Sweden vs “SE AB”, April 2026, Administrative Court of Appeal in Jönköping, Case Nos 2794-23 and 2795-23
Table of Contents
Case Information
Court: Administrative Court of Appeal in Jönköping (Kammarrätten i Jönköping)
Case number: 2794-23 and 2795-23
Citation: Kammarrätten i Jönköping, dom 2026-04-30, mål nr 2794-23 och 2795-23
Applicant: SE AB (name redacted in judgment)
Respondent: Skatteverket (Swedish Tax Agency)
Jurisdiction: Sweden
Judgment date: 2026-04-30
Judgment Summary
The Administrative Court of Appeal in Jönköping partially allowed the appeal of a Swedish company (name redacted) against Skatteverket's transfer pricing adjustments and associated tax surcharges for tax years 2017 and 2018. The lower court, Förvaltningsrätten i Linköping, had issued its judgment on 22 June 2023 in case numbers 3671-21 and 3674-21.
The Court of Appeal found that Skatteverket had not met its burden of proof for limiting the arm's length range to the interquartile values of the European comparables study, because that study contained data from only ten companies, which did not satisfy the condition in paragraph 3.57 of the OECD Transfer Pricing Guidelines requiring a substantial amount of data before statistical tools such as the interquartile range may be applied.
The court rejected the company's argument that a multi-year period preceding each tax year should be taken into account for the comparison. It upheld the finding that the company had submitted incorrect information warranting back-taxation and tax surcharges, but granted a 50 per cent reduction in the surcharges on account of unreasonably long processing time, following HFD 2024 ref. 40. The court awarded the company costs totalling an additional 200,000 kr beyond the 50,000 kr already granted by the lower court.
Background
The company operated within a corporate group and sold goods through distributors in various parts of the world. Within the framework of its transfer pricing documentation, the company conducted comparables studies for the different regions where its distributors operated.
For Europe, the comparables study identified ten companies considered comparable to the distributors. Skatteverket used that analysis as the basis for its reassessment decisions but took the position that only the interquartile range, rather than the full range from minimum to maximum, represented arm's length pricing. Skatteverket argued that there were comparability deficiencies in the study, pointing in particular to differences in geographic markets (noting that the relevant group companies operated in the Turkish and Russian markets, while most comparables in the study were Italian) and differences in turnover.
Skatteverket issued decisions imposing additional income tax and tax surcharges for tax years 2017 and 2018. The company appealed to Förvaltningsrätten i Linköping, which issued its judgment on 22 June 2023. Both parties then appealed to Kammarrätten i Jönköping.
Core Dispute
The central dispute concerned whether Skatteverket was entitled to restrict the arm's length range to the interquartile values of the European comparables study, which was based on data from ten companies, rather than using the full range up to the maximum value.
A secondary dispute concerned whether a four-year period preceding each tax year should be taken into account in the arm's length comparison, on the basis that results in the tax years under review were closely connected to results in those earlier years due to intra-group goods purchases and a consistent pricing strategy.
A further issue was whether the tax surcharges should be reduced or waived entirely, on grounds including that the company had prepared and submitted transfer pricing documentation, that the company faced a difficult legal question, and that the total processing time had been unreasonably long.
Court Findings
On the interquartile range, the court held that paragraph 3.57 of the OECD Transfer Pricing Guidelines requires a substantial amount of data before interquartile values may be used as a statistical tool. A study based on only ten companies does not satisfy that requirement. The court further held that Skatteverket's comparability objections, including the observation that market conditions in Italy may differ from those in Turkey and Russia, applied equally to all values in the range and did not justify focusing exclusively on the values above the upper quartile. Applying the principle established in HFD 2019 not. 20, the court held that the burden rested on Skatteverket to demonstrate that the net margins of comparables falling outside the interquartile range were unsuitable for comparison, and that burden had not been discharged. The court therefore accepted the maximum value in the European study as representing arm's length pricing, and adopted the company's calculation of the resulting amounts.
