Swedish tax probe into foreign-owned firms

The Swedish Tax Board is to investigate Swedish companies which are owned by companies abroad in an attempt - usually successful - to reduce tax they pay in Sweden.

Sweden loses billions of kronor of tax revenue annually because of this kind of ownership structure.

While the objective of the project is to prevent foreign ownership for tax technicalities, the Board says it will focus on companies owned in, or via, the Benelux countries.

“We have noticed an increase in Swedish ownership via these countries,” said project leader Göran Haglund at the Swedish Tax Board, to Swedish Radio.

The number of Swedish companies which are owned from Belgium, the Netherlands and Luxembourg doubled between 2000 and 2004. In total, around 1,800 companies in Sweden are owned from these countries.

The increase has been most significant in Luxembourg. A preliminary investigation by the tax board indicates that in two thirds of these cases, the foreign ownership is purely a cover. In other words, the same person is behind both the firm in Sweden and the parent company in Luxembourg.

With this set-up, a business owner can effectively halve the tax payable in Sweden.

TT/The Local