Sweden Clarifies CbC Reporting Threshold Rules
The Swedish tax authority (Skatteverket), has published guidance on companies’ country-by-country reporting obligations with respect to short and extended tax years, and company divestments and restructurings.
Under Sweden’s Tax Procedures Act, a group is not obligated to submit a CbC report if, according to its consolidated accounts, it has a total income of less than SEK7bn (USD872m) for the fiscal year immediately prior to the financial year that the report would cover.
In the guidance issued by Skatteverket on January 15, 2018, the tax authority clarified that Sweden’s CbC reporting threshold is not adjustable according to the length of the company’s previous fiscal year. This is in line with OECD CbC reporting guidance published in November 2017.
“The Swedish Tax Agency considers that the limit of SEK7bn regarding the obligation to submit country-by-country report is a fixed limit that should not be adjusted for the duration of the fiscal year,” the guidance confirmed.
The Swedish guidance also considers situations whereby a company that has become a parent company in a main group after a divestment or other form of restructuring. Skatteverket says that in such a situation, the company is obligated to submit a CbC report even if it was a parent company in a subgroup in the previous financial year, provided that revenue for the previous fiscal year exceeded SEK7bn.
The CbC report is one element of a new three-tiered standardized approach to transfer pricing documentation proposed under Action 13 of the base erosion and profit shifting project. Under the framework, MNEs are required to provide aggregate information annually for each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE Group. It also covers information about which entities do business in a particular jurisdiction and the business activities each entity engages in.
The tax agency also said that the OECD Guidelines for country-by-country reporting can be used to interpret the Swedish rules, provided that it does not conflict with the law or concerns situations that do not occur in Sweden.