Accounting for succession of generations of a sole trader

Employer declaration

You must report payments and tax deductions for each employee every month. The easiest way to do this is in the e-service Submit PAYE tax return at skatteverket.se. As of January 1, 2024, you must provide information on how much the payee received in cash compensation or benefit that refers to board fees. On the individual data, you fill in the amount for the board fee in box 023 - Of which compensation is board fee. The board fee must also be included in the amount you report as cash compensation or benefits.

Report the result in the income tax return

The final statement of economic activity shall be made in the income tax return in May of the year following the gift or estate distribution.

Transfer of funds

Often the new owner can take over tax allocation reserves and expansion funds. In the event of estate distribution, the recipient must declare in writing that he/she is taking over the funds. In the case of a gift, you and the new owner must agree in writing on the transfer of the funds.

The new owner must complete the Swedish Tax Agency's form N7 Transfer of funds and distribution amounts and submit it together with his or her income tax return.

Download the Swedish Tax Agency's form N7 Övertagande av fonder och fördelningsbelopp (“Transfer of funds and distribution amounts”) (in Swedish)

Interest distribution

If there is a distribution amount saved, you can normally transfer it to a new owner. The new owner must fill in the Tax Agency's form N7, which is submitted together with the tax return.

Deficit in economic activities

If your economic activity operates at a deficit in its last year, you may be able to deduct the loss, under certain conditions, in the capital tax schedule. A final deficit may be used in the income year following the year in which the activity was discontinued. 70% of the deficit is tax deductible. You can spread out the final deficit deduction over up to three years if you wish. You can never transfer a deficit to a new owner.

If the deficit is incurred by an estate, it can deduct the deficit from the capital tax schedule of its income tax return.

If you end your activity within the first five financial years, you can also offset the deficit against income from services. This applies if you have carried out active economic activity, if you have not directly or indirectly carried out similar economic activity during the last five years before starting the economic activity, and the first SEK 100,000 in deficit for each of the five years.

More about deficits at the Swedish Tax Agency (in Swedish)

Individual social security contributions and special payroll tax

In the year in which the economic activity ceases, you can calculate the final individual social security contributions or the special payroll tax and deduct these directly in the last income tax return for the economic activity. Otherwise, you make a standard deduction for the individual social security contributions/special payroll tax in the income tax return for the last year of the activity, but then you must make a final reconciliation of the individual social security contributions/special payroll tax the following year.

See exact calculation of individual social security contributions at the Swedish Tax Agency (in Swedish)

Keep your tax account

Your tax account is not affected by deregistering your company.