Sweden vs “CA AB”: CASE SUMMARY
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Sweden vs “CA AB”: CASE SUMMARY
Case Information
- Court: The Supreme Administrative Court (Sweden)
- Case No: 1348-24 1349-24
- Applicant: [Company Name Redacted] AB
- Defendant: Swedish Tax Agency
- Judgment Date: 25 November 2024
- Download the FULL JUDGMENT
Judgment Summary
The case at hand concerns a dispute under the Nordic Tax Convention, a treaty aimed at avoiding double taxation among its signatories. The applicant, [Company Name Redacted] AB, received interest income from a related Norwegian entity in 2011 and 2012, which was taxed in Sweden. Concurrently, the Norwegian tax authority disallowed the corresponding deduction for interest expenses, citing non-compliance with the arm’s length principle. This discrepancy led to double taxation.
The applicant sought a revision of Sweden’s taxation decision, invoking Article 9(2) of the Nordic Tax Convention, which mandates corresponding adjustments to eliminate double taxation. The Swedish Tax Agency rejected this request, arguing that the Norwegian adjustment did not adhere to the arm’s length principle.
The Administrative Court initially ruled in favour of the applicant, exempting the interest income from taxation. However, the Administrative Court of Appeal reversed the decision, asserting that Article 9(2) does not empower courts to enforce corresponding adjustments, as these require consultations between competent authorities.
The Supreme Administrative Court disagreed with the Court of Appeal’s interpretation. It held that administrative courts are competent to apply treaty provisions, including corresponding adjustments under Article 9(2). The court emphasised that its role was to determine whether the Norwegian adjustment complied with the arm’s length principle and, if so, whether Sweden must exempt the corresponding income from taxation.
Consequently, the Supreme Administrative Court set aside the Court of Appeal’s ruling and remanded the case for further consideration. The applicant was awarded SEK 119,990 in legal costs. This landmark decision underscores the judiciary’s role in ensuring the fair application of international tax treaties and preventing double taxation.
