Accounting during liquidation of a trading or limited partnership

Employer declaration

You are required to report employer contributions and deducted taxes for all reporting periods until the Swedish Tax Agency has deregistered the company as an employer.

If you haven't paid any salaries, indicate this by entering zero (0) in the box for "Total employer contributions" and zero (0) in the box for "total deducted taxes."

VAT

You are required to report VAT for all reporting periods until the Swedish Tax Agency deregisters the company for VAT. If you have no VAT to report, enter zero (0) in the box for "VAT to pay or reclaim."

Company income tax return

You must provide a tax return for the company as long as it is registered with the Swedish Companies Registration Office. This also applies if the company has been deregistered for F-tax, VAT and as an employer.

Pay the correct preliminary tax as a shareholder.

The preliminary tax you are paying today is unlikely to match the tax you will have to pay when liquidating the company. To pay the correct preliminary tax, you should submit a new preliminary income declaration. In this declaration, you state your share of the company's final results. Don't forget to consider any reserves that you need to include for taxation purposes. If you do not submit a new preliminary income declaration, you should continue to pay the same preliminary tax as before until you receive a new decision on newly charged preliminary tax from the Swedish Tax Agency.

Deducted preliminary tax at the Swedish Tax Agency

Commercial property

If a trading partnership transfers a property or a tenant-ownership apartment to a partner in the trading partnership at a price below the market value, special taxation may be applicable. This applies if the property or tenant-ownership apartment is expected to become a primary residence as a result of the transfer. The company must reverse any previously granted deductions for improvement repairs and maintenance that it has made in the year you terminate the company and the five preceding years. The company must also reverse any previously granted depreciation deductions as income in the business activity. The market value, not the actual compensation, is recorded as the disposal price. The amount by which the actual compensation is below the market value should be recorded as personal withdrawal. Consequently, the shareholder's adjusted acquisition cost is also affected. The transfer of a business property is taxed under the capital income category for individuals and estates and under the business income category for legal entities.

Pay the correct preliminary tax for the company

Is your company paying preliminary tax every month for property tax, property fee, or special payroll tax? Then it's not certain that the preliminary tax is accurate when the company concludes its operations. To pay the correct preliminary tax, you should therefore submit a new preliminary income declaration for the company.

If the company does not submit a new preliminary income declaration, the company should continue to pay the same estimated tax as before.

Deducted preliminary tax at the Swedish Tax Agency

Partner's income declaration

As in previous years, you must disclose your share of the company's result in your income tax return. The calculation is made as usual on form N3A, which is submitted with the income tax return. You must also declare disposal of a share in a trading partnership on form K15A. On this form, use the standard N3A annex to calculate your profit or loss, which you enter on your ordinary income tax return. You must reverse expansion funds and tax allocation reserves for taxation. For owners who take over assets from the company resulting in withdrawal taxation, the owner's capital account and the adjusted acquisition cost are reduced. The tax effect is the same as if you had first withdrawn money from the company and then purchased the asset privately.

Download the Swedish Tax Agency's form K15A, disposal of share in a trading partnership (in Swedish)

Equipment and stock

If you take over as a partner equipment or stocks from the company, they are considered as own withdrawals. On own withdrawals, the trading partnership must account for withdrawal VAT, calculated on the purchase value or the cost price. Please note that withdrawals must be valued at market price in the trading partnership's income tax return.

All own withdrawals affect the adjusted acquisition cost. The value that affects the adjusted acquisition cost is that which the company has reported for taxation including VAT.

Funds

Once it has been decided that the company will enter into liquidation each partner shall reverse the expansion fund and all tax allocation reserves for taxation. This also applies when a partner chooses to leave the company.

Interest distribution

At the time of your last declaration of your share in the company, you can carry out interest distribution if any part of the financial year is to be accounted for by you. An interest distribution means that you calculate interest on your capital in the company. The interest distribution can be either positive or negative and shall be calculated on the capital base. The capital base is calculated on the basis of your adjusted acquisition cost at tax year beginning of the tax year.

You must make a negative interest distribution if the capital base, at the end of the last financial year, is negative by more than SEK 50,000. The amount must be included as income in the economic activity tax schedule. You must then deduct the same amount in the capital tax schedule.

You may make a positive interest distribution if there was a positive capital base of more than SEK 50,000 at the end of the last financial year. When economic activities cease, positive interest distribution can also be made for reversed tax allocation reserves as well as reduction of expansion funds. You can deduct this amount in the economic activity tax schedule. The same amount must then be included as income in the capital tax schedule.

If your last financial year is shorter than 12 months, the amount of the distribution must be adjusted to take account of the length of the financial year.

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)

Deficit in the company

If you have ended the activity of the trading partnership, as a partner you are not usually allowed to deduct the deficit. If you end your activity within the first five financial years, you can also offset the deficit against income from services.

A limited or other partner with limited liability for the company's debts may not deduct more from the deficit than he has invested or undertaken to invest.

Capital gain or loss

When you end your company, you must calculate a capital gain or capital loss on your share in the company, which you report on your income tax return. The calculation is made by reducing what you receive in liquidation by the amount of expenses. The cost amount is the same as the adjusted acquisition cost.

Tax account

The company tax account remains in place even after the company has been liquidated.