On the multi-year period argument, the court acknowledged that case law (RÅ 1991 ref. 107) does not exclude the possibility that over- and under-charges over a longer period may in certain circumstances be offset against each other. However, the court found that no evidence had been adduced to show that the company's pricing system produced such long-term effects for the distributors or that there was any similar connection between results across different years. The argument was therefore rejected.
On back-taxation and tax surcharges, the court agreed with Förvaltningsrätten that the company had submitted incorrect information providing grounds for back-taxation and tax surcharges.
On the question of relief from tax surcharges, the court disagreed with Förvaltningsrätten's finding that relief was warranted because the company had prepared and submitted transfer pricing documentation. The court found that the documentation had not been used by the company when actually setting its intra-group prices, with the result that deviations arose from the arm's length prices set out in the documentation. Because the errors arose in that manner, they could not be regarded as resulting from the company having faced a difficult tax law question. The errors were not excusable on that basis.
However, the court held that relief was warranted on account of unreasonably long processing time. The total processing time since Skatteverket first considered imposing tax surcharges exceeded five years, during which the cases had been inactive in Förvaltningsrätten and in Kammarrätten for a combined period of more than three years. Following HFD 2024 ref. 40, the court reduced the tax surcharges to one half.
The court noted that the level of relief granted by Förvaltningsrätten resulted in tax surcharges being levied at a reasonable level, and made no further adjustment beyond reducing the surcharge base to correspond with the reduction in taxable income.
On costs, the court held that the claimed amounts should be reduced because the company had not succeeded on all points, the amount claimed was not fully reasonable, and the work invested was high relative to the scope of the cases, with some repetition in the written submissions.
Outcome
The Court of Appeal partially allowed the appeal. The company's taxable business income (överskott av näringsverksamhet) was reduced by 12,589,855 kr for tax year 2017 and by 17,788,964 kr for tax year 2018. The base for the tax surcharges was reduced by the same amounts. The tax surcharges were maintained at the level resulting from the relief already granted by Förvaltningsrätten, with no additional relief beyond the reduction of the surcharge base. The court awarded the company an additional 200,000 kr in costs for proceedings in both Förvaltningsrätten and Kammarrätten, on top of the 50,000 kr already granted by Förvaltningsrätten.
TP Method Highlighted
The transactional net margin method (TNMM) was applied, using operating margin (rörelsemarginal) as the profit level indicator. The comparables study for Europe comprised ten companies. The dispute centred on whether the full range from minimum to maximum, or only the interquartile range, represented arm's length pricing. The court held that the full range, including the maximum value, was the appropriate arm's length range.
Major Issues / Areas of Contention
- Whether Skatteverket was entitled to restrict the arm's length range to the interquartile values where the European comparables study contained data from only ten companies, given the requirement in paragraph 3.57 of the OECD Transfer Pricing Guidelines for a substantial amount of data.
- Whether Skatteverket discharged its burden of proof, under the principle in HFD 2019 not. 20, to demonstrate that comparables falling outside the interquartile range were unsuitable for comparison.
- Whether the company's comparability objections concerning geographic market differences (Italy versus Turkey and Russia) and turnover differences affected only the outer values of the range or the entire range equally.
- Whether a four-year period preceding each tax year should be taken into account in the arm's length comparison, on the basis that results were closely connected across years due to intra-group goods purchases and a consistent pricing strategy (compensation argument).
- Whether the conditions established in RÅ 1991 ref. 107 for offsetting over- and under-charges across years were met on the facts of this case.
- Whether the company submitted incorrect information providing grounds for back-taxation and tax surcharges.
- Whether relief from tax surcharges was warranted because the company had prepared and submitted transfer pricing documentation that Skatteverket used as the basis for its decision.
- Whether relief from tax surcharges was warranted on the ground of unreasonably long processing time, and the extent of any such relief under HFD 2024 ref. 40.
- The appropriate level of costs to be awarded to the company, having regard to partial success and the reasonableness of the work claimed.