Policies Towards Foreign Direct Investment

There are no laws or practices that discriminate or are alleged to discriminate against foreign investors, including and especially U.S. investors, by prohibiting, limiting, or conditioning foreign investment in a sector of the economy (either at the pre-establishment (market access) or post-establishment phase of investment).  Until the mid-1980s, Sweden’s approach to direct investment from abroad was quite restrictive and governed by a complex system of laws and regulations.  Sweden’s entry into the European Union (EU) in 1995 largely eliminated all restrictions.  Restrictions to investment remain in the defense and other sensitive sectors, as addressed in the next section “Limits on Foreign Control and Right to Private Ownership and Establishment.”

The Swedish Government recognizes the need to further improve the business climate for entrepreneurs, education, and the flow of research from lab to market.  Swedish authorities have implemented a number of reforms to improve the business regulatory environment and to attract more foreign investment.  In addition, Sweden is implementing an EU investment screening regulation (EU Foreign Investment Screening Mechanism – adopted in March 2019), and plans to announce a national investment screening mechanism by the end of 2020 or early 2021.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are very few restrictions on where and how foreign enterprises can invest, and there are no equity caps, mandatory joint-venture requirements, or other measures designed to limit foreign ownership or market access.  However, Sweden does maintain some limitations in a select number of situations:

• Accountancy: Investment in the accountancy sector by non-EU-residents cannot exceed 25 percent.
• Legal services: Investment in a corporation or partnership carrying out the activities of an “advokat,” a lawyer, cannot be done by non-EU residents.
• Air transport: Foreign enterprises may be restricted from access to international air routes unless bilateral intergovernmental agreements provide otherwise.
• Air transport: Cabotage is reserved to national airlines.
• Maritime transport: Cabotage is reserved to vessels flying the national flag.
• Defense: Restrictions apply to foreign ownership of companies involved in the defense industry and other sensitive areas.
• On January 1, 2020, Sweden enacted new regulations giving Swedish armed forces and security services authority to deny or revoke operating licenses to mobile radio providers that threaten national security.

Swedish company law provides various ways a business can be organized.  The main difference between these forms is whether the founder must own capital and to what extent the founder is personally liable for the company’s debt.  The Swedish Act (1992:160) on Foreign Branches applies to foreign companies operating through a branch and also to people residing abroad who run a business in Sweden.  A branch must have a president who resides within the European Economic Area (EEA).  All business enterprises in Sweden (including branches) are required to register at the Swedish Companies Registration Office, Bolagsverket.  An invention or trademark must be registered in Sweden in order to obtain legal protection.  A bank from a non-EEA country needs special permission from the Financial Supervisory Authority, Finansinspektionen,  to establish a branch in Sweden.  Sweden also adheres to EU regulations on investment screening and approval mechanisms for inbound foreign investment.

Other Investment Policy Reviews

Sweden has in the past three years not undergone an investment policy review by the World Trade Organization (WTO), or the United Nations Committee on Trade and Development (UNCTAD), or the Organization for Economic Cooperation and Development (OECD).

Business Facilitation

Business Sweden’s Swedish Trade and Invest Council is the investment promotion agency tasked with facilitating business.  The services of the agency are available to all investors.

All forms of business enterprise, except for sole traders, have to be registered with the Swedish Companies Registration Office, Bolagsverket, before starting operations.  Sole traders may apply for registration in order to be given exclusive rights to the name in the county where they will be operating.  Online applications to register an enterprise can be made at https://www.bolagsverket.se/en and is open to foreign companies.  The process of registering an enterprise is clear and can take a few days or up to a few weeks, depending on the complexity and form of the business enterprise.  All business enterprises, including sole traders, need also to be registered with the Swedish Tax Agency, Skatteverket, before starting operations.  Relevant information and guides can be found at http://www.skatteverket.se.  Depending on the nature of business, companies may need to register with the Environmental Protection Agency, Naturvårdsverket, or, if real estate is involved, the county authorities.  Non-EU/EEA citizens need a residence permit, obtained from the Swedish Board of Migration, Migrationsverket, in order to start up and/or run a business.  A compilation of  Swedish government agencies  that work with registering, starting, running, expanding and/or closing a business can be found at http://www.verksamt.se.

Outward Investment

The Government of Sweden has commissioned the Swedish Exports Credit Guarantee Board (EKN) to promote Swedish exports and the internationalization of Swedish companies.  EKN insures exporting companies and banks against non-payment in export transactions, thereby reducing risk and encouraging the expansion of operations.  As part of its export strategy presented in 2015, the Swedish Government has also launched Team Sweden to promote Swedish exports and investment.  Team Sweden is tasked with making export market entry clear and simple for Swedish companies and consists of a common network for all public initiatives to support exports and internationalization.

The Government does not generally restrict domestic investors from investing abroad.  The only exceptions are related to matters of national security and national defense; the Inspectorate of Strategic Products (ISP) is tasked with control and compliance regarding the sale and export of defense equipment and dual-use products.  ISP is also the National Authority for the Chemical Weapons Convention and handles cases concerning targeted sanctions.