Visma Skatt & Bokslut Pro
Expansion fund
What is an expansion fund?
Sole proprietors are permitted to allocate earnings to an expansion fund. This is done for profit equalization purposes, and makes it possible to postpone the definitive tax on the net profit.
Deductions for expansion fund are done in the tax return and do not require any adjustments in the bookkeeping.
Normally, around 50 percent of a sole proprietor’s profit goes to income tax and social contributions. A transfer to the expansion fund instead results in a temporary tax, which is currently 20.6% of the amount transferred. As long as 79,4 per cent of the allocated earnings remain in the business, no further taxes will be added. This method yields the same results as when taxed earnings are created in a limited company.
The basis for expansion funds is entered in under Tax calculation - - Expansion fund.
- In the section Basis at the end of the year, enter the amounts that constitute the capital base for the expansion fund.
The capital base consists of equity capital at the end of the tax year, plus deficits during the tax year that have not been offset against other income, minus temporary capital injections during the tax year. The amounts are filled in automatically but can be changed by hovering over the fields and selecting Override amount from the menu that appears. - If there are previous transitional, separate items or non-durable capital contributions, fill them in under Transitional item and non-durable capital contributions.
- If you have properties and/or forest accounts, enter the value of these under Real property, forest account, etc..
- Under Tax calculation - Sole proprietorship - Profit/loss planning - Expansion fund – capital basis, you can see how the base has been calculated.
- Any deductions for the expansion fund are shown under Profit/loss planning - Own adjustment - Expansion fund and will be deducted from the taxable profit.
Mark the section as done by clicking on the status icon in the Done column in the Calculations view.
Field explanations
Basis at the end of the year
Assets minus liabilities (+/-)
In this field, the equity at year-end (for the current year) is specified. This amount is generated by the system, but you can override it by clicking on the field’s menu icon and changing the prefilled value.
Idle deficit at the end of the year
Here, the deficit at year-end (for the current year) is specified.
Transitional item and non-durable capital contributions
Previous transitional item
If there was a negative capital basis for interest allocation at the time of the introduction, a transitional item corresponding to the negative capital basis was established to achieve a zero-level.
Separate item
You may have a separate item if you have acquired a business property in 1996 or later by inheritance, gift, or other similar means or similar and, at the same time, took over a loan or left a so called payment bond. The item may only be included to the extent that amount that the capital base is not negative and as long as the property remains in the business. You can also enter the original amount to keep track of it for the future.
Non-durable capital contributions
Reduce the capital basis with own deposits to the business.
Real property, forest account
Value of property
Recorded value
In this field, the recorded value of the property, i.e. its acquisition value minus amortization according to plan, is specified.
Tax value
In this field, the tax value of the property, i.e. its acquisition value minus amortization according to plan and amortization in addition to plan, is specified. If you own real estates, you need to calculate the taxable value of each property when calculating the interest distribution/expansion fund. The easiest way to do this is via the calculation appendix Tax value of real estate.
Forest account and account of intellectual property rightholder
Recorded value
If money has been allocated to a forest account or an intellectual property rightholder’s account, the recorded value is specified here.
Half of the funds on the account
In this field, 50 per cent of the funds on the forest account or the intellectual property rightholder’s account, that should be included when calculating the basis for interest allocation or expansion fund, are specified.
Other adjustments
Negative adjustment
If the tax allocation reserves have been recorded as untaxed reserves, this must be specified here in order to prevent the amount to be affected twice.
Positive adjustment
A positive adjustment shall be made if an asset’s tax base exceeds its recorded value, or if the tax allocation reserves have been recorded and they have decreased the company’s equity.
