As a main rule under domestic law, Swedish withholding tax is levied on outbound dividends when the recipient entitled to receive the dividend is a foreign legal person.
The Swedish Administrative Court of Appeal ruled in the beginning of 2012 that the Swedish withholding tax rules are contrary to EU law in a situation where Swedish withholding tax is being levied on dividend payments to a foreign investment fund. The applicant was a Luxembourg SICAV which, based on EU principles, requested repayment of Swedish withholding tax. The Swedish Administrative Court of Appeal found that the unequal treatment of the SICAV as compared to a Swedish investment fund was contrary to EU law. There was no ground for justifying why the requested withholding tax was being repaid.
The Swedish Tax Agency appealed the ruling to the Swedish Supreme Administrative Court, which only issues a ruling if the question is being leaved to appeal and as such has value as precedent.
On May 20, 2013, the Swedish Supreme Administrative Court decided that the question will not be leaved to appeal, which means the ruling from the Swedish Administrative Court of Appeal is valid.
The above is a great opportunity for foreign investment funds that have suffered withholding in Sweden to request a repayment of the tax withheld in Sweden. The statute of limitation in Sweden is five years and a request for repayment can cover all years in scope.
We have assisted a number of clients requesting repayment of withholding tax withheld in Sweden and would be pleased to further elaborate on the above and assist you and your clients with this process.