WORKING IN SWEDEN
IN NUMBERS: How freelance profits in Sweden compare to actual salaries
Employers in Sweden pay taxes and pension payments for each employee, so if you go freelance, you end up having to pay them yourself. The accountancy firm Frivision has estimated for The Local how profits from a solo company correspond to a salary as an employed person.
Published: 12 February 2022 16:17 CET
Freelancing has plenty of perks, but make sure you've done your sums right or you could get a nasty shock when tax season comes. Photo: Margareta Bloom Sandebäck/imagebank.sweden.se
Sweden’s public holidays: How to maximise your annual leave in 2022
It's time to start planning your annual leave before your colleagues book up the most coveted days off in the Swedish calendar. Here's a list of Sweden's "red days" in 2022 and the public holiday hacks you need to know to get as much time off work as you possibly can.
Published: 21 December 2021 10:24 CET
Updated: 13 February 2022 14:33 CET
Updated: 13 February 2022 14:33 CET
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“How freelance profits in Sweden COMPARE to actual salaries” Compare being the key word. Still waiting for the comparison part of the article between EMPLOYEES and entrepreneurs.
Stating facts and showing company tax fees is not really a comparison, isn’t it?
The title of the article looked promising but the quality of it is very poor. For the first, I agree with John.Smith that no comparison is actually made.
Then, some things in the article do not make any sense. For example, the author states “Employees in Sweden are required to make a seven percent contribution to unemployment insurance, pensions, family benefits, and health insurance, while employers contribute 31.42 percent. ” What 7% contribution are you talking about? I had been working as an employee in Sweden (before getting into sole trader) for more than 10 years but never heard about that.
The structure of the article and its content just shows that the author has very poor understanding of the Swedish tax system for employees and sole traders. The phrase “And should you set up your own company or pay F-skatt? ” just shows it clearly.
A very rough rule-of-thumb is that a freelancer needs to have an annual ‘income’ of about 1 million SEK to be able to take out a reasonable monthly salary and to have at least some holiday when no income is being generated. Don’t forget as well that the Christmas/New Year period can mean at least two dead weeks with significantly reduced income, and Easter isn’t much better. In the summer, biz activity will abruptly slow down after Midsommar and nothing much will happen until mid-August. All of this needs to be budgeted for when starting your new business venture, depending of course on the particularities of your specific sector.
If your plans for freelancing are long-term, I would recommend starting an aktiebolag so as to keep your business accounting totally separate from your personal finances. The minimum share capital is now only 25,000 SEK compared with the previous 50k and even 100k in the old days. Keeping an AB’s accounts is simplified tremendously with software such as Visma Bokföring and similar, and these days you are no longer legally required to have an auditor.
If your business is very successful, an aktiebolag will also enable you to take out a dividend each year instead of a comfortable salary with the advantage that tax on dividends is only 20% compared with at least 30% on salaried income or even 50% if your salary exceeds 504,000 SEK. This results in people taking a maximum annual salary of 504k and then any further income as a dividend. Politicians are obviously aware of this and there are constant plans to close the loophole, although they themselves exploit the situation when they leave politics and enter the lucrative lecture circuit and similar.
Forgot to mention that if you intend to freelance long-term, it is also very important to budget for contributing to a decent pension scheme. Your aktiebolag can do the contributing, but it will mean a relatively significant monthly cost depending on what you choose for scheme. On the other hand, it will be well worth it when you eventually retire. Your only regret will be not to have made higher contributions…