Spotify ready to leave Sweden due to hostile policy

Spotify has warned Sweden's politicians that it will be forced to move thousands of jobs away from Sweden unless significant changes are made to the country's housing, tax and education systems, because current policies are stymieing growth at the Swedish music-streaming firm. The company claims that employees are struggling to find affordable housing and being charged high taxes on their stock options - income from these is classed as employment and therefore taxed at 70%, compared to tax rates between 15-20% in the US and 25% in Germany. Recent International Monetary Fund data suggests that housing stock in Sweden's capital Stockholm has been hampered by complex planning restrictions, therefore the market has failed to keep pace with population growth: in 2013 85% of all municipalities in Stockholm reported a shortage in rental properties, and there are plans to hold a protest in the capital next month to demand reforms.

Spotify’s founders have written an open letter to Sweden’s politicians, saying they’ll be forced to divert thousands of jobs away from Sweden if major changes to the country’s housing, taxation, and education systems aren’t made.

The founders, CEO Daniel Ek and chairman Martin Lorentzon, warn that current policies are stymying growth at the Swedish music-streaming company. They say their employees are having a hard time finding apartments and are being charged inordinately high taxes on their stock options, and that the pipeline of programmers coming out of Sweden’s schools is not large enough.

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“We are now therefore forced to state that if no changes are made, we must consider growing more in other countries instead of Sweden,” Ek and Lorentzon wrote in a letter posted to Medium.

There’s evidence to suggest Ek and Lorentzon are right, at least on housing. New research from the International Monetary Fund shows that housing stock in Stockholm hasn’t kept pace with population growth, hampered by complex planning restrictions. In 2013, 85% of all municipalities in Stockholm reported a shortage of rental properties (pdf, p. 27), according to the IMF.

The Spotify letter has struck a nerve, inspiring plans for a protest in Stockholm next month to demand reforms in the housing system. According to The Local, more than 400 entrepreneurs have expressed interest in attending.

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The Spotify founders name New York, London, and Singapore as examples of cities where their company can grow. They say the choice for Spotify now is between expansion in Stockholm or New York.

But a company in search of a sensible housing market for its employees might consider casting a wider net—and tempering its criticism of Stockholm.

Mans Ulvestam, founder of Acast, which produces analytics and inserts ads in podcasts, has offices in New York, London, and Stockholm. “The cost of living in New York is way higher than Stockholm,” he says. “It’s certainly cheaper to buy an apartment in Stockholm than San Francisco, New York, or London. If Spotify had said they were moving to Idaho–that would have been a valid argument.”