What is Periodiseringsfond (Tax Equalisation Reserve)?
Periodiseringsfond is a Swedish tax equalisation reserve that allows companies and sole traders to defer up to 25% of their taxable income into a reserve, reducing the current year's tax. The reserve must be reversed (added back to income) within 6 years. An annual interest charge of 1.5% multiplied by the government lending rate applies.
Current Rate (Inkomstår 2025)
Deferral up to 25% of taxable income; reversal within 6 years; interest charge applies
Example
An AB earns SEK 800,000 taxable profit in 2025. It allocates 25% = SEK 200,000 to a periodiseringsfond. Taxable income for 2025 = SEK 600,000. The SEK 200,000 is added back as income in a future year within 6 years (by 2031).
How Periodiseringsfond (Tax Equalisation Reserve) works in Sweden
The periodiseringsfond is one of the most widely used tax planning tools for Swedish businesses. It provides genuine cash-flow benefits and a mechanism for smoothing taxable income between good and lean years.
**The mechanics**
Each year, a company can allocate up to 25% of taxable income (after other deductions) to one or more periodiseringsfonder. Multiple funds can exist simultaneously — one per year. The allocation directly reduces taxable income for that year and therefore reduces bolagsskatt due.
The fund must be reversed no later than the sixth income year after the year of allocation. If an allocation was made for inkomstår 2020, it must be reversed by inkomstår 2026 at the latest. Reversals add to taxable income in the reversal year.
**The interest charge (schablonintäkt)**
Allocations to periodiseringsfonder are not entirely free. Each year, a schablonintäkt (deemed interest income) is added to taxable income, calculated as: sum of all outstanding fund balances at the start of the tax year × 1.5% × the government lending rate (statslåneräntan). In periods of low interest rates, this charge is minimal. In higher rate environments, it can be more significant.
**Why use a periodiseringsfond?**
Profit-smoothing: if 2025 is a strong year and 2026 is expected to be weaker, moving income from 2025 to 2026 can reduce tax in the high year without a permanent tax saving — but if the future year has losses to offset, the benefit can be permanent.
Cash-flow benefit: even without a permanent saving, deferring bolagsskatt payment by up to 6 years is a genuine financial benefit.
Matching against future investments: many companies plan to reverse a periodiseringsfond in a year when they make significant capital expenditure, effectively reducing the net tax impact of the investment.
**AB vs enskild firma differences**
For AB companies, the periodiseringsfond sits on the company's balance sheet. For sole traders (enskild firma), the fund is a personal tax reserve. The mechanics are similar but the tax rates differ (corporate 20.6% vs personal up to 52%), making the fund particularly valuable for sole traders as a way to smooth high-income years.
Related terms
Bolagsskatt is Swedish corporate income tax, charged at a flat rate of 20.6% on the taxable profits of Swedish limited companies (aktiebolag). There is no regional variation. The rate was reduced from 21.4% in 2021.
An Aktiebolag (AB) is a Swedish limited company, the most common business structure for entrepreneurs and SMEs. Minimum share capital is SEK 25,000. The AB is registered with Bolagsverket and is a separate legal entity with limited shareholder liability. At least one director must be resident in the EEA.
Expansionsfond is a Swedish tax deferral mechanism available to sole traders (enskild firma) and partnerships, allowing them to defer tax on reinvested profits at the corporate rate of 20.6% rather than the personal income tax rate of up to 52%. The expansion fund becomes taxable when withdrawn, at which point the remaining 31.4% personal tax differential applies.
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