In 2020, the Swedish Tax Agency introduced a temporary possibility to defer tax payments to support entrepreneurs who were financially affected by the pandemic. The support has been extended in stages, but on September 12 this year it is time to start paying the tax. This could cause problems for businesses that don't apply for an installment on time. 

‍

The coronavirus pandemic was tough on society at large, but one group that was hit particularly hard was the country's entrepreneurs. While revenues slowed down or, in the worst case, stopped altogether, costs persisted. Therefore, a number of measures were introduced to help entrepreneurs financially during a vulnerable period. One of these measures was the introduction by the Swedish Tax Agency of a temporary deferral of payment of employer contributions, deducted taxes and VAT.

‍

How the respite worked

The deferral could be applied for accounting periods January 2020-January 2021, October to December 2021 and April to June 2022 and was divided into several stages. In the first stage, businesses could apply for a deferral for up to 12 months but no longer than September 12, 2023 (January 17, 2024 for businesses reporting VAT once a year). Thereafter, businesses could apply for an extension of up to a further 12 months until September 12, 2024 (January 17, 2025 for businesses that account for VAT once a year). Thus, depending on when they applied, businesses have been able to obtain a deferral of up to 24 months for tax payments.

‍

What happens when the grace period expires

Once a company has had a temporary deferral for 24 months, or less if limited by the end date, it will have to pay the deferred tax. The Swedish Tax Agency will send out information about 30 days before the end date of the deferral with information on when the money must be paid and how much interest and fee will be added (the deferral was not free of charge, but there is an additional interest and a deferral fee). For all companies with monthly or quarterly accounts that have applied for an extension of the deferral beyond September 12, 2023, this will be done around August 12. 

‍

The remission can be paid in installments 

Fortunately, the vast majority of businesses do not have to pay the full amount in one go. When the extended grace period expires, businesses can apply to extend the grace period for up to 36 more months, provided that an installment plan is set up. However, to be able to apply for an installment plan, the company must have been in temporary forbearance for 24 months, or as long as possible if limited by the end dates. 

‍

The installment plan can be divided into a minimum of two installments and a maximum of 36 installments over a maximum period of 36 months. However, the bulk of the repayment must be made during the first part of the installment plan. 

‍

‍

Read more about the temporary deferral of tax payments and how to apply for an installment plan on the Swedish Tax Agency's website.

‍