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Hire Contractors In Sweden

According to the World Bank’s Doing Business 2020 report, Sweden secured the 10th position out of the 190 countries for ease of doing business. Its robust business environment, talented workforce, and economy promoting innovation and competition are the primary reasons for this.

The Swedish government has also made various changes to increase its workforce further and attract top talent.

Recently, Sweden announced a significant reduction in processing EU Blue cards. Previously, it took 90 days, which has now been reduced to 30 days. 

This move has fast-tracked the process of hiring skilled professionals in certain industries. 

Businesses that wish to hire contractors in Sweden have benefited greatly from these administrative changes. They can now shortlist and hire top candidates without dealing with bureaucratic delays. 

In this article, we will explain all the effective ways you can hire in Sweden. You will also learn about a few challenges of this recruitment process and how to overcome them.

How to Hire Independent Contractors in Sweden

Most businesses commonly use the method of directly hiring international contractors in Sweden. This means that there are no staffing agencies or contractor management software involved in the process. 

You take care of everything, from sourcing candidates and conducting interviews to onboarding them. 

The good thing about this method is transparency and complete authority in managing your contractors. However, the downside is that it can be extremely expensive, time-consuming, and complicated. 

Hiring Contractors through Skuad AOR

A simple and effective alternative to directly hiring international contractors in Sweden is through an AOR.

An agent of record in Sweden, like Skuad, will act on your behalf, managing various administrative tasks for your organization. 

These include managing payroll, maintaining compliance, and administering benefits. This leads to cost savings and increased efficiency. 

With Skuad by your side, you can avail all of these below-mentioned advantages.

  • Drafting locally compliant contracts, including IP agreements.
  • Bullet-proof data privacy and security.
  • Built-in IP protection
  • Reduced chances of worker misclassification mistakes and
  • Quick, accurate payments in 100+ currencies.
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How to Pay Contractors in Sweden

Paying workers directly means setting up a payroll in Sweden, understanding and overseeing all the tax obligations, managing crucial documents, and processing compensation in the right currency.

That sounds like a lot, doesn't it? A simplified approach is to pay contractors in Sweden with Skuad’s AOR solution.

Skuad features various capabilities that streamline the entire process of international payments. They include,

  • Automated invoicing and payments
  • Expense management and regulatory compliance
  • Multi-currency payments
  • Flexible payment scheduling and
  • Competitive FX rates, among others.

Hiring Contractors Directly vs Hiring Contractors via Skuad

Let’s look at this table to compare the two most common ways of hiring contractors in Sweden.

Parameters Hiring Directly Hiring with Skuad’s Sweden AOR Solution
Risk of misclassification Sweden Extremely high and can lead to expensive legal fines/imprisonment. Minimal since Skuad’s legal experts guarantee 100% compliance.
Contractor onboarding It is complicated and time-consuming since it involves a lot of crucial tasks and paperwork. With Skuad, you can digitally onboard within minutes.
Payroll Requires in-depth expertise in processing international payments. Skuad runs payroll in 100+ currencies.

Cost of Hiring Contractors in Sweden

Thinking - ‘How much does it cost to hire a contractor in Sweden?’ - If you hire contractors directly, the total cost will undoubtedly be extremely high.

First, You must set up a legal entity on this foreign land, register your business, get the documents signed, and post a job offer. 

This alone will require you to hire a separate team of legal professionals. 

Additionally, you will need HR experts to help you shortlist and onboard new contractors. 

However, when you partner up with an AOR in Sweden, like Skuad, you no longer need to worry about such expenses. We will handle all administrative challenges, and you need to focus on the day-to-day operations of your business.

How to Convert a Contractor into an Employee in Sweden

Mentioned below is a detailed breakdown of the essential steps involved in converting from contractor to employee salary in Sweden.

  • Discuss the salary, working hours, and mandatory benefits with the contractor while keeping in mind that you adhere to the statutory requirements set forth by the Swedish labor laws. 
  • Formulate an employment contract (preferably in writing) that outlines the terms and conditions of the working relationship.
  • Once both parties have signed the contract, begin background verification as part of the employee onboarding process. Depending on the job role, you can run a criminal record check, credit history check, or social media verification. 
  • Complete all the necessary documents and enroll them into your local payroll system.

