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Sweden clarifies Permanent Establishment (PE) provisions in an Advance Ruling

In a recent advance ruling, the Swedish Council for Advance Rulings has clarified rules regarding permanent establishment (PE) status for a foreign company.


PRLog (Press Release) - Dec. 10, 2013 - SUNNYVALE, Calif. -- In a recent advance ruling, the Swedish Council for Advance Rulings has clarified rules regarding permanent establishment (PE) status for a foreign company. The clarification pertains to companies with a computer server or software operating from a server located in Sweden, reports Nair & Co.’s International Tax Services team.

Under Swedish regulations, a foreign legal entity has to pay Swedish income tax in case the entity has PE in Sweden. Generally, a PE is defined as a fixed place from where the entity carries out its business, wholly or partially in Sweden.

Company Alpha (Alpha Co.) and its subsidiary Beta (Beta Co.) were considering setting up a server in Sweden from which software would be supplied to group companies. Beta would house the server in a rented facility in Sweden. Alpha Co. would store its fully owned software on that server. Beta Co.’s main activity would mainly include managing the server and software stored on the server. With the exception of the server location, all business activities and decision-making would be carried out in Beta Co.’s and Alpha Co.’s place of business, outside of Sweden.

As per the advance ruling, Alpha Co. would not be considered to have a PE in Sweden. However, Beta Co.’s activities of managing the server and its software are beyond “preparatory or auxiliary work” and thus would be considered to have a PE in Sweden.

This advance ruling, which is subject to an appeal, may have on impact on foreign companies operating in Sweden who currently do not recognise a permanent establishment there. Foreign companies planning to locate a server in Sweden should consider whether their Swedish operation could be structured in such a way that the provision of the server will be considered a ‘preparatory or auxiliary’ activity and therefore below the threshold for creating a taxable presence.

For more information about doing business overseas (http://www.nair-co.com/expanding-business-overseas.aspx) or to know more about our International Expansion Services please contact us (http://www.nair-co.com/global-offices.aspx).

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About Nair & Co.

Nair & Co., the leader in international business expansion services (http://www.nair-co.com/), provides accounting, HR, legal, tax and compliance services for the set up and management of your international operations. Our model of a single-point-of-contact, supported by internal teams of experienced advisors, helps clients expand business and manage risk so they can focus on their core business and sustain growth with minimal risk, stress and cost. We support nearly 250 clients in over 70 countries. Nair & Co. is headquartered in Bristol, UK, has 450 employees and offices in China, India, Japan, Singapore, and the US. Learn more at www.nair-co.com

Media Contacts

For media enquiries or to learn to more about Nair & Co., please email us at media@nair-co.com or call Yvonne Smith at +1.408.501.8867

Yvonne Smith
408 501 8867

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Source:Nair & Co.
City/Town:Sunnyvale - California - United States
Tags:sweden, Swedish Tax, business in Sweden, international tax
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