Payment liability for legal entities’ unpaid taxes and charges
If you’re a legal entity’s representative, you can be held personally liable for almost all unpaid taxes and charges recorded on the legal entity’s tax account. A legal entity could be a limited company, an economic association, a non-profit association or a foundation, for example.
A representative’s personal liability for deferred tax payments
Some business owners who applied for tax payment respite due to the COVID-19 pandemic are worried about becoming personally liable for the deferred tax.
The Swedish Tax Agency has published a position statement according to which we will not seek to hold a representative personally liable for unpaid taxes and charges for which payment respite has been granted under Swedish legislation on deferred payment of taxes in certain cases. This applies if a business has not clearly exploited the rules and taken advantage of the respite in a manner contrary to the purpose of the legislation.
The term “representative” primarily refers to a business’s appointed representative. You are a limited company’s representative if you’re a board member. You may also be considered a representative without being formally appointed if, in practice, you have had a controlling influence over the legal entity.
As a representative, you can be held personally liable for payment on the grounds that the legal entity:
- has not paid taxes or charges in accordance with the provisions of the Tax Payment Act or the Tax Procedures Act
- has not deducted preliminary tax from employees’ compensation
- has provided incorrect information in a VAT return, resulting in too much VAT being refunded to the legal entity
To be held personally liable for non-payment, a representative must have acted intentionally or with gross negligence. Failure to make a payment is not considered intentional or grossly negligent if, by the due date at the latest, you have taken measures to settle the legal entity’s tax debts. The required measures are: filing for bankruptcy; applying for business reorganisation; or suspending payments and subsequently applying for a creditor composition arrangement or filing for bankruptcy.
In some cases, a decision to grant a payment respite may affect a representative’s personal liability. Further information is available in our legal guidance section.
Obstacles to representatives’ personal liability (Legal guidance, in Swedish) External link.
The deadline for taking the required measures to settle the legal entity’s debts will be extended if you apply for, and are granted, a grace period (“rådrum”). Further information about what a grace period is, the requirements that must be fulfilled and how to apply is available here:
Grace period: your scope for action as a business representative External link.
There may also be circumstances in which you are not held personally liable for the legal entity’s unpaid taxes and charges. These circumstances are known as grounds for release from liability. Further information about what may be regarded as grounds for release from liability is available here:
Release from payment liability (Legal guidance, in Swedish) External link.
The Swedish Tax Agency does not decide on personal liability for payment. It applies to a court for personal liability to be imposed. The court can grant you a full or partial release from payment liability in specific circumstances (please refer to the information above regarding grounds for exemption). Before the Swedish Tax Agency applies to the court, you will normally have the opportunity to explain why you should not be held personally liable, or why your liability should at least be limited. It is very important to contact us and provide your input at this stage.
Legal provisions: Chapter 12, Sections 6, 6a and 6b of the Tax Payment Act (1997:483); and Chapter 59, Sections 12 and 15 of the Tax Procedures Act (2011:1244).
If you need further information, please refer to the legal guidance section on the Swedish Tax Agency’s website, skatteverket.se, or contact us.
Joint and several liability for partnership debts
If you’re a partner involved in a general partnership, or a general partner involved in a limited partnership, you’re liable for the partnership’s debts. This is known as joint and several liability, as outlined in Chapter 2, Section 20 of the Swedish legislation (1980:1102) on simple partnerships and general partnerships.
This means that if the partnership does not pay its taxes and charges, the Swedish Tax Agency can hold you liable for payment. You must then pay all the outstanding taxes and charges that were due for payment by the partnership while you were a partner, as well as any taxes and charges that remained unpaid by the partnership when you became a partner. In cases concerning joint and several liability for a general partnership’s debts, the Swedish Tax Agency can reach a decision on liability.