For a small Swedish team with an uncertain future, an employer of record can reduce the employment administration you must build. For a lasting operation that needs its own contracts, management structure and local business presence, a Swedish limited company, or AB, deserves serious consideration. Direct foreign-employer registration is a third route worth assessing before you incorporate.
Duration matters as much as headcount. For covered agency assignments, Sweden's more-than-24-months-in-36 rule creates a client duty to offer permanent employment or pay compensation. Build that decision into the plan before comparing monthly service fees.
Rules checked 20 October 2026.
Which route fits your plans in Sweden?
Choose the structure around the work you intend to perform, then test the cost of maintaining and leaving it. A company registration certificate and a functioning employment operation are different milestones.
EOR is particularly useful when your company lacks local employment administration and the commercial operation does not itself require another structure. An AB becomes more attractive when you need a durable Swedish contracting party, direct employment policies and internal capacity to run the company. Neither recommendation follows from a universal employee-count threshold.
Which employment routes are available?
An EOR service label does not decide Swedish legal treatment. The Agency Work Act concerns employees hired for supply to a client under that client's control and direction. Establish who actually directs the work, rather than relying on the service agreement's title.
Skatteverket supports foreign business registration without a Swedish electronic ID. Employer registration does not establish a general right to operate indefinitely without another structure. Section 2 of the Foreign Branches Act regulates how foreign companies conduct Swedish business, with EU/EEA free-movement and other exemption provisions. Test the actual activity separately from the payroll application.
The 24-month decision is an offer or payment
Under section 12a, more than 24 months of placement during 36 months at the same operating unit triggers the client's duty. Within one month of exceeding the threshold, it must offer indefinite employment or pay two current monthly salaries. Qualifying collective agreements can vary this rule; specified subsidized employment categories are excluded.
An accepted offer ends the agency employment when the client employment begins. A rejected offer does not automatically end the assignment. The government's explanation states that a compliant rejected offer need not be repeated for continued or later placement. This is not a general compulsory conversion at month 24.
A single-client arrangement is not automatically disqualified either. In AD 2025 nr 55, the Labour Court explained that agency employment does not require supplying multiple clients. The judgment concerns the actual employer relationship, rather than granting blanket approval to every commercial EOR configuration.
Track the operating unit and accumulated placement history. Do not assume changing the provider or agreement label restarts the relevant history. For a remote role, obtain a written assessment of the relevant operating unit rather than treating the home address as a safe exemption.
What each route requires your company to manage
For an AB, the practical sequence includes capital, governing documents, registration, banking and employer setup. The official AB formation guide requires at least SEK 25,000 share capital. Cash formation uses a bank certificate; in-kind contributions have a different evidence route. Beneficial-ownership reporting is another task.
Governance can affect readiness. Under the Companies Act, at least half the board must reside in the EEA, subject to dispensation. Where no authorised representative resides in Sweden, a qualifying Swedish service recipient is required. Check the proposed board and signatories before assuming an overseas management team can file unchanged.
Every AB must prepare and submit an annual report, including an inactive company. This work does not disappear when you stop hiring. An EOR may reduce employment administration, while your client managers still need clear workplace and assignment responsibilities.
Collective-agreement status can change the comparison. Binding agreements require their specified collective insurance; without one, supplementary arrangements are generally voluntary, with sector, contractual and permit conditions to check. Salaried and wage-earner schemes differ. Compare equivalent benefits explicitly rather than assuming either route's management fee covers them.
An EOR also leaves a separate tax question. Skatteverket's permanent-establishment tests examine actual business locations, activities and dependent agents, alongside any relevant treaty. The practical implication is that an EOR employment contract alone cannot establish the foreign client's tax position. A Swedish salesperson regularly concluding core-business contracts needs an activity and treaty assessment before procurement treats EOR as the entire expansion structure.
Compare costs on the same basis
The examples below use constant headcount, salaried office employees aged 35, SEK 50,000 monthly gross base salary, Swedish social-insurance coverage and equivalent holiday, pension and insurance assumptions. Both compared employers are Swedish-established. Ordinary contributions are 31.42%, subject to employee and relief exceptions.
Salary, ordinary contributions, holiday remuneration, equivalent benefits and common employment-exit liabilities are excluded from both route totals. These are incremental infrastructure comparisons, not salary-inclusive hiring budgets. Add any actual package difference back into the comparison.
Commercial figures are replaceable illustrations, not evidenced Swedish budget estimates or quotes. Public registration amounts are verified. The service fee, professional work, internal effort and exit allowances are assumptions.
The current filing fees are SEK 2,400 electronically or SEK 2,700 by post, plus SEK 250 beneficial-ownership reporting. The table uses electronic filing. Skatteverket registration is free. Check filing eligibility and add any dispensation or specialist work your case requires.
