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Swedish tech startups and scaleups

swedishtechnews.com

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Re: Swedish tech startups and scaleups

#21

Post by idlehand »

dijit wrote: post #9
eandre wrote: post #7

Founder of Encore here (on the list). Great to see so many wonderful companies represented. Sweden is a great place to start a startup these days.

I'm starting a subsidiary of a start-up in Germany in Sweden. It's not my experience that Sweden is a great place for startups, the bureaucracy is extremely hit/miss. Setting up tax information for example is really difficult as a non-Swedish speaker and even tripped up my Swedish speaking friend (who is a project coordinator on the new Skane hospital: so she's somewhat aware of the tax system). How much of your dail…

There is an abundance of experienced engineers who are willing to work for less than an entry-level engineer in the US. Wages are very low even in Stockholm. Great if you want to build a tech startup.

Unfortunately the employment law is written in support of factory workers, not knowledge workers. So many employers are very cautious when hiring because a non-performing employee is very expensive to get rid of, as long as they have been employed for 6 months or more.

Re: Swedish tech startups and scaleups

#22

Post by eandre »

dijit wrote: post #19
eandre wrote: post #18

Earlier quoted context omitted.

But you need a UK bank account, which requires a officer with a registered address in the UK. We were lucky our investors were UK-based otherwise it would have been a nightmare. Then you need to argue HMRC valuation discounts if you want to issue EMI options, which are only valid for 3 months, so you need to do it repeatedly. And then EMI option schemes are 15+ pages long contracts. Sweden has an equivalent stock opt…

> But you need a UK bank account, Sure, I assumed this because you need that in any country you operate a legal entity. > which requires a officer with a registered address in the UK. This is the same in Sweden too > Then you need to argue HMRC valuation discounts if you want to issue EMI options, which are only valid for 3 months, so you need to do it repeatedly. And then EMI option schemes are 15+ pages long contra…

AFAIK in Sweden you need a managing directory who is resident in the European Economic Area (EEA), not necessarily in Sweden.

Re: Swedish tech startups and scaleups

#23

Post by SOLAR_FIELDS »

imartin2k wrote: post #8
kensai wrote: post #5

Earlier quoted context omitted.

Where is Paradox Interactive?! Aaah. Not a startup anymore.

I am the creator of this list. I chose to exclude gaming studios, because I don't really cover them in the newsletter, and have not really any good overview of that sector either.

A shame, because IMO Sweden has one of the better gaming start up scenes in the world as well.

Re: Swedish tech startups and scaleups

#24

Post by ninjin »

kzrdude wrote: post #20
idlehand wrote: post #17

Earlier quoted context omitted.

Unfortunately taxes are high. 20.6% corporation tax and 30% capital gains tax.

20.6% is lower than Denmark, Austria, Germany, France, Netherlands, Belgium, etc. It's on the lower end, while not being lower than the UK and of course not Ireland (considered a semi tax haven).

Starting 2023 it will be lower than the UK as well for any business above GBP 250,000 when HMRC bumps that rate to 25%. Heck, I would argue that even 20.6% is not that different to the current 19% across the board in the UK.

Re: Swedish tech startups and scaleups

#25

Post by dijit »

eandre wrote: post #22
dijit wrote: post #19

Earlier quoted context omitted.

> But you need a UK bank account, Sure, I assumed this because you need that in any country you operate a legal entity. > which requires a officer with a registered address in the UK. This is the same in Sweden too > Then you need to argue HMRC valuation discounts if you want to issue EMI options, which are only valid for 3 months, so you need to do it repeatedly. And then EMI option schemes are 15+ pages long contra…

AFAIK in Sweden you need a managing directory who is resident in the European Economic Area (EEA), not necessarily in Sweden.

You must have at least one legal representative, usually a director, in Sweden.

You can apply for temporary exemptions, but they are temporary and you are supposed to have good reason.

There’s no explicit requirements that any particular position must be held in Sweden, you can be a VD in the EEA for example, but you still need at least one legal responsible person to be domiciled.

