Sweden is looking to become an epicenter for entrepreneurs and hopes to entice small businesses to set up shop, thanks to tax legislation changes in the country.
Reports Tuesday (Sept. 5) in Reuters noted Sweden, which has its sights set on having the lowest unemployment rate in Europe by the end of the decade, is planning to cut taxes for small businesses that are hiring their first employees. According to reports, while Sweden already has a strong reputation among startups and tech innovators, some entrepreneurs have raised concerns over the ability to attract adequate talent in the country.
“Small, newly-founded companies can find it hard to offer competitive salaries, but we will be able to offer their employees tax-advantaged personal options,” said Magdalena Andersson, the country’s finance minister, in a statement. “We want to make it possible for these companies to stay and grow in Sweden.”
Reports said legislators are also planning to lessen payroll taxes for small businesses. The new rules will be included in the nation’s autumn budget, due out later this month, and are set to come into effect on Jan. 1, 2018.
One of Sweden’s most famous startups is Spotify, which last year said it would begin to look outside Sweden for growth unless the government eased up hiring rules and addressed housing shortages.
Reports said the tax-cutting initiative will cost approximately $250 million next year, but the government’s budget last year said it had more than $1.8 billion for extra spend. Despite the strength of its economy, Sweden’s unemployment rate sits a 6.6 percent, higher than that of the U.K. and Germany, reports noted.
Other top Swedish companies have publicly addressed concerns over current legislation. Earlier this year, financial group Nordea threatened to leave the country altogether, taking issue with Sweden’s plan to require banks to contribute more to the national budget through a payroll tax and increased resolution fees.