Transfer Pricing

Preliminary Bill on Advance Pricing Agreements

On June 5, 2009, the preliminary bill (“Lagrådsremiss”) on Advance Pricing Agreements (“APAs”) was published. By concluding APAs, companies and the Swedish Tax Agency (“STA”) can regulate companies’ pricing for international transactions in advance.

Sweden is relatively late with the introduction of formal APAs. The information that is required for an APA application is indeed more thorough than what is needed for the documentation requirements. However, the type of information that is required is more or less identical. One of the benefits of APAs is the reduced risk of tax adjustments and the following litigations to avoid double taxation. In addition, the risks of future tax audits and their outcome are considerably limited.

In previous years, there has been an increase of tax audits in the transfer pricing area. Hence, companies with complicated or high value transactions are suitable for APAs to safeguard the acceptance of the pricing of their intra-group transactions. The STA will arrange pre-filing meetings with companies that are interested in applying for an APA to discuss the prerequisites and suitability of an application. The pre-filing meetings will not be held until the law has come into force. Since the law is proposed to come into force January 1, 2010, companies should analyze the prerequisites and prepare for an application as soon as possible.

The preliminary bill is in line with the previous proposal by the STA and the memorandum of the Ministry of Finance. The main difference is that companies will be charged a fee for their application. The bill will be subject to voting in the parliament during the fall and the law will come into force January 1, 2010.

Nils von Koch, 08-723 96 16 nils.vonkoch@kpmg.se
Per Degerman, 08-723 96 17 per.degerman@kpmg.se

[2009-06-05]

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