• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 11/8/2013

Sweden - Interest rates on intercompany loans 

November 8: Sweden’s Supreme Administrative Court denied the Swedish tax agency’s request for leave to appeal an issue concerning interest deductions in five tax cases. At issue was whether market rates of interest on intercompany loans were in accordance with the arm’s length principal.


Since 2010, the Swedish tax agency relied on the Diligentia judgment to reconsider the tax assessments for a large number of companies having substantial loans, the interest of which was paid to non-Swedish lenders. The cases before the tax agency generally concerned the rate of interest on loan transactions between related parties.

The taxpayer companies asserted that a prerequisite for the arm’s length principle is that controlled transactions must be compared to similar uncontrolled transactions and that, with respect to this position, the Swedish tax agency had not satisfied its burden of proof. While the companies were unsuccessful in the judicial proceedings before the Administrative Court, they were successful when they appealed to the Administrative Court of Appeal.

The Swedish tax agency then applied for leave to appeal to the Supreme Administrative Court in five cases. The Supreme Administrative Court recently rejected these requests for leave to appeal.

KPMG observation

Tax professionals in Sweden point out that, with this recent action, the Swedish tax agency may now possibly take a more reasonable position in determining market interest rates on intercompany loans as being in compliance with the arm’s length principle, given the high court’s refusal to allow an appeal of the decisions of Supreme Administrative Court.

Read a November 2013 report prepared by the KPMG member firm in Sweden: Supreme Administrative Court rejects application for leave to appeal for interest cases

Contact a tax professional with KPMG's Global Transfer Pricing Services.

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