Sweden

Executive Summary

Sweden is generally considered a highly favorable investment destination. Sweden offers an extremely competitive, open economy with access to new products, technologies, skills, and innovations. Sweden also has a well-educated labor force, outstanding communication infrastructure, and a stable political environment, which makes it a choice destination for U.S. and foreign companies. Low levels of corporate tax, the absence of withholding tax on dividends, and a favorable holding company regime are additional incentives for doing business in Sweden.

Sweden’s attractiveness as an investment destination is tempered by a few structural business challenges. These include high personal and VAT taxes. In addition, the high cost of labor, rigid labor legislation and regulations, a persistent housing shortage, and the general high cost of living in Sweden can present challenges to attracting, hiring, and maintaining talent for new firms entering Sweden. Historically, the telecommunications, information technology, healthcare, energy, and public transport sectors have attracted the most foreign investment. However, manufacturing, wholesale, and retail trade have also recently attracted increased foreign funds.

Overall, investment conditions remain largely favorable. In the World Economic Forum’s 2019 Competitiveness Report, Sweden was ranked eight out of 138 countries in overall competitiveness and productivity. The report highlighted Sweden’s strengths: human capital (health, education level, and skills of the population), macroeconomic stability, and technical and physical infrastructure. Bloomberg’s 2021 Innovation Index ranked Sweden fifth among the most innovative nations on earth; a pattern reinforced by Sweden ranked second on the European Commission’s 2021 European Innovation Scoreboard and second on the World Intellectual Property Organization/INSEAD 2021 Global Innovation Index. Also in 2021, Transparency International ranked Sweden as one of the most corruption-free countries in the world – fourth out of 180. Sweden is perceived as a creative place with interesting research and technology. It is well equipped to embrace the Fourth Industrial Revolution with a superior IT infrastructure and is seen as a frontrunner in adopting new technologies and setting new consumer trends. U.S. and other exporters can take advantage of a test market full of demanding, highly sophisticated customers.

The COVID-19 pandemic considerably impacted the Swedish economy, but following several fiscal stimulus packages, a successful vaccination rollout, and a relaxation of pandemic-related restrictions, Sweden’ economy has recovered fully to pre-pandemic levels with no notable impact on the investment climate. Climate and the environment are a central concern for the Swedish government, political parties across the political spectrum, businesses, and the public at large. Successive Swedish governments have actively lobbied for ambitious action to protect the environment and to curb greenhouse gases within a multilateral, internationally binding framework and by welcoming research, innovation, and investment within the fields of climate and the environment.