The Government has proposed an action package to support companies following the outbreak of covid-19. However, there are also other measures that can be taken in order to prevent liquidity problems. If your company expects a lower profit than projected, it may be a good opportunity to submit a new preliminary income tax return.
The crisis package proposed by the Government is aimed at mitigating the financial effects of the ongoing spread of covid-19 by, among other measures, providing a deferral for payments of employers’ social security contributions, preliminary tax on salaries and VAT. In addition to the measures introduced by the Government, there are measures that the companies themselves can take in order to strengthen liquidity.
Do not pay more preliminary tax than necessary
A recurring effect on companies’ liquidity is the monthly payment of preliminary tax on expected income. Companies can rapidly adjust to changes in income projections for current years by submitting a new preliminary income tax return.
The Tax Agency (Sw. “Skatteverket”) can adjust a company’s preliminary income tax payments during the entire tax year and the following six months. The adjustment can be made on both the Tax Agency’s and the company’s initiative. Should the company wish to make an adjustment to the preliminary income tax payments, it can do so by submitting a new preliminary income tax return for the current year.
Should your income projection change during the year, you have the possibility to submit a new preliminary income tax return and, depending on the Tax Agency’s processing time, quickly receive a more accurate monthly tax payment. This way, companies can avoid excess preliminary tax payments during the remainder of the year, if the financial outcome is expected to be significantly lower than initially projected. The new preliminary tax will apply immediately upon Skatteverket making a new decision. It is important that a new preliminary tax return is submitted in order to avoid paying too little in preliminary tax, should the conditions change again later during the year.
The objective is for the preliminary tax to, as far as possible, correspond to the final tax amount. In situations with a receding projection, there is no reason to retain an excessive monthly preliminary tax payment, despite it being difficult to foresee all events during the coming year.
PwC is closely monitoring the development in regard to the spread of covid-19. Read more in previous posts on Tax matters:
- 300 billion in the government's covid-19 action package
- Possible deferral of payment regarding taxes and fees
For more information and tips...
- ...visit the Swedish Tax Authority's website.
Jessica Holtz Forsberg är auktoriserad skatterådgivare, specialiserad inom internationell företagsbeskattning och internprissättning, och ansvarig för vår skatteverksamhet i Stockholm.
Jessica Holtz Forsberg is an authorized tax consultant at PwC's Stockholm office. She specializes in international corporate tax and transfer pricing.
+46 10-212 6025