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Consultants in the Swedish Automotive sector accused of receiving their pay in the black market. Swedish Tax office request high tax payback

Saturday, 07 January 2012
Some of the salary of the consultant in the Swedish automotive sector are said to be okay and normal with the tax system but that some, a big chuck, rests in the black economy which is later ferried to tax havens such as the English Channel Island.

The Swedish tax authority has started a tax evasion interrogation in which some 134 Swedish and foreign consultants in the automotive industry in western Sweden have received tax demands of Skr65 million, according to the Swedish daily, Göteborg Posten (GP).

In recent years, the tax authority carried out an investigation of the tax structure in which it appears that payments for both Swedish and foreign consultants, primarily in the automotive industry in western Sweden, was divided into a normal and black economy model, called a split payroll.


Between 30 and 70 percent of the fees has gone into a type of tax mixture or a tax haven according to the Tax authority’s review, reports GP

So far it is concluded that some 134 consultants have received requests for additional tax reaching the amount Skr65 million to be paid to the Swedish tax authority.

GP adds that a 49-year-old consultant who worked at Volvo Cars for many years recently received notice that the tax he would pay to the Swedish tax man would be in the region of Skr1.2 million in additional tax.

The techniques in which the tax was split as reported above in explained is that the whole scenarios starts with a British brokerage firm, Alistair Millar Design Engineering (AM Design), which played a key role in planning and executing the approach. In a complicated but intricate chain, AM Design conveyed the consultant's services to MSX International Sweden which then conveyed the consultant to Volvo Car Corporation.

Consultant's compensation for services at Volvo Cars has been paid by AM Design: about half of it was acceptable approach agreed by the Swedish tax system into their accounts in Sweden. That has been taxed but the remainder is said to be paid out in black economy system thereby dodging the view of the taxman. It is reported that an account on the Channel Island of Jersey received the black economy money.

Now, it is required that the consultants claw back approximately Skr1.2 million in additional tax, social insurance charges, penalties and interest for that incomes during 2005 to 2008 that the tax man did not see.

The Swedish tax lawyers have notified the several of the consultants who were brokered by AM Design, about 30 people half of whom are Swedes have been informed.
“In 2005 we started looking at the tax lay-ups around the consultants  and found it strange. Many were not even registered with the Swedish tax authority. Another part was carrying only a small portion of income in Sweden. That the problem has proven to be so widespread is a bit surprising,” said Johan Lundborg an investigation with the Swedish tax authority in Gothenburg and who led the investigation.
By Team

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