Grace period – your scope for action as a business representative
If you represent a legal entity that’s having difficulty paying its debts, you can apply for a grace period. The two-month grace period provides an opportunity to resolve payment problems. The grace period does not affect the business’s payment liability.
A legal entity, such as a limited company, foundation or association, is required to pay its own taxes and contributions. As the representative of a legal entity, you’re responsible for making these payments. You may incur personal payment liability if you fail to fulfil your obligations as a representative – either intentionally or through gross negligence.
Liability for payment of legal persons' unpaid taxes and fees
A grace period gives you more time to address business debts
A grace period gives you time to take measures to address a business’s debts without incurring personal liability for payments originally due within the grace period. If the debts remain unpaid after the grace period and you have not taken effective measures to address them, you might be held personally liable for those debts.
Your grace period application is personal and specific to you. It does not cover other parties that might represent the legal entity. Your grace period does not affect the business’s payment liability. The business must therefore continue to pay its taxes and charges on time.
You can also be granted a grace period for customs duties and environmental charges
You can also apply for a grace period for customs duties, taxes and other charges payable to Swedish Customs, as well as for environmental charges on nitrogen oxide emissions from energy production. You may otherwise incur personal liability for these taxes and charges in your capacity as a business representative.
Payment liabilities not covered by a grace period
The following payment liabilities are not covered by a grace period:
- unpaid preliminary tax
- excess input VAT or excess excise duty that has been over-credited to the business
- shareholders’ personal payment liability under the Swedish Companies Act
- joint owners’ personal payment liability in respect of partnerships under Swedish legislation on partnerships and simple partnerships
The regulations are specified in full in the Swedish Tax Procedures Act.
Example – payment during the grace period
Charlie represents a limited company. She realises that the limited company will have difficulty in making its next VAT payment on the due date. She applies for a grace period for herself so that she has time to find ways for the limited company to overcome its financial difficulties, without incurring personal liability for payment. During the grace period, she is able to secure the finances necessary to settle the debt.
Since payment is made by the end of the grace period, Charlie cannot incur personal liability for the limited company’s debt.
Example – bankruptcy application during the grace period
Majid represents a limited company. One week before its final tax payment is due, he realises that the company will not be able to pay. He wants the opportunity to investigate whether the situation can be resolved. He therefore applies to the Swedish Tax Agency for a grace period, which he is granted.
During this two-month grace period, Majid investigates various financing solutions and new sources of income, but after seven weeks, the limited company is still unable to pay the tax it owes. The limited company therefore submits a bankruptcy application.
Since the point of liability for the tax (i.e. the end of the grace period) occurs after the limited company has initiated bankruptcy proceedings, Majid cannot incur personal liability for its tax debt.
Applying for a grace period
The easiest way to apply for a grace period is digitally. If a business has several representatives, each party must submit their own application.
When the Swedish Tax Agency has reached a decision, you will receive a written notification, either in your digital mailbox or by post.
We will grant you a grace period unless there are specific grounds for refusing it
The grace period legislation is intended for representatives of legal entities that are generally well managed financially, but have encountered unexpected payment difficulties. The Swedish Tax Agency generally grants business representatives a grace period unless there are specific grounds for refusing it. This means you do not need to explain why you are applying for a grace period.
Specific grounds for refusing to grant a grace period include the following, for example:
- you have previously been granted a grace period
- the business’s or your reporting is deficient to an extent that cannot regarded as insignificant
- either the business or you have unpaid taxes or charges (other than those included in your application) amounting to at least half of one price base amount. (The base amount is an annually set index figure used for thresholds in Swedish tax and social insurance law)
The grace period runs for two months from the payment due date
The grace period begins on the due date for a tax payment from a business’s tax account (normally the 12th day of the month), and lasts for two months from that date.
In the e-service, you can select a payment due date that is no more than
- six weeks after the date of application
- one month before the date of application
Payment due dates set for January and August are later than the 12th day of the month. Because of this, if you apply during the period 13–19 January or 13–19 August, you can choose a due date that falls more than one month before the date of application.
The dates available depend on the statutory tax payment dates and on when you submit your application. If you apply using the e-service, you will be able to see the valid dates.
Your grace period begins on the payment due date that you specify, even if no tax or charge is due for payment during this period.
Example – grace period start date if you apply in August
If you apply for a grace period on 18 August, you can choose a retroactive start date of either 12 July or 26 July.
Example – grace period start date if you apply in March
If you apply for a grace period on 18 March, you can choose a retroactive start date of either 26 February or 12 March. In order to choose 12 February as your grace period start date, you must submit your application by 12 March at the latest.
The details of grace period cases are subject to confidentiality
Details of grace period cases are subject to confidentiality. This means that the Swedish Tax Agency is not permitted to disclose the following: information regarding the existence of a grace period case; whether we have decided to grant a grace period; or any other details of the case.
The Swedish Tax Agency can cancel a grace period
The Swedish Tax Agency can cancel a grace period that we have granted you if there are exceptional grounds for doing so – for example, if you have acted in bad faith. We will only cancel a grace period in exceptional circumstances, in order to ensure that it is not used in a manner contrary to its purpose and to prevent its deliberate misuse.
If we cancel a grace period, representative liability will be assessed as if the grace period had never been granted.
You can request a review
You can request a review of a grace period decision – or a cancellation decision – that the Swedish Tax Agency has reached. However, you cannot appeal to the Administrative Court against any such decision. The Swedish Tax Agency must receive your review request no later than two months after the date on which you received the decision notice.
Liability for payment of legal persons' unpaid taxes and fees