A Swedish Administrative Court of Appeal issued a decision in a case regarding permanent establishments, and concluded that a German company that regularly conducted business from the same place in Sweden (albeit for a limited period of time) was deemed to have a permanent establishment.
The case concerned a German company that developed and sold software for tire inflation pressure systems. The company annually performed tests in winter conditions in the north of Sweden, and brought all of the equipment (cars) from Germany. The test results were then used for software development in Germany. The annual testing period ranged from three to four months, but the company was only “on site” for a few weeks at a time.
The appellate court found that:
In this case, the income tax payable in Sweden was very limited in relation to the company’s size. However, being found to have a permanent establishment and being liable for tax in Sweden increased the administrative burden on the company (additional registration and filing requirements both for the company and its employees with the tax liability measured from first day of work in Sweden).
In light of this decision, foreign companies that have annually reoccurring activities in Sweden need to consider whether these activities give rise to a permanent establishment in Sweden.
Read a November 2016 report prepared by the KPMG member firm in Sweden
For more information, contact a KPMG tax professional in Sweden:
Daniel Fridell | +46 40 35 62 06 | firstname.lastname@example.org
Louise Hemmestad | +46 8 723 61 09 | email@example.com
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.