Tax Treaty Case Law around the Globe 2012
1. Aufl. 2013
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Sweden: Non-Deductibility of Interest Payments
30.1. Introduction
Swedish tax law primarily provides for a group contribution system to offset profits and losses between related companies. A group contribution is deductible to the payer and taxable to the recipient even though it is not an ordinary expense. Under chapter 35 of the Income Tax Act (ITA), the parent company must be a Swedish company or a company resident within the European Economic Area (EEA). Furthermore, the recipient of the group contribution must be either a Swedish company, or a resident within the EEA having a permanent establishment in Sweden to which the group contribution can be taxed.
These provisions by and large safeguard that EEA companies are not discriminated against. However, having a non-EEA company in the group may lead to the disqualification of a group contribution. In such cases, recourse must be made to article 24 of the applicable tax treaty. In RÅ 2011 not. 99, article 24 of the Sweden-United States tax treaty was at issue.
The Supreme Administrative Court considered an appealed advance ruling from the Revenue Law Commission. The structure was as follows: A US company, USCo, had a permanent establ...