Global

Details

  • 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.

Summary

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.




©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

 

Share this

Share this

Subscribe

Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)


Already a Subscriber? Login


Not a member? Subscribe now