Corporate tax compliance includes, for instance, preliminary tax returns, tax computations at year end and yearly income tax returns to be filed with the Swedish Tax Agency.
There are four different filing dates in respect of the yearly income tax returns, depending on the tax year in question (financial year). If the tax year corresponds to the calendar year, the income tax return is due on 1 July in the following year.
VAT compliance can include preparing and filing of VAT returns, EC sales lists and Intrastat declarations. VAT paid on purchases can be offset against VAT collected on sales and the net is payable through VAT returns. The VAT return must, as a main rule, be filed every month. However, if the tax base for VAT does not exceed 40 million SEK per year, the VAT return is usually to be filed every quarter.
The Swedish transfer pricing rules adopts the arm’s length principle for transactions between related enterprises and authorizes an increase in the taxable income of a Swedish enterprise, equal to the reduction of income, resulting from transactions that are not arm’s length. The arm’s length principle implies that the pricing between controlled entities is set as independent companies in comparable situations. The burden of evidence to show that wrongful pricing has occurred is placed on the Tax Agency.
Furthermore, the Swedish Supreme Administrative Court has determined that the OECD Guidelines can be used for assessing Swedish transfer pricing issues. In practice, the OECD Guidelines is used for guidance when preparing transfer pricing documentation.
Transfer pricing documentation requirement
Besides the arm’s length principle, the Swedish transfer pricing rules state that cross-border transactions need to be documented. These rules include documentation requirements for all enterprises registered in Sweden that conduct cross-border controlled transactions. There are exceptions for small and medium sized entities. Thus, in Sweden, it is compulsory, for multinational groups with more than 250 employees or, with a net sales in excess of SEK 450 million, and a balance sheet total in excess of SEK 400 million to prepare written documentation on all material cross-border transactions with associated entities.
The Swedish documentation requirements also entail transactions between related groups which are held under a common control (i.e. one or more joint shareholder(s) have common direct or indirect control of two or more entities).
Transfer pricing documentation shall consist of a master file describing the business of the group, which the Swedish entity is a part of, and a local file describing the Swedish legal entity and its cross-border transactions. The Swedish transfer pricing documentation requirements are in principle equivalent to the requirements in the OECD Guidelines, both relating to the content requirements of the master file and the local file.
Depending on the size of the business carried out in Sweden, it could be a requirement to appoint an auditor according to Swedish law. There are certain thresholds to consider in this respect. If a company or a branch has exceeded at least two of the following criteria in the last two financial years, it is required to appoint an auditor:
For certain financial activities, an auditor is always required.