Commercial assumptions exclude VAT and other transaction taxes, FX charges, premises, regulated-activity costs and unusual disputes. Recoverability and invoicing location can change tax treatment. The exit allowances are provisions for comparison, not fixed-price liquidation offers. Continued operation after the hiring horizon requires continued overhead rather than an assumed closure.
Three headcount and time-horizon scenarios
For employees N and months M, the illustrative ordinary route costs are:
- EOR: SEK 5,000 + N × SEK 5,000 × M + SEK 1,000 × M + SEK 10,000.
- AB: SEK 32,650 + SEK 12,000 × M + N × SEK 500 × M + SEK 30,000.
For the third plan, gross statutory compensation is 20 × 2 × SEK 50,000 = SEK 2,000,000. The illustration additionally assumes a Swedish agency pays it and invoices reimbursement with standard 31.42% employer contributions: SEK 628,400. Added to SEK 3,651,000, this produces SEK 6,279,400 before transaction taxes or extra administration.
This reimbursement mechanism is a scenario choice, not a universal invoice rule. HFD 2025 ref. 58 treats section 12a compensation as remuneration from work in its expert-tax-relief case; the originating ruling describes agency payment and reimbursement of social charges. Confirm payer, contribution treatment, agreement variation and VAT with the actual payroll/invoice schedule. An accepted permanent offer would instead require a transition calculation with EOR and direct-employment periods separated.
A fee change can reverse the five-person result
Replace the assumed monthly EOR service fee with SEK 3,000 and the five-person, 24-month illustration becomes SEK 399,000: SEK 5,000 + 5 × SEK 3,000 × 24 + SEK 24,000 + SEK 10,000. That is SEK 11,650 below the AB illustration. The original fee assumption produced an AB advantage of SEK 228,350.
The action is to obtain matched written scope and fees, rather than infer a Swedish market crossover from this table. Check the horizon and employment package alongside the fee. If headcount ramps, sum each staffing period instead of charging final headcount for every month.
Direct foreign employment needs a separate worksheet. For a qualifying no-PE employer, Skatteverket gives an ordinary 2026 rate of 18.80%, subject to coverage and age rules. You cannot simply reuse the common-cost exclusion above. A socialavgiftsavtal can shift contribution administration to the employee, while the foreign employer retains ultimate responsibility and its own withholding duties.
How to move between routes later
Start transition planning before the existing route's commercial notice or statutory decision date.
- Identify the new legal employer and the employment-law mechanism. A move from EOR to AB does not automatically qualify as a business transfer. If LAS section 6b applies, its transfer protections and employee objection rights matter; section 3 governs relevant service aggregation. Otherwise document the agreed change and contractual service recognition without representing it as automatic statutory continuity.
- Reconcile salary, accrued leave, pension, insurance, service dates and employment terms. Distinguish a section 12a accepted offer from another voluntary employer change. Review applicable union-negotiation duties before decisions.
- Check work permission against the actual permit. Employer-restricted permits can require a new application; occupation-only permits can allow a new employer in the same occupation. Confirm the permit conditions and lawful start timing before the cutover.
- Agree final and first payroll responsibility, data handover, invoices and deposits. Commercial service cancellation does not itself end employment. If closing an AB, separately fund final filings, accounting, liabilities and the chosen closure process.
The detailed Sweden employment-law guide covers the wider employer duties. Keep those obligations in the handover even when the day-to-day role stays unchanged.
Decide what to confirm before committing
Request five records: the actual role and supervision map; the employing entity and collective-agreement position; a dated readiness schedule; matched salary, benefit and infrastructure budgets; and a transition/exit plan identifying the assignment clock and work permissions.
Is a Swedish entity compulsory for one hire?
No blanket incorporation requirement follows from the headcount. Direct foreign-employer registration is possible, but the actual business activity may create branch-law or tax obligations. Assess those before treating registration as the complete structure.
Must every EOR employee move to our payroll after two years?
No. For covered assignments, the threshold is more than 24 months within 36 at the same operating unit. The statutory alternatives are a permanent offer or compensation, subject to relevant exceptions and qualifying agreement variations.
Is SEK 25,000 the cost of opening an AB?
It is the minimum share capital. Public filing fees, professional help, operating preparation and ongoing administration are separate. Capital remains exposed to the business's performance and capital-protection rules.
At what headcount does an AB become cheaper?
There is no universal number established here. In the worked examples, a fee change reverses the five-person result. Replace the illustrative inputs, then check whether the cheaper route supports the activity and duration.
Can we keep benefits unchanged when moving routes?
Compare the actual pension and insurance arrangements, agreement coverage and accrued rights. The same salary does not establish the same package, and contractual service recognition needs careful drafting alongside any statutory transfer rights.
For an arrangement assessment, bring Borderless AI your Swedish role, workplace, headcount plan and intended duration. Our EOR service covers employment administration including contracts, payroll and benefits. Ask us to confirm the proposed Swedish arrangement and scope before committing to a start date or comparing a quote with your AB budget.
