holiday pay but the most common is to pay a holiday supplement of 0,43%.
An example of an employee cost calculation
Below is an example of the total employer cost for an employee with a gross salary of 30 000 SEK gross per month:
- Annual salary: 360 000 SEK (30 000 x 12 months)
- Holiday pay : 3 225 SEK (30 000 x 0,43% x 25 days)
- Social fees: 114 125 SEK (363 225 x 31,42%)
- Contract insurance: 18 161 SEK (363 225 x 5%)
- Special payroll tax: 3 525 SEK ((363 225 x 4%) x 24,26%)
- Total cost per year: 499 036 SEK/employee
- Total cost per month:: 41 586 SEK/employee
Payroll frequency, obligatory and customary benefits
Employees in Sweden are by custom paid their salary in 12 monthly installments. A 13th or 14th salary, Christmas bonuses and the like, which are seen in some European nations, are not common in Sweden.
Other obligatory benefits which employees in Sweden enjoy include:
- Parental leave of up to 480 days (split between the two parents) with roughly 80-90% of salary for up to 390 days.
- The possibility to stay home to care for a sick child while receiving just under 80% of full salary.
Do you want more information or need help with employment and payroll in Sweden?
Internago can assist with cost calculations and full payroll services in Sweden as well as other European markets. Please click here to find more information, or if you prefer contact us directly at firstname.lastname@example.org or email@example.com
Please note that this blog post only gives an overview and provides some introductory examples to payroll in Sweden. In practice, there are more detailed aspects to consider, which is why this blog post should only be seen as a general guide. For a more in-depth discussion, do not hesitate to contact us at firstname.lastname@example.org