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Bankruptcy of a sole trader

Bankruptcy of a sole trader

You can 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

If you are unable to pay your company's debts, you can apply to the District Court for your company to be declared bankrupt. Then a receiver takes care of the company's assets and uses them to pay off its debts.

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 registers that the company no longer has F-tax, no longer has to pay VAT and is no longer an employer.

Deregistering a sole trader in the event of bankruptcy

During bankruptcy: tax, income statements 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.

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.