What is a Fiscal Year?

A fiscal year is the period during which a company is required to prepare its financial statements or annual report. Normally, a fiscal year spans a twelve-month period but can be shortened or extended under certain conditions. A shortened fiscal year can occur when the company is founded or closed, as well as when the company chooses to change its fiscal year. An extended fiscal year is possible when the company is founded or upon changing the fiscal year, but the extension can be a maximum of 18 months.

In most cases, companies have the calendar year as their fiscal year, i.e. January 1 – December 31. Companies that do not use the calendar year as their fiscal year have split fiscal years.

What is a Split Fiscal Year?

A split fiscal year refers to a period that does not coincide with the traditional calendar year, such as October 1 – September 30. This is common for certain companies and organizations where seasonal factors affect their operations, such as ski resorts or agriculture.

Not all companies are allowed to have a split fiscal year. A split fiscal year is only possible for limited companies, associations, and partnerships with legal owners. If a company wants to change its fiscal year from the calendar year to a split fiscal year, it requires approval from the Swedish Tax Agency.

Like regular fiscal years, a split fiscal year spans a twelve-month period.

Shortened or Extended Fiscal Year?

When starting your business and applying for F-tax, you may in some cases choose a shortened or extended fiscal year. What you choose does not significantly affect your daily operations; however, there may be less administrative work related to your accounting if you choose an extended fiscal year. By choosing an extended fiscal year, you only need to prepare one set of financial statements and in some cases, one annual report instead of two within the same time period.