Frequently Asked Questions & Answers

When a company uses an EOR, a tripartite agreement is signed by the company, the employee and the EOR. The company and the employee maintain a direct relationship. The company is responsible for assigning tasks, managing performance and overseeing other aspects relating to the work itself.

The EOR acts as the employee’s legal employer and handles administrative and legal responsibilities, such as payroll, taxes, benefits and regulatory compliance. For global EORs, this may also include managing employees’ visas and tax matters in the host country. The employee is responsible for carrying out the tasks set out in their job description.

An EOR assists businesses in hiring and managing a global workforce, while a PEO provides support for companies with domestic HR and workforce functions where they already have legal entities.

With a PEO, you enter into a co-employment arrangement, meaning you remain the legal employer of your hires and retain responsibility for any legal or compliance issues that arise. In contrast, an EOR becomes the legal employer, assuming full responsibility for your team.

If your focus is on domestic operations, a PEO is a great choice. However, if you’re looking to expand internationally while streamlining HR, payroll, and compliance, an EOR is the ideal solution.

PEO and EOR services share several similarities, which is why they are often confused. The key shared characteristics include:

• Both PEOs and EORs provide HR services to other companies
• Both specialise in ensuring compliance with payroll, employment and tax regulations
• The services offered by both include payroll processing, HR administration, benefits management, onboarding, and administration of payroll and tax reporting
• The main driver behind using a PEO or EOR is to free up internal resources to focus on core operations and avoid compliance issues due to a lack of knowledge of local employment laws
• In both models, the client company remains the “managing employer”, meaning the organisation retains exclusive decision-making authority over compensation, projects and workload, and more

An Employer of Record (EOR) is an organisation that is legally responsible for the entire employment on behalf of an employer. The employees perform their work for the employer, while the EOR handles the administrative and legal responsibilities associated with the employment.

The service offers comprehensive outsourcing solutions for employers who want to hire international talent without worrying about compliance or establishing a permanent establishment locally. An EOR conducts its business through its own permanent local establishment, in which it employs staff on behalf of its clients. 

Services:

• Management of employee benefits
• Payroll management
• Compliance management
• Providing employment contracts
• Administration
• Acting as the legal employer for employees
• Arranging visas and work permits
• Acting as an intermediary between employees and authorities
• Providing legal advice on matters such as notice periods, termination rules, severance pay, and more

Assess your company’s needs and the services required for international recruitment. Create a shortlist of potential EOR providers and refine it by evaluating the pros and cons of each option.

Verify that the EOR has a permanent establishment in Sweden, such as BTR, rather than outsourcing its EOR services to a third party. Relying on a partner-dependent EOR can entail risks, such as limited control over costs and security. Since the EOR handles everything from onboarding to payroll on your company’s behalf, make sure they provide a positive experience for your employees. For example, do they respond quickly to enquiries and offer support when needed? Do they ensure salaries are paid on time? Is their onboarding process engaging and thorough?

Confirm that your EOR offers a competitive and fair compensation and benefits package to help attract and retain top talent. Work with the EOR to develop a benefits package that reflects the employee’s role, skills, experience and local employment regulations. Also ensure that the EOR prioritises security and compliance to protect your intellectual property and company data

The cost of using an EOR can vary depending on factors such as the services required, the location of your employees, and the number of people you plan to hire. Typically, prices range from USD 599 to sometimes over USD 2,000 per employee per month.

If you find EOR providers offering lower prices, make sure they offer the same level of security and compliance as more established providers.

When it comes to pricing, it is best to choose an EOR that offers a clear and fixed price for a comprehensive service package, including onboarding, benefits, taxes, payroll, compliance, and data protection.

Sweden has several labour laws that employers must follow, as well as specific guidelines for termination, employment contracts, compensation and other aspects of employment and personnel management. Below you will find more information on these topics.
When you hire employees in Sweden, it is important to take into account both collective agreements and Swedish labour laws. Each industry has its own collective agreements that regulate terms and conditions of employment, so it is important to identify which agreements apply to your employees during recruitment. Some industries have more complex agreements than others, and labour laws are updated frequently.

