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Transfer pricing methods

Available methods

Which transfer pricing methods are used in your jurisdiction and what are the pros and cons of each method?

Generally, there are no provisions concerning pricing methods in Swedish law. Instead, pricing methods have been discussed in case law (eg, the so-called Shell cases, the Supreme Administrative Court, RÅ 1991 ref 107), although sparingly. In the Shell cases, the Supreme Administrative Court (Swe: Högsta förvaltningsdomstolen) decided to use the comparable uncontrolled price method.

The same pricing methods as stated in the Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines apply in Sweden. The methods stated therein are considered to be adequate transfer pricing methods. The different methods are more or less adequate to use depending on the specifics of each transaction. The pros and cons of each method in Sweden are similar to those in other jurisdictions using the OECD Transfer Pricing Guidelines.

Preferred methods and restrictions

Is there a hierarchy of preferred methods? Are there explicit limits or restrictions on certain methods?

There is no hierarchy of preferred methods of transfer pricing in Sweden that deviates from the recommendations in the OECD Transfer Pricing Guidelines. Nor are there any explicit limits on certain methods. When choosing a transfer pricing method, the taxpayer must make a case-by-case assessment on which method is more likely to result in the arm’s-length price for the specific transaction.

Comparability analysis

What rules, standards and best practices should be considered when undertaking a comparability analysis?

The same comparability analysis as follows from OECD Transfer Pricing Guidelines should be considered. Generally, it is advisable to gather independent and objective economic analyses, statistical evidence and data from database searches. The quality of such data is more important than quantity.

Special considerations

Are there any special considerations or issues specific to your jurisdiction that associated parties should bear in mind when selecting transfer pricing methods?

There are no such special considerations or issues specific to Sweden. The associated parties are free to use any transfer pricing method for the relevant transaction. However, the parties should perform a thorough analysis on what transfer pricing method will most likely result in the arm’s-length price for a specific transaction. Given the transfer pricing documentation requirement, some pricing methods may be more or less easy to document. Parties must bear in mind that they must state why a specific method was considered most appropriate for the pricing of an important transaction in the transfer pricing documentation. The parties must also be able to justify the use of the method in a potential tax audit.

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