Sweden
Answer ... Yes, statutory anti-avoidance rules are applicable to corporate taxpayers. There are also anti-avoidance rules based on jurisprudence.
Sweden
Answer ... Sweden imposes anti-avoidance rules primarily for transactions that have been carried out to achieve substantial tax benefits. Certain transactions may therefore be considered invalid if the following tax avoidance criteria are met:
- The transaction has resulted in a substantial tax benefit;
- The taxpayer directly or indirectly participated in the transaction;
- The reason for implementing the transaction was primarily the tax benefit realised; and
- The transaction conflicts with the purpose of the rules that have been surpassed or are directly applicable.
Sweden
Answer ... Controlled foreign companies (CFCs): The Swedish CFC rules states that Swedish companies that control a non-Swedish company can, if the income is considered to be low taxed and certain other conditions are met, be subject to Swedish taxation on the income generated in the non-Swedish company. To be subject to the CFC rules, the Swedish company must have a controlling influence over the foreign company (ie, 25% of the shares or voting rights). Income is regarded as low-taxed if it is not subject to taxation at all, or if it is subject to taxation at a rate below 11.77% for 2020 (55% of the current corporate income tax rate of 21.4%. For 2021, the threshold will be 11.33% (as the corporate income tax rate will be reduced to 20.6%). The net income in the foreign company should be calculated based on Swedish tax rules, with minor exceptions on tax allocation reserves and tax losses carried forward, among other things. Even if the net income is subject to taxation at a rate below 11.77%, there are exceptions from CFC taxation if the foreign entity is tax resident in a geographic area covered by Appendix 39a of the Income Tax Act (‘the white list’), unless any of the exceptions stated in the list applies (‘the exception from the exception’).
Interest deductions: On 1 January 2019 Sweden introduced new rules on interest deductions. The new rules are applicable to both external and internal loan arrangements.
Interest on intra-group loans may be deductible if the beneficial owner of the interest income is tax resident in:
- the European Economic Area (EEA); or
- a state outside the EEA with which Sweden has entered into a double tax treaty which is not limited to certain income, provided that the company is covered by the treaty.
Otherwise, the beneficial owner of the interest income must be taxed at a minimum rate of 10%, where the interest income was its sole income and the debt was not created “exclusively or almost exclusively” to create a substantial tax benefit for the group.
To the extent that a deduction is allowed under the above conditions, the new rules include a general interest limitation rule which applies to all loans (internal as well as external), permitting only a 30% deduction of tax earnings before interest, tax, depreciation and amortisation (EBITDA). However, the EBITDA interest limitation rule will apply only to net interest costs exceeding SEK 5 million at a group level.
See question 1.6 regarding loss restrictions.
The Swedish anti-hybrid rules generally apply to most transactions between associated entities that result in double deductions, or the deduction of allowances without the corresponding income being taxed. The Swedish rules are in accordance with the EU Directives on hybrid mismatches (2016/1164 and 2017/952).
Sweden
Answer ... Corporations and individuals can apply to the Swedish Board of Advance Tax Rulings for an advance ruling on tax issues. The ruling is binding on both the courts and the Swedish Tax Agency if the taxpayer chooses to apply the measures accordingly.
Swedish taxpayers can apply for advance pricing agreements for their transfer pricing arrangements. These can be unilateral, bilateral or multilateral, and are based and aligned with the works of the Organisation for Economic Co-operation and Development (OECD).
Sweden
Answer ... The transfer pricing regime in Sweden conforms with the OECD Guidelines. Sweden hence applies the arm’s-length principle to intra-group transactions. Accepted transfer pricing methods include cost plus, comparable uncontrolled price, profit split, transactional net margin method and resale price method.
If certain provisions are fulfilled, legal entities must prepare transfer pricing documentation, which aims to ensure that the intra-group transactions of multinational enterprises adhere to the arm’s-length principle.
Sweden
Answer ... Yes, the statute of limitations is six years from the end of the income tax year (the tax year corresponds to the financial year).