Economic and non-profit associations

If several of you will be running an artistic activity together, you can start an economic or non-profit association. Examples include a studio association, music studio, theatre association and book publisher. Both an economic and a non-profit association are considered legal taxable entities. The board and members are normally not personally liable for the association’s debts and obligations.

Economic associations

An economic association is formed by at least three people who become its members. The members may be natural or legal persons. The financial liability is limited to the capital invested, which can be from 1 krona upwards.

An economic association is a separate legal entity with its own company registration number and must meet these conditions:

• Be registered with the Swedish Companies Registration Office (Bolagsverket) in order to be considered as formed
• Have an auditor (however, the auditor does not need to be certified or authorised)
• Prepare an annual report each year.

Note: Smaller economic associations do not need to submit an annual report to the Swedish Companies Registration Office, but they must be able to present one if asked. Annual reports are always public documents.

Take out a salary and get a dividend on your profits

As a working member of the association, you are considered an employee and can receive a salary. As a member, it is also possible to receive dividends on the association’s profits such as a refund or supplementary payment. If you have a sole trader company or limited liability company, you can also bill the association for your work. Keep in mind that your sickness and parental benefits will then be calculated based on the business you run yourself in the company.

Non-profit associations

When a group of at least three people starts a non-profit association to run an artistic activity together, the members can either be employed by the association or each can bill the non-profit association through their own companies.

Salaries, VAT and social security

If the members or other people working for the association are employed, they can be paid for their work. In this case, the non-profit association must register as an employer with the Swedish Tax Agency (Skatteverket).

As a rule, non-profit associations that are public benefit organisations do not need to register for or pay VAT. The exception is if the association conducts economic activity, in which case it might be required to report VAT for the part of the activity that relates to economic activities.