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The pain of paying the high Swedish taxes as Local authorities accused for attempts to avoid taxes

Monday, 26 March 2012
It's not just private equity firms that are trying to carry out tax planning to avoid the high Swedish taxes, No! Municipal and counties are also working hard to avoid paying taxes through various tax planning mechanisms. In a review carried out by the Swedish Tax Agency some 25 municipal corporations had been rejected their interest deductions.

This came after the Swedish tax authority looked into a group of companies owned and working for various local authorities  and determined that they have been trying to evade taxes  - amount could reach Skr600 million.

According to radio Sweden, an audit carried out by the Swedish Tax Board show that various companies in this category have been trying to evade the payment of taxes. The municipal authorities concerned have rejected the accusation according to radio Sweden.

Among the municipal-owned company audited by the Swedish Tax authorities, to seek how they make use of interest deductions, it was discovered that some 25 companies over the last two tax years used the so-called interest-tops.

In these cases, the Tax authority consider that these internal interest turbines are used to substantially bring down the tax payments and therefore this exception does not apply, according to a tax accountant,  Borje Noring speaking to radio Sweden.

The interest turbines are when companies take internal loans with interest rates so that their profits will subsequently disappear. A not uncommon occurrence in the private business corporations, but a legislative change in 2009 opened the door for the public sector to indulge in and this is why the Tax authority wanted to examine it.

“External loans are the ones deductible and the legislature has said that they are. Then you could not refuse to certify the deductions, which one is entitled to,” says Swedish municipalities and county lawyer Lars Bjornson to radio Sweden.
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