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The personal responsibility of representatives for tax liabilities can be extensive

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The personal responsibility of representatives for tax liabilities can be extensiveThere are special rules implying that representatives of a legal entity can be required to pay the entity’s tax liabilities. In practice, a given representative can be liable for payment of taxes in spite of them having no knowledge of the situation or circumstances, and in spite of the fact that they own no shares in the company in question.

Responsibilities of representatives

A representative for a legal entity (for example, a company or non-profit association) is, together with the legal entity, liable to pay tax fallen due for payment if the representative intentionally, or due to gross negligence, has failed to pay the taxes or fees.

The terms ”intentionally” and ”gross negligence” have, during a long period of time, been interpreted in a very strict manner. An example of when a representative is seen to have acted intentionally is when he or she has not paid tax due in spite of the fact that there were funds in the company on the due date or shortly prior to the due date. An example of when a representative is seen to have undertaken an act that was grossly negligent is when he or she continues to operate a company in spite of the fact that that they understand that continued operations imply an obvious risk of the company not being able to pay taxes when they fall due. In such a situation, there is a requirement that active measures are undertaken prior to the due date with the aim of settling the company’s debts. Examples of such active measures are the application for bankruptcy proceedings, application for reconstruction, or suspension of payments with the aim of initiating composition proceedings.

It is important to point out that this obligation can come into effect even if a corporate representative has complied with the stipulations of the Swedish Companies Act and has prepared a balance sheet for liquidation purposes within the prescribed time period.

Examples taken from legal practice

In a decision from the Supreme Administrative Court, a member of a Board of Directors, who did not own shares in the company and who did not know that false invoices had been included in the bookkeeping, was seen to be responsible for the company’s tax liabilities.

Examples from the Administrative Court of Appeal’s practice were the responsibility of representatives has been assessed include:

  • An individual who did not own shares and neither was a Board member in the company in question, but who took care of all of the office work, was seen to be an actual representative of the company.
  • An individual who sold a company, but remained as a Board Member after the sale, was deemed to incur liability for payment of the company’s tax debts also for the period after the sale of the company.
  • A Board Member who was Chairman in a non-profit association was deemed to be liable to pay the association’s tax debts in spite of the fact that there was no ownership interest and compensation had not been paid for the assignment.


It is important to be aware of the obligations one incurs as a representative (such as a Board Member or as some form of actual representative) and one should ensure that you have access to the information you need to secure a correct and true view of how the operations are undertaken (for example in order to identify improprieties), as well as to how the accounting is handled. Important questions to pose are, for example: Am I considered to comprise a representative of the legal entity? What do I have as responsibilities and obligations? How can I ensure that I am kept informed?

If you have questions regarding this important area, you are, of course, most welcome to contact us.

Do you have any questions on entrepreneur and SME Taxes?

Mari-Helen Näslund

Mari-Helen Näslund

Mari-Helen Näslund är skatterådgivare på PwC:s kontor i Sundsvall. Mari-Helen arbetar i huvudsak med inkomstskatt och ofta med rådgivning gentemot ägarledda företag.
010-212 90 50
Mari-Helen Näslund works at PwC's office in Sundsvall. Mari-Helen focus on income tax and often with advice in relation to owner-managed businesses.
+46 10-212 90 50

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