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Accounting during succession of generations in a trading partnership

Here you can read about accounting during a succession of generations. This includes accounting for the expansion fund, interest distribution and the reversal of tax allocation reserves.

You must reverse tax allocation reserves when you transfer your share in the company. The reversal will affect your share of the company's result.

In the event of estate distribution, the recipient must declare in writing that he/she is taking over the expansion fund.

In the event of a gift or division of estate, you and the new owner must agree in writing on the transfer of the expansion fund.

If the expansion fund is taken over by the recipient, he or she must complete the Tax Agency's form N7, which must be submitted together with the income tax return.

Download the Swedish Tax Agency's form N7 (in Swedish)

Interest distribution

At the last reporting of economic activities you can make an interest distribution. It can be either positive or negative and is calculated on the capital base. The capital base is calculated from your adjusted acquisition cost at the start 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.

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. As a partner of a trading partnership, you may not make an interest distribution against returned tax allocation reserves or a reduction of the expansion fund in case of a beneficial acquisition. When a transfer is made by inheritance, will or as a gift, it is beneficial. 

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

The new owner cannot take over a saved distribution amount.

Individual social security contributions and special payroll tax

To avoid having to account for economic activities in future years, you can, instead of making a standard deduction for individual social security contributions or special payroll tax, calculate the exact contributions in your final income tax return. If you make a standard deduction for the fees, as you probably have done so far, you will have to report the economic activity for at least another year to make a final reconciliation.

See the exact calculation of own contributions on the Swedish Tax Agency's website (in Swedish)

Negative adjusted acquisition cost

If the adjusted acquisition cost is negative, you must report it in capital tax schedule capital on the Tax Agency's form K15A. The cost of acquisition has been calculated each year on form N3A issued by the Tax Agency. Adjusted acquisition cost consists of the amount paid for the share plus additions and taxable income and deductions for withdrawals and deficits deducted.

Download the Swedish Tax Agency's form K15A (in Swedish)
Download the Swedish Tax Agency's form N3A (in Swedish

Tax accounts

Neither the company nor the shareholder tax account is affected by the transfer of the share to the new owner.