Employment contracts in Sweden typically cover details about leave, pay and benefits. Every employee must have a contract describing job duties and terms of employment, but specific details are only required if they are stipulated in the applicable collective agreement.

In general, employment contracts are considered permanent unless otherwise stated, such as for seasonal or temporary positions. For fixed-term employment, if the employee has held the role for more than two years, the contract automatically converts to a permanent employment.

There are no formal requirements for how employment contracts are negotiated, but if the employment lasts more than three weeks, a written contract is required. Verbal agreements are permitted but are not the norm.

Swedish labour laws provide protection and benefits for employees, governed by the following key laws:

• The Employment Protection Act
• The Work Environment Act
• The Employment Act
• The Annual Leave Act
• The Parental Leave Act
• The Discrimination Act
• The Working Hours Act

In Sweden, an employee must not work more than 40 hours per week. Employees may not work more than 48 hours of overtime within a four-week period, and the maximum permitted overtime is 200 hours per year. Employees must take a 30-minute break after five hours of work and are entitled to an 11-hour rest period within each 24-hour working day. There are also special rules for underage workers and for those who work night shifts.

Sweden offers generous benefits for sick leave and parental leave. If an employee falls ill, they are entitled to sick pay from the employer during the first 14 days. After that, the Swedish Social Insurance Agency (Försäkringskassan) provides sickness benefit. Parental leave in Sweden is one of the most generous in the world, with parents entitled to up to 480 days of paid leave, which can be shared between both parents.

Hiring employees in Sweden involves several costs in addition to salaries. Employers must pay social security contributions, which include pension contributions and health insurance, totalling approximately 31.42% of gross salary. Holiday pay is usually around 12% of the annual gross salary, and there may also be additional costs for employee benefits, such as wellness allowances and other health-related benefits.

Non-EU citizens who want to work in Sweden must obtain a work permit. The application process involves several steps, such as the employer having to advertise the position within the EU/EEA for at least ten days before a work permit application can be submitted. Work permits are usually issued for up to two years and can be extended.

An employer must have a valid and legitimate reason to dismiss an employee, such as redundancy, performance or productivity issues, or workplace misconduct. Generally, the employer must give notice depending on the employee’s length of service with the company. Notice periods can vary from 14 days to six months.

Swedish employment law does not require severance pay or compensation, but such payments may be required under individual contracts, specific agreements, or collective bargaining agreements.

An Employer of Record (EOR) in Sweden is a third-party organisation that takes on the role of the legal employer for your workforce in the country. The EOR handles employer-related tasks such as onboarding, payroll and benefits, ensures compliance with local laws and regulations, and enables you to focus on managing day-to-day operations.

The best EOR providers are those that have their own permanent establishment in the country where the staff are employed, a so-called direct EOR. BTR Group has its own permanent establishments in Sweden, Finland and Denmark and are experts in the Nordic market.

The primary role of an EOR is to act as the legal employer for a company’s global workforce. As the official employer, the EOR assumes responsibility for all compliance-related matters, including HR compliance, payroll and tax obligations.

Services:

• Employee benefits
• Tax management
• Payroll management
• Compliance support
• HR administration
• Onboarding
• Recruitment and hiring
• Employment contracts
• Other HR-related tasks (such as personnel matters and terminations)
• “Co-employment”, where employer responsibility is shared with the official employer

PEO and EOR services share several similarities, which is why they are often confused. The key common characteristics include:

• Both PEOs and EORs provide HR services to other companies
• Both specialise in ensuring compliance with payroll, employment and tax regulations
• The services offered by both include payroll management, HR administration, benefits administration, onboarding, and administration of payroll and tax reporting
• The main driver behind using a PEO or EOR is to free up internal resources to focus on core operations and avoid compliance issues due to a lack of knowledge of local employment laws
• In both models, the client company remains the “managing employer”, meaning the organisation retains exclusive decision-making authority over compensation, projects and workload, among other things

A PEO solution (Professional Employer Organization) helps companies manage payroll administration, taxes and employer responsibilities in accordance with local regulations (in Sweden, Denmark and Finland). The PEO provider acts as a local HR department and ensures correct salaries, tax payments, social security contributions and reporting to the relevant authorities in each country. The company retains operational responsibility for the employee, while the PEO partner takes care of HR compliance, employment contracts, benefits and regulatory requirements, reducing risks and simplifying international expansion in the Nordics.

