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Anti-avoidance framework

Regulation

What legislative and regulatory initiatives has the government taken to combat tax avoidance in your jurisdiction?

There are several regulations enacted in Sweden to combat tax avoidance, such as the Act against Tax Evasion (1995:575) and the Act against Tax Evasion Crimes (1971:69).

There are also provisions in the Income Tax Act, such as the arm’s-length principle or the controlled foreign company rules.

Sweden also actively participates in the base erosion and profit shifting (BEPS) project (the Organisation for Economic Cooperation and Development (OECD)/G20 Base Erosion Profit Shifting Project) and is a signatory to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS.

To what extent does your jurisdiction follow the OECD Action Plan on Base Erosion and Profit Shifting?

Sweden already has legislation that fulfils many of the actions set up under the OECD BEPS Action Plan. However, there are some areas in which Sweden lacks legislation proposed by the BEPS Action Plan; in other areas, it is unclear whether Sweden’s legislation corresponds with the proposed actions. Such matters are under review with the Ministry of Finance.

Is there a legal distinction between aggressive tax planning and tax avoidance?

The term ‘aggressive tax planning’ is not legally defined in Swedish legislation. Some – but not all – transactions that are considered aggressive tax planning may be dealt with under the Swedish anti-avoidance provisions and principles.

Penalties

What penalties are imposed for non-compliance with anti-avoidance provisions?

Both administrative and criminal penalties may be available depending on the character of the tax-evading measure. The administrative penalties or measures entail tax penalties and supplementary taxation, whereas the criminal penalties may entail prison and fines.

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