Bankruptcy of a sole trader
Your activity can be declared bankrupt, or you can yourself declare your activity bankrupt, if you can no longer pay its debts. The decision on bankruptcy is made by the District Court, which appoints a receiver.
Bankruptcy means a business is closed down by the liquidation of all assets to pay off debts. However, there are some things you can do if you are unable to pay your taxes and fees before you file for bankruptcy.
See what you can do with the help of the Tax Agency (in Swedish)
Apply for bankruptcy at the District Court
You apply for your own bankruptcy at The Swedish Courts. It is the District Court that declare your company bankrupt.
Apply for own bankruptcy - natural person (in Swedish)
District Court decides
The District Court decides on bankruptcy and appoints a receiver. During the bankruptcy proceedings, the receiver manages the company's assets and liabilities. It is also up to the receiver to decide whether to continue the activity or to sell the business's assets outright.
Contact the District Court if you have questions about fees, waiting times or how to appeal.
During bankruptcy - rules regarding asset management
After the District Court has decided on bankruptcy
- you no longer have control over your property
- you may not operate economic activities which involve an obligation to keep accounts
- you remain the owner of your property
- you are obliged to account for and pay tax on all income until the bankruptcy decision.
Since you've been operating a sole trader you are personally liable for the debts when your business goes bankrupt. This applies until the right to claim them expires.
The Swedish Tax Agency deregisters the company
The Tax Agency receives information from the District Court about the bankruptcy. The Tax Agency deregisters F-tax, VAT and as employer.
Deregistering a sole trader in the event of bankruptcy
During bankruptcy: tax and tax returns
Someone must submit income statements during the bankruptcy period. It is common for the receiver to take over this responsibility, but you must agree on this in such cases. Tax returns must be filed by the business's representative, not by the receiver.
You must submit PAYE tax returns and VAT returns until the date you are declared bankrupt. Then a receiver takes over the accounting. You still have to submit tax return, not the receiver.
The company must pay tax on all its income even during the bankruptcy period.
When the bankruptcy ends
The receiver reports his work to the District Court, which concludes the bankruptcy.