It depends on the company’s turnover and accounting period. VAT can be reported monthly, quarterly or annually, depending on the company’s size and turnover.

If a company does not report VAT correctly, it may be subject to a late filing penalty or estimated taxation, where the Swedish Tax Agency estimates the basis and determines an amount that the company must pay.

The year-end method (cash method): This method can be used by companies with a turnover of less than three million kronor per year. The company records VAT when payment is made by the customer or when the invoice is paid.

The invoice method: This method is used by larger companies with a turnover of more than three million kronor per year. Here, VAT is recorded both when the invoice is issued and when payment is made. 

VAT reporting is done in a VAT return, where both input and output VAT for each accounting period are reported. Even if a company has no VAT to declare, a VAT return must still be submitted.

VAT rates vary depending on goods and services, but the three most common VAT rates are 6%, 12% and 25%. The output VAT must be reported to the Swedish Tax Agency. The difference, i.e. the difference between input and output VAT, must be reported to the Swedish Tax Agency. The company either gets money back or has to pay the difference to the Swedish Tax Agency.

There are two types of VAT: input and output.

• Input VAT is the VAT paid on the goods and services the company purchases. You are entitled to reclaim this VAT.
• Output VAT is the VAT added to the goods and services the company sells.

As an accounting firm, we often take care of the VAT return for our customers. Here we explain what applies when it comes to VAT (value added tax) accounting. VAT must be paid on most goods and services, and as a sole trader you are obliged to report and pay VAT to the Swedish Tax Agency (Skatteverket). For this purpose, all sole traders need to register for VAT with the Swedish Tax Agency and will then receive a VAT registration number.

The accounting requirements for Swedish companies vary depending on the company’s size and legal form. The external accounting is governed by several laws, including the Annual Accounts Act (1995:1554) and the Bookkeeping Act (1999:1078). Generally accepted accounting practice, which means following the relevant accounting rules, recommendations and established practice, is the foundation of all accounting.

Accounting is divided into external and internal accounting. External accounting, which is also called financial accounting, is regulated by law and aims to provide external stakeholders with information about the company’s financial performance and position over a specific period. Internal accounting is often more detailed than external accounting and focuses on providing internal stakeholders, i.e. those who work within the company, with the information they need to make informed decisions.

Accounting is a broader concept than bookkeeping and includes not only the recording of business transactions (bookkeeping), but also year-end accounts, tax returns and reporting. For some companies, especially larger companies, the accounting may be subject to audit, which means that an independent auditor reviews the accounting and assesses whether it presents a true and fair view of the company’s financial position.

Although the terms bookkeeping and accounting are often used synonymously, accounting is a broader concept. In bookkeeping, the company’s invoices, receipts and other supporting documents are recorded, either physically or digitally, in accordance with the methods prescribed by the Bookkeeping Act, which may be either the cash method or the invoice method. All business transactions must be recorded on an ongoing basis, a process known as day-to-day bookkeeping, and organised systematically by accounts, known as ledger bookkeeping. Each business transaction must have a supporting document confirming that the transaction has been carried out.

Accounting also includes other elements such as annual accounts, tax returns and reports that can form the basis for decisions about the company’s future development. The purpose of accounting is to provide an overview of the company’s financial performance. Accounting is of great importance for, for example, the taxation of the business. In limited companies, accounting is also used to make decisions on the discharge of liability for the board of directors and the managing director, as well as on any dividend distribution.

For larger companies, the accounts are often subject to an independent audit in which the auditor assesses whether the accounts give a true and fair view of the company’s financial position. Which parts of the accounting must be carried out under the Bookkeeping Act and the Annual Accounts Act depends on the company’s legal form and turnover. Regardless of the company’s legal form, the accounting must always follow generally accepted accounting principles, meaning that it must be carried out in accordance with laws, recommendations and established practice.