• Home
  •  
    Regions
    • Europe
    • UK & Ireland
    • DACH
    • Nordic
    • France
    • Southern Europe
    • Benelux
    • CEE
    • Asia
  •  
    Deals
    • Buyouts
    • Venture
    • Exits
    • Refinancings
    • Build-up
    • Turnaround
    • Secondaries
    • Advanced deals search
  •  
    Funds
    • Buyout
    • Venture
    • Mezzanine
    • Debt
    • Funds-of-funds
    • Secondaries
    • Fundraising pipelines
    • Advanced funds search
  •  
    GPs & LPs
    • GP profiles
    • LP profiles
    • GP news
    • LP news
    • Sponsors search
    • LPs search
  •  
    Secondaries
    • Deals
    • Funds
    • News
    • Analysis
  •  
    People
    • People moves
    • Analysis
    • In Profile
    • Q&A
    • Videos
    • Comment
  •  
    Analysis
    • In Profile
    • Fundraising
