Expanding your business into the Nordic region — consisting of Sweden, Norway, Denmark, Finland and Iceland — can offer significant strategic advantages. The Nordic countries offer attractive opportunities for global expansion due to their prosperous economies, technologically advanced infrastructure and robust talent pool. One of the first important questions companies face is whether to establish a local legal entity or use an Employer of Record (EoR) to recruit and manage staff in the region.

This article provides a comprehensive comparison of the costs, time lines, legal requirements and operational challenges associated with setting up a legal entity versus using an Employer of Record (EoR) in the Nordic region.

Challenges Associated With Setting Up a Legal Entity in the Nordics

High Initial and Ongoing Costs

The formation of a legal entity in any Nordic country requires considerable initial expenditure, including registration fees, minimum share capital, legal expenses, and compliance costs. The country wise cost breakdown is as follows.

Sweden

Legal Entity Type: Aktiebolag (AB – Limited Liability Company)

• Minimum Requirement for Share Capital: SEK 25,000 (~€2,200)
• Registration Fee: SEK 2,200–2,500 (~€190–220)
• Legal & Advisory Fees: €1,500 – €3,000 (This is optional)
• Bank Account: Can require a Swedish ID or in person visit to the brank

Total Estimated Initial Cost: €2,000 – €5,000

Norway

 Legal Entity Type: (Aksjeselskap – AS)

• Registration fee: NOK 6,274 (€550)
• Minimum share capital Requirement: NOK 30,000 (€2,600)
• Legal fees: €2,000–€5,000
• Banking challenges: Strict requirements for non-residents
• Annual compliance costs: €7,000+

Total initial cost: Approx €10,000–€15,000+

Denmark 

Legal Entity Type: (Anpartsselskab – ApS)

• Registration fee: DKK 670 (€90)
• Minimum share capital Requirement: DKK 50,000 (€6,700)
• Notary & legal fees: €2,000–€5,000
• Corporate tax advisor: €3,000+/year

Total initial cost: Approx €10,000–€15,000+

Finland 

Legal Entity Type: (Osakeyhtiö – Oy)

• Registration fee: €275 -€380 
• Minimum share capital Requirement: €2,500
• Legal fees: €2,000–€4,000
• Banking & compliance: €5,000+/year

Total initial cost: Approx €8,000–€12,000+

Iceland

 (Einkahlutafélag – ehf.)

• Registration fee: ISK 75,000 (€500)
• Minimum share capital Requirement: ISK 500,000 (€3,300)
• Legal & accounting: €5,000+

Total initial cost: Approx €8,000–€12,000

Time Lines for Legal Entity Setups

• Sweden: 2–4 weeks  ( Approx)
• Norway: 4–8 weeks ( Approx)
• Denmark: 3–6 weeks ( Approx)
• Finland: 4–6 weeks ( Approx)
• Iceland: 6–8 weeks ( Approx)

Complex Legal & Compliance Requirements

Strict legal regulations and compliance rules apply when setting up a company in the Nordic countries. In certain countries such as Norway and Denmark, international companies may have problems with corporate governance as they require a resident director. Once a company is incorporated, it must file taxes (including VAT and payroll tax) every month or every three months or annually. Depending on how large the company is, it may also need to have annual financial audits carried out.

In addition, the region has strict regulations on hiring and firing, and companies must adhere to strict employee protection regulations and collective labour agreements. These difficulties make it difficult for local groups to build and utilise resources without local help.

Other Operational Burdens

To comply with local tax and financial regulations, companies operating in the Nordic countries may require to hire a local accountant, which usually costs approximately €500 to €1,500 per month. Managing payroll is difficult, as social benefits and pensions are regulated in a complicated way. In addition, the strict labour regulations make it difficult and time-consuming to terminate employees, which makes things even more complicated for the company.

Additional Considerations

- New established entities may require VAT registration.
- Ongoing compliance and annual filings can add extra costs.
- Physical presence or local director may be mandatory depending on the country.

The EoR - A Fast, Compliant, and Cost-Effective Option

With an EOR such as Swapp Agency, you can legally hire employees in Sweden, Norway, Denmark or Finland without having to go through the long and costly process of setting up a company. The EOR takes care of local compliance, payroll, tax payments and labour legislation, so you are not required to have extra staff for accounting, legal or HR purposes.

Working with an Employer of Record (EOR) in the Nordics can save you 30-60% of the costs compared to setting up and running a local company. This is especially true if you are hiring a small team (1–10 employees) or entering the market for the first tim

Here is how the EOR is a cost effective option.

• No costs for incorporation: Setting up a legal entity usually costs between €3,000 and €6,000 (approx.) in each country.
• No ongoing compliance fees: You don't have to pay for annual accounting, auditing and legal advice, which can cost you an additional €2,000 to €5,000 (approx.) per year.
• No requirements for a local director or office: This can add thousands of Euro to administrative and operational costs.
• Faster hiring: With EOR, you can hire talent in 1–2 weeks instead of 1–3 months, which saves both time and money.

Conclusion

The Nordics is an ideal destination for business expansion, but whether you should set up a legal company or use an Employer of Record (EoR) depends heavily on your business plan, your budget and your timeline.

For start-ups, remote-first or organisations exploring the market, an Employer of Record (EoR) is the optimal choice— - offering a quick, cost-effective entry point without the burden of legal compliance, company administration or significant upfront costs. An Employer of Record (EoR) like Swapp Agency facilitates the onboarding of Nordic talent within weeks rather than months by minimising start-up costs and simplifying the recruitment process, thereby circumventing difficulties such as local director mandates, share capital requirements and ongoing accounting burdens.