The Swedish tax agency has published guidance explaining how Swedish companies are to notify the tax agency as to which group entity will submit the country-by-country (CbC) report, as well as guidance as to how taxpayers are to submit the CbC report in Sweden.
Sweden's parliament in early March 2017 approved legislation to implement transfer pricing documentation and CbC reporting rules. The new measures, effective 1 April 2017, adopt transfer pricing documentation rules reflecting the standards in the OECD's base erosion and profit shifting (BEPS) Action 13 final report. The legislation complies with OECD’s recommendations, so that the transfer pricing documentation will consist of a Master file and Local file(s).
The CbC report will be due by 31 December 2017 at the latest (pertaining to financial years commencing 1 January 2016 or later). Under the new rules, multinational groups for the year prior to the financial year with revenues exceeding SEK 7 billion will be required to submit certain data every year for each jurisdiction in which they are active. Normally, it will be the parent company of the multinational group that will submit the CbC report to the tax authority of the country where it is active. If there is no requirement to submit a CbC report in the country where the parent company is a resident, or if the tax authority in that country fails to share the CbC report with the Swedish tax agency, the Swedish subsidiary may be required to submit the CbC report on behalf of the parent company. In such instances, the Swedish company must notify the Swedish tax agency by 30 April 2017 for financial years ending before 1 April 2017 as to which group entity will be filing the CbC report on behalf of the group. Read TaxNewsFlash-Transfer Pricing
The guidance from Sweden’s tax agency addresses the notification process by a group entity required to file the CbC report on behalf of the group, that must be submitted by 30 April 2017 (at the latest) for financial years concluding before 1 April 2017. Going forward, the notification must be submitted by the last day of the financial year (at the latest). The notification is a requirement for all Swedish companies and permanent establishments that are part of a group that is required to prepare a CbC report. The guidance sets forth: (1) information required to be included in the CbC report; and (2) the address where the CbC report is to be filed.
The guidance also provides that the CbC report must submitted in Sweden by 31 December 2017 (at the latest) for the financial year 1 January to 31 December 2016. For companies with a “split” financial year, the CbC report must be submitted within 12 months after the end of the financial year. Multinational groups that, for the year preceding the financial year, have reported revenues exceeding SEK 7 billion must submit details every year for each tax jurisdiction in which they are active.Swedish companies are to submit the CbC reports in an electronic XML-format. The tax agency stated that it will publish a technical description of the format for CbC reports as well as how the files are to be submitted.
The Swedish requirements for CbC reporting apply as of financial year 2016. Therefore, it is important that groups, that will be subject to the CbC reporting rules, begin now to prepare for this reporting obligation. Note that the notification as to which group entity is filing the CbC report must be submitted manually by 30 April 2017, for financial years ending before 1 April 2017. Each Swedish entity that is part of a group within the scope of CbC reporting must submit a written notification on its own behalf. It has been observed that the regulations on the format of the XML for CbC reporting are currently unclear, and technical descriptions from the tax agency are expected.
Read a March 2017 report prepared by the KPMG member firm in Sweden
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