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Interest allocation
What is interest allocation?
Interest allocation is a way to make the tax rules more equal between sole proprietorships and limited companies. A positive interest allocation can result in lower taxes by taxing part of the profit as capital income (at a 30% tax rate) instead of business activity.
The basis for calculating the interest allocation, the so-called capital basis, is roughly equivalent to the equity capital of the business at the end of the previous accounting year. You can find this amount in field B10 of last year's NE appendix. The allocation of interest is done in the tax return, not in the accounting.
Positive interest allocation
You can make a positive interest allocation if your business has a positive capital basis, after certain adjustments, of more than SEK 50,000 at the end of the last financial year. The interest on the capital base can then be transferred to capital income and will be taxed at 30 percent. The transferred amount is not included in the basis for calculating personal contributions, special payroll tax and general pension contributions. It is also not pensionable.
The interest rate is based on the government borrowing rate plus six percentage points.
Negative interest allocation
Negative interest allocation is compulsory, and must be specified if the company has a net debt of more than SEK 50 000 (after certain adjustments).
The interest rate is based on the government borrowing rate plus one percentage point.
Read more about interest allocation on skatteverket's website.
The amounts constituting the capital base for interest distribution are filled in under Tax calculation - - Interest allocation.
- In the section Basis at the beginning of the year, the retrieved amounts constituting the capital base for interest distribution are shown.
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.. 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.
- Under Tax calculation - Sole proprietorship - Profit/loss planning - Expansion fund – capital basis, you can see how the base has been calculated. The program takes the monetary limits for positive and negative interest allocation into account, and deducts or adds the amount to the taxable profit/loss.
Mark this section as done by clicking on the status icon in the Done column in the Calculations view.
Field explanations
Basis at the beginning of the year
Assets minus liablities (+/-)
In this field, the equity for the previous year (after certain adjustments) is specified. Normally, this amount is found in field B10 on the NE tax form for the previous year.
Assets and liabilities (+/-) according to tax appendix NEA
Here, you add your share of the equity for the previous year. Normally, this amount is found in field B10 on the NEA tax form for the previous year.
Idle deficit from previous year
Here, the deficit for the previous year is specified (field R48 on previous year’s NE tax form). The amount is retrieved from the Idle deficit from previous year (R24) field in the Other tax adjustments section.
Total tax allocation reserves
Here, the summarized amount from the Tax allocation reserve section is found.
Saved allocation amount
In this field, the saved allocation amount from the previous year (field 10 under Övriga uppgifter on previous year’s NE tax form) is specified.
Expansion fund
Here, the expansion fund at the beginning of the 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 funds have 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 percent 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.
