If the income is derived from business, the basis for tax assessment is the financial year. The year-end for a company may be fixed at any calendar month ending, provided it comprises 12 calendar months and ends on the last day of a month. Swedish subsidiaries of foreign parents may generally be permitted to adopt the same year-end as the parent company.
Every corporate entity or registered branch must file an annual corporate tax return. The applicable due date for tax return submissions depends on the month in which the financial year ends: tax returns for financial years ending in January through April are due on 1 November in the same year; tax returns for financial years ending in May or June are due on 15 December in the same year; tax returns for financial years ending in July or August are due on 1 March in the following year; and tax returns for financial years ending in September through December are due on 1 July in the following year. The financial year of most Swedish companies follow the calendar year; consequently, most tax returns are subject to the 1 July due date.
The annual assessments are made by the Swedish Tax Agency during the calendar year following the income year and should be completed about a year after the expiry of the financial year.
Payment of tax
Income taxes are collected during the year in which the income is earned, under a preliminary tax system. A corporate entity’s preliminary tax liability is determined by a preliminary tax assessment based either on the latest available final tax assessment or on a preliminary tax return filed by the company. The preliminary taxes are payable in monthly instalments. Interest surcharges on underpayment of preliminary taxes, however, generally apply after two months from the end of the fiscal year (the end of a fiscal year is one of 30 April, 30 June, 31 August, or 31 December).
Once a tax assessment decision has been made by the Swedish Tax Agency, any balance owed by the taxpayer is payable in 90 days. Any balance owed to the taxpayer is automatically refunded within a year from the end of the fiscal year.
A taxpayer that submits incorrect or insufficient information in a tax return is charged a penalty of up to 40% of the tax that, if the incorrect information had been accepted, would have been imposed or credited. The penalty and the rate may vary depending on the type of the shortcoming. Late filing fees also apply.
Taxes are assessed by the Swedish Tax Agency. Depending on the circumstances, reassessments and/or appeals generally can be initiated within two and/or six years after the expiry of the calendar year during which the financial year ended. The extended six-year period can generally be applied by the Swedish Tax Agency to the disadvantage of the taxpayer in cases of erroneous or misleading information having been provided by the taxpayer or the taxpayer's omission of information. Appeals can be made to the Administrative Court, onwards to the Administrative Court of Appeal and, in case granted trial dispensation, onwards to the Supreme Administrative Court.
Topics of focus for tax authorities
The Swedish Tax Agency has, for quite some time, focused on challenging interest deductions on inter-company loans made under the view that the interest rate deviates from the arm's-length rule. This particular focus has resulted in a number of court cases. The Swedish Tax Agency is currently also focusing on interest deduction restrictions under current limitation rules.
Another focus of the Swedish Tax Agency has been to challenge individual owners of private equity companies on the taxation of carried interest.