REALWorld Law

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Several types of corporate vehicle are used for real estate investments, including limited liability companies (aktiebolag), partnerships (handelsbolag), or partnerships with limited liability (kommanditbolag).

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Limited liability company

A Swedish limited liability company is a business enterprise in which the liabilities of the shareholders are limited to their capital investment in the company.

Partnership

There are two types of partnership: trading partnerships (handelsbolag) and limited partnerships (kommanditbolag). A limited partnership offers limited liability but tax regulation is basically the same for both.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Limited liability company

SEK 25,000 for a private limited liability company and SEK 500,000 for a public limited liability company.

Partnership

There is no minimum capital requirement for partnerships.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Limited liability company

Approximately SEK15,000 for a private limited liability company.

Partnership

Approximately SEK15,000 for a partnership.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Limited liability company

The formation of a limited liability company generally takes about 20 to 25 days. However, an off-the-shelf company may become operative in one or two days.

Partnership

The formation of a partnership generally takes about 20 to 25 days.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Limited liability company

The Swedish corporate governance model is defined by legislation, self-regulation and tradition. Applicable regulations include the Swedish Companies Act (Aktiebolagslagen), the Accounting Act (Bokföringslagen) and the Annual Account Act (Årsredovisningslagen). In addition to these, there are a number of self-regulating frameworks such as the new Code of Corporate Governance (Bolagskoden) which applies to Swedish companies whose shares are listed on a regulated market in Sweden. There are also unwritten rules governing attitudes and traditions that have evolved over time.

The Swedish system is based on a strict division of power and responsibilities between the shareholders (exercised at the general meeting), the board of directors, the managing director and the auditors. In a private limited liability company the board of directors can consist of one or two individuals, provided at least one deputy director is appointed. A public limited liability company must have at least three directors. If a managing director is appointed, he has the authority to represent the company and sign on its behalf in relation to the day-to-day administration and management of its affairs.

Partnership

A trading partnership exists where two or more legal entities or individuals agree to conduct a commercial enterprise in this form, and the partnership is formally registered. All partners are jointly and severally liable for the obligations of the partnership. There are no statutory provisions requiring formalities such as shareholders' meetings or a board of directors. However, the partnership agreement may set out more detailed regulations for governance.

The Partnerships Act (Lag om handelsbolag och enkla bolag) also allows for the formation of limited partnerships. In this case, general partners (Komplementärer) are liable for all the debts of the partnership while limited partners (Kommanditdelägare) are liable only up to the amount of capital they have contributed. There are also limitations on who can be appointed as a general partner (for example, foundations and not-for-profit associations cannot be general partners). Unless otherwise agreed, a limited partner must not take any active role in running the partnership's business and must not sign on its behalf.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Limited liability company

Approximately SEK25,000 or more annually for a company that is inactive apart from owning real estate and receiving rent, depending on the size of company, its turnover, the number of employees etc.

Partnership

Approximately SEK20,000 or more annually for a partnership that is inactive apart from owning real estate and receiving rent, depending on the size of partnership, its turnover, the number of employees etc. 

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Limited liability company

Taxation of current income in Sweden

Income tax

The tax rate is 20.6% (2025). Rental and other income, including capital gains, is treated as ordinary business income. Interest payments and other costs are tax deductible. A general reduction of net interest deduction corresponding to 30% of EBITDA applies. However, the reduced interest deduction applies only if negative net interest exceeds SEK 5 million (simplification rule). The amount is measured on a group level. Certain additional restrictions apply to the deduction of interest on intercompany loans. Depreciation for buildings is allowed for tax purposes at the following annual rates: 2% to 5% for industrial premises, 3% for retail and 2% for offices. Speeded up depreciations (additional 2% the first six years) are available for newly produced apartment houses.

Property tax

Property tax is calculated as a percentage of the tax value of the property, which is 75% of the estimated market value. For the following types of property, the rates are:

• Industrial premises: 0.5%
• Offices and other commercial buildings: 1%
• Apartment blocks: normally SEK 1,724 for each apartment, but a maximum of 0.3% of the tax value assigned to the apartment
• Family houses: normally SEK 10,074 but a maximum of 0.75% of the tax value assigned to the house
• New apartment blocks and family houses that that were built in or after 2012 are exempt from property tax for 15 years
• Buildings that house tenants engaged in certain public benefit activities can be classified as special facilities and are exempt from tax liability.

Taxation of distribution of current income to investors

Resident shareholders

Corporate shareholders are normally exempt from tax on dividends from shares in non-listed companies. An individual is normally taxed at a rate of 25 percent. Special rules apply to closely held companies in which the shareholders are actively engaged.

Non-resident shareholders

The Parent-Subsidiary Directive applies. No withholding tax is imposed in Sweden on dividends paid to a foreign parent company, provided the parent company is comparable to a Swedish company (AB) and is taxed in a similar way. Withholding tax is normally imposed only on the distribution of dividends to companies located in tax havens. Special rules apply to dividends paid to non-corporate shareholders.

Taxation of capital gains

Capital gains on the sale of real estate are taxed as ordinary business income at the rate of currently 20.6% (2025).

Non-resident shareholders (without a permanent establishment in Sweden) are not taxed in Sweden on capital gains made from the sale of shares.

Resident corporate shareholders are exempt from tax on capital gains from unlisted holdings. Resident individuals are normally taxed at the rate of 25% on capital gains from the sale of shares.

Partnership

Taxation of current income in Sweden

Income tax

A partnership is transparent for income tax purposes. Income tax is calculated in the same way as for ordinary business income in an incorporated company. Depreciation is allowed for tax purposes at the following rates:

• 2% to 5% for industrial premises
• 3% for retail
• 2% for offices

The tax rate is currently 20.6% (2025) for corporate partners, and there is a progressive rate of 30–68% for individuals.

Property tax

A partnership is subject to property tax. Property tax is calculated as a percentage of the tax value of the property, which is 75% of the estimated market value. For the following types of property, the rates are:

• Industrial premises: 0.5%
• Offices and other commercial buildings: 1%
• Apartment blocks: normally SEK 1,724 for each apartment, but a maximum of 0.3% of the tax value assigned to the apartment
• Family houses: normally SEK 10,087 but a maximum of 0.75% of the tax value assigned to the house
• New apartment blocks and family houses that that were built in or after 2012 are exempt from property tax for 15 years
• Buildings that house tenants engaged in certain public benefit activities can be classified as special facilities and are exempt from tax liability.

Taxation of distribution of current income to investors

No withholding tax applies to the distribution of profits.

Taxation of capital gains

Non-resident partners are not taxed in Sweden on capital gains made from the sale of shares in the partnership.

Capital gains from the sale of shares in a partnership are exempt from tax for corporate partners. Resident individuals are normally taxed at the rate of 30% on capital gains.

Capital gains from the sale of property owned by the partnership are taxed as ordinary business income for corporate partners at currently 20.6% (2025). Individual partners are taxed on capital gains at 27%.

Last modified 13 Mar 2025