Swedish Credit Union FAQ

1. What kind of services can credit union formed on Sweden offer?
Financial services are normally restricted to the accepting of deposits and the making of loans to its members. In other words it would typically be expected to operate as a traditional savings and loan institution with the capitalization originating through member “contributions”. However, it is feasible that such an entity could also issue guarantees (c.d’s for example) as well as other financial instruments.

2. What are the Swedish legal requirements for the formation of a credit union?
The CU is exempted from regulation and supervision as long as it has less than 1000 members at all times. There are no actual reporting requirements regarding members. You need to file an annual tax return, and the tax is 30% on reported profit. There are no annual license fees to pay.

3. How long does it usually take to form credit union in Sweden?
Formation of new entity usually takes about 1-2 months.

4. What statutory protection is there for member confidentiality? Does a list of members have to be provided to public authorities?
There is no reporting of members to any authority, only names of directors are avaible in the registry.

5. What tax is payable by non-Swedish resident members on interest paid on deposits?
There are no requirements for the CU to withhold any taxes on interest paid, regardless of which country the member would be a resident of. It would be the responsibility of the client to pay any taxes he/she would be liable to.

6. Can Swedish credit union offer any brokerage services?
For other services such as securities offering, brokerage, Forex, we recommend you to be offered from other jurisdictions without too much regulatory requirements and without the tax burden of Sweden. Example of such entity which can easy offer such services is Uruguay offshore financial services company. We recommend to use Swedish credit union in combination with this company so that it can accept deposit from your clients.

7. Does Swedish credit union require local presence in Sweden?
No, but we can arrange you virtual office services so that you entity has look like that it is doing business from Sweden.

8. Are there any restrictions or limitations on the size of each member's contribution/deposits to the Credit Union ?
No.

9. Can the Credit Union apply for a SWIFT address ?
A CU will not have its own SWIFT (BIC) address. SWIFT prefer highly capitalized and regulated entities; this entity is exempt from regulation. Each individual customer would not receive their individual IBAN account numbers unless you (the CU) make arrangements with a bank for them to provide this service, with individual sub-accounts. Most clients however pool all clients funds on one master account (which can have IBAN co-ordinates for easy transfers for the clients), and create the individual customer accounts "in-house". Just because each client would not get their own IBAN, would not mean that they cannot make IBAN payments. They can still pay via IBAN to the CU IBAN master account. They simply have to include a note in the reference field of the transfer, usually "for further credit to XXXXX", where XXXXX would be their individual "in-house" account. The administrator of the CU would receive this note, and credit the relevant customer account through an internal control software or whatever system you will decide to use. You should look at the CU as any other company; there are no pre-determined formats for how you run your business or administer accounts. The important difference however if compared with a regular company, is that the CU can legally take deposits and make loans.

10. For Swedish CUs, what is the required operable capital ?
There is no minimum capital required for the formation of a Credit Union in Sweden. Initial capital will be decided by the Members (Founders).

11. What is the limit of liability of every Director of the Credit Union ?
Directors do not have personal liability for the CU, except in the case of overdue taxes.

12. Upon establishment of the entity, we need to have the names of the (initial at least) shareholders, together with the number of shares to be held by each one of them. Is this right ?
There is no predetermined share capital as such. If you become a member you are technically a shareholder. The procedure for becoming a member depends on the requirements the association decides to have. The part of the "share" would usually depend on a member's contribution to the EA. Members do not have to be registered with any government authority.

13. For the CU, is there a clearly defined minimum operating capital for loans/deposits ratio? Some banks can loan as much as 90% of their capital, and in some jurisdictions, even more!
No such fractional reserve lending since the CU is exempt from regulation and capital requirements

14. Is it possible to accept corporate clients ?
Actual members should be physical persons, but you could offer corporate services; simply identify one person as the actual member, for example the beneficial owner of the corporation as banks would usually do. The bottom line is that if required, you should be able to show that you have less than 1000 members (physical individuals).

How to order?
Click here for details how to order Swedish Credit Union
If you have more questions about credit unions please contact us.