Once the transition is complete, you may use an employer of record Sweden to manage them.

Challenges of Hiring Contractors in Sweden

Despite its business-friendly environment, Sweden poses a few challenges that can be difficult to solve without the proper resources. Let’s examine these hurdles.

Complex Labor Laws of Sweden

Sweden’s strict labor laws can often get complicated, especially without a proper legal team. Unlike employees, who are governed by the Employment Protection Act, contractors and self-employed individuals in Sweden are regulated by general civil law. 

Various parameters are used to determine an individual's status (independent contractor or full-time employee) in Sweden. They include,

  • Whether a single person or the individual performs the work can independently hire helpers.
  • Whether the organization is responsible for providing the tools/equipment to carry out the job.
  • The kind of remuneration for the work performed.
  • Whether the person is restricted from providing similar services for someone else.
  • Whether the individual is bound by specific instructions set forth by the company.

If you wish to hire and onboard contractors in Sweden. It will allow you to classify workers, potentially avoiding legal troubles properly. However, to ensure such thorough compliance, you need the help of contractor management software, which can get extremely expensive for SMEs.

Tax Liabilities for Contractors in Sweden

As a self-employed person (enskild näringsidkare), contractors must apply for the F-tax at the Swedish Tax Agency. This certification proves the person is responsible for paying taxes in Sweden and social security contributions.

The current national income tax rate in Sweden is set at 0%-20%.

As an employer in Sweden, you are responsible for understanding these different requirements and ensuring that they are diligently met. This makes things even more complicated, especially when you do not have contractor software to handle such international contractor payroll details.

High Cost of Living in Sweden

The average cost of living in Sweden is high. This is especially true for Stockholm, Malmo, and Gothenburg areas. One main reason is the high rent prices, which increase by 1% yearly. 

Additionally, transportation is costly in Sweden, especially by car. This is because two taxes are added to gas: an energy tax and a carbon dioxide tax. In simpler terms, gas costing around 8 SEK/liter usually exceeds 16 SEK per liter in Sweden. 

This has become a major disadvantage for employers wishing to hire contractors in this country. The high cost of living also means that most self-employed individuals will increase the general rate charged. 

Furthermore, if businesses are not able to match the compensation amount with contractors' financial needs, this can lead to dissatisfaction and decreased productivity overall.

Hire Contractors in Sweden with Skuad

Hiring international workers in Sweden can be challenging. Thankfully, with Skuad by your side, you no longer have to worry about administrative technicalities. 

We do everything from digitally onboarding new hires within minutes to processing payments with just one click. 

Our comprehensive platform allows you to stay compliant with local labor laws and helps you manage every crucial task (expense management, benefits administration, and more) from one single platform.

Book a demo today and experience the Skuad difference first-hand!

FAQs

1. What is the difference between an employee and a contractor in Sweden?

One of the main differences between an employee and a contractor lies in benefits administration. Unlike an employee, in Sweden, a contractor does not enjoy statutory benefits, such as paid leaves/vacations, maternity, and health benefits. 

2. Can I hire an independent contractor from another country?

Yes, you can hire an independent contractor from another location if you know the country-specific labor laws and ensure compliance with them. For example, for contracting employee in Sweden, you must be well-versed with Swedish labor laws.

3. What is the difference between a contractor and a freelancer?

An organization usually hires contractors on a project-to-project basis, meaning they work for only one employer at a time. On the other hand, a freelancer can work with multiple clients and have their own premises.

4. How do I pay a foreign contractor?

The easiest, safest and cheapest way to pay contractors USA to Europe for contract jobs in Sweden is through a contractor software/AOR platform, such as Skuad. It will handle all the technical aspects of payroll processing, such as formulating required documents, managing currencies, sending timely and accurate payments, and so on. 

5. How much tax do you pay as a freelancer in Sweden?

The tax rate for self-employed residents of Sweden usually ranges from 30% to 55%. It is based on the individual’s income and location in Sweden.

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