SwedenSweden

Legal ReferencePlease see Section 14 para 19 of the Swedish Income Tax Act (1999:1229).

There is a reference to the OECD TPG in decisions by the Supreme Court (RÅ 1991 ref. 107 and HFD 2016 ref. 45). Also, in the preparatory work to the transfer pricing documentation legislation a reference is made to the transfer pricing methods described in the OECD TPG.

Legal ReferencePlease see Section 14 para 20 of the Swedish Income Tax Act (1999:1229).

Parties shall be considered related if: A party, directly or indirectly, participate in the management or monitoring of another party’s enterprise, or owns shares in that enterprise, or The same persons, directly or indirectly, participate in the management or monitoring of both enterprises, or own shares in those enterprises.

Legal ReferenceWith respect to decisions by the Swedish Supreme Administrative Court, please see cases RÅ 1991 ref. 107 and HFD 2016 ref. 45.

Sweden considers the TPG implemented by decisions by the Swedish Supreme Administrative Court. Therefore, the methods outlined above, including the use of other methods, are used.

• CUP (not provided)
• Resale Price (not provided)
• Cost Plus (not provided)
• TNMM (not provided)
• Profit Split (not provided)
• Other (not provided)

Sweden does follow the OECD TPG on the criteria for the application of the methods.

• Hierarchy of methods (not selected)
• Most appropriate method (selected)
• Other (if so, please explain) (not selected)

Sweden does follow the OECD TPG. The guidance contained in paragraphs 2.18-2.22 of the OECD TPG may be followed when pricing transactions involving commodities.

Sweden does follow the guidance contained in the OECD TPG regarding comparability analysis.

It is not allowed explicitly, but the interpretation of the TPG indicates that arm’s length range and/or statistical measures can be applied where appropriate.

Sweden does follow the guidance contained in Chapter VI in the OECD TPG for transactions involving intangibles.

Legal ReferenceHTVI Implementation Questionnaire

However, even though no specific legislation has been introduced to adopt the HTVI approach, it may nonetheless, in relevant parts, be considered as guidance for the application of the arm’s length principle in Swedish domestic legislation.

Sweden does follow the guidance contained in the OECD TPG on intra-group services transactions.

Sweden does follow the guidance contained in the OECD TPG on financial transactions.

Legal ReferencePlease see Section 24 para 16-29 and Section 24 a of the Swedish Income Tax Act (1999:1229).

The Swedish Income Tax Act contains targeted rules limiting interest deduction in certain circumstances and general limitation on the deduction of financial expenses consistent with standards in BEPS Action 4.

Legal ReferencePlease see Section 39 para 15–16 Skatteförfarandelagen

• Master file consistent with Annex I to Chapter V of the TPG (selected)
• Local file consistent with Annex II to Chapter V of the TPG (selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (not selected)
• Other (specify): (not selected)

Legal ReferencePlease see Skatteförfarandelagen

The master file and the local file should be prepared by the taxpayer but must only be submitted to the tax authorities upon request. The local file shall be prepared, at the latest, by the date the company must file its income tax return to the tax authorities. The master file shall be prepared, at the latest, by the date when the parent company must file its income tax return. The documentation shall be prepared in Swedish, Norwegian, Danish or English. The country-by-country report should be filed no later than 12 months after the last day of the reporting fiscal year of the MNE group.

There are no specific penalties for not preparing transfer pricing documentation per se. However, should the company’s transfer pricing be subject to an audit by the Swedish Tax Agency, penalties may apply. Should the assessment by the result in additional tax, penalties of 40% of the additional tax imposed generally apply if insufficient/incorrect information has been provided in the company’s tax return

Legal ReferencePlease see Section 39 para 15–16 Skatteförfarandelagen

Transactions that are unimportant do not have to be documented in the local file. Transactions a Swedish company has with a related foreign company is always considered unimportant if the total value of the transactions under the fiscal year concerned is below SEK 5 000 000. This exception does not apply when the transaction concerns intangible property, unless the intangible property concerned is unimportant to the business of the company. Micro, small and medium-sized companies (according to the definition in the Commission recommendation of 6 May 2003 (2003/361/EC) concerning the definition of micro, small and medium-sized enterprises) are not obligated to prepare transfer pricing documentation.

Legal ReferencePlease see Lagen om prissättningsbesked vid internationella transaktioner (2009:1289). The Swedish tax treaties. Sweden’s MAP Profile.

For further information, please see Sweden’s MAP profile.

• Rulings (not selected)
• Enhanced engagement or cooperative compliance programmes (not selected)
• Advance Pricing Agreements (APA) (selected)
• Unilateral APAs (not selected)
• Bilateral APAs (selected)
• Multilateral APAs (selected)
• International Compliance Assurance Programme (ICAP) (not selected)
• Mutual Agreement Procedures (selected)

The simplified and streamlined approach for baseline marketing and distribution activities is under consideration.

• N/A (selected)

• 20% (not selected)
• 30% (not selected)
• Other (please specify) (not selected)
• N/A (selected)

Subject to the Swedish domestic legislation and administrative practices, we will respect the outcome determined under the simplified and streamlined approach to in-scope transactions where such approach is applied by a covered jurisdiction and will take all reasonable steps to relieve potential double taxation that may arise from the application of the simplified and streamlined approach where there is a bilateral tax treaty in effect between Sweden and the relevant jurisdiction.

Sweden allows for downward corresponding adjustments in case this is stipulated in a tax treaty with the other jurisdiction. However, a prerequisite for the downward adjustment is, in general, that the Swedish Tax Agency considers the upward adjustment in the corresponding jurisdiction to be at arm’s length.

Sweden does follow the TPG. Where it is necessary for reaching an arm’s length result, year-end adjustments are allowed and expected. Moreover, if the result of a business indicate that its transfer prices have not been at arm’s length, and this is confirmed in an audit, then the Swedish Tax Agency may adjust the price.

In general, the Swedish tax treaties follow the OECD MTC. Sweden only has a few tax treaties based on the new version of Article 7 (OECD MTC 2010 and later). In these cases, Sweden follows the principles of the AOA. Where the old tax treaties do not contain the new version of Article 7 (OECD MTC 2010 and later), Sweden still follows the AOA for attribution of profits to PEs. In these cases, Sweden seeks relevant guidance in the Report on the Attribution of Profits to Permanent Establishments from the 17 June 2008. It can also be noted that Sweden has made an observation on the Commentary to Article 7 of the OECD MTC with respect to the different approaches for attributing “free” capital.

• Article 7 as it read before 2010. (selected)
• Article 7 as it reads after 2010. (selected)
• Other (please provide additional details) (not selected)