Re: Swedish tech startups and scaleups

#26

Post by varispeed »

eandre wrote: post #18
dijit wrote: post #13

Earlier quoted context omitted.

Because I did it in the UK and it was very much a DIY thing. 14GBP to Companies House, extra 10GBP to reserve the right to your name. File your books every year, expect to be audited randomly for a few years.

But you need a UK bank account, which requires a officer with a registered address in the UK. We were lucky our investors were UK-based otherwise it would have been a nightmare. Then you need to argue HMRC valuation discounts if you want to issue EMI options, which are only valid for 3 months, so you need to do it repeatedly. And then EMI option schemes are 15+ pages long contracts. Sweden has an equivalent stock opt…

Aren't EMI options basically a scam? I never understood why company cannot just give an employee real shares. I was at a start up a couple of years ago and was promised these. Basically every month CEO had a new excuse that HMRC this or HMRC that. After a year and a half I decided to leave, because I understood I would never get any of that. Now when I see company offering EMI shares it is a clear red flag for me. E.g. if you offer £50k in EMI shares just pay a lump sum instead and I can put this on my ISA tracking fund or just give real shares in the company.

Re: Swedish tech startups and scaleups

#27

Post by varispeed »

ninjin wrote: post #24
kzrdude wrote: post #20

Earlier quoted context omitted.

20.6% is lower than Denmark, Austria, Germany, France, Netherlands, Belgium, etc. It's on the lower end, while not being lower than the UK and of course not Ireland (considered a semi tax haven).

Starting 2023 it will be lower than the UK as well for any business above GBP 250,000 when HMRC bumps that rate to 25%. Heck, I would argue that even 20.6% is not that different to the current 19% across the board in the UK.

If you are reinvesting money in the company (especially at a start up stage), Corporation Tax is the least important tax. More important is how much employees cost and UK is up there with the highest taxed countries in the world. If you want to pay workers more than peanuts, the tax take is more than 50% on a salary (when including Employer's NI).

Re: Swedish tech startups and scaleups

#28

Post by archydeb »

I heard that Sweden's high income tax actually incentivised startups, because the only way to get _seriously_ wealthy was through capital gains.

Does anybody know whether that's true?

If so, it really undermines the narrative that is somewhat dominant in Britain, that high income tax will disincentivize entrepreneurship and innovation etc etc

Re: Swedish tech startups and scaleups

#29

Post by codethief »

archydeb wrote: post #28

I heard that Sweden's high income tax actually incentivised startups, because the only way to get _seriously_ wealthy was through capital gains. Does anybody know whether that's true? If so, it really undermines the narrative that is somewhat dominant in Britain, that high income tax will disincentivize entrepreneurship and innovation etc etc

No idea about the situation in Sweden but generally speaking I'd say it depends a lot on whether "income" in "income tax" also includes capital gains.

Re: Swedish tech startups and scaleups

#30

Post by IneffablePigeon »

varispeed wrote: post #26
eandre wrote: post #18

Earlier quoted context omitted.

But you need a UK bank account, which requires a officer with a registered address in the UK. We were lucky our investors were UK-based otherwise it would have been a nightmare. Then you need to argue HMRC valuation discounts if you want to issue EMI options, which are only valid for 3 months, so you need to do it repeatedly. And then EMI option schemes are 15+ pages long contracts. Sweden has an equivalent stock opt…

Aren't EMI options basically a scam? I never understood why company cannot just give an employee real shares. I was at a start up a couple of years ago and was promised these. Basically every month CEO had a new excuse that HMRC this or HMRC that. After a year and a half I decided to leave, because I understood I would never get any of that. Now when I see company offering EMI shares it is a clear red flag for me. E.…

EMI gives both tax advantages and means you owe no tax when being offered the option. 50k as a lump sum would be taxed as income (so, fairly heavily). 50k in shares might attract a similar tax bill to be paid directly by the employee far in advance of any chance of recouping the value of the shares.

EMI itself is not a scam. Whether a company follows through on giving you the options in a reasonable timescale is another thing, and whether the shares are eventually worth anything is another again. As with all things startup option/share related, consider it a lottery ticket with an unknown chance of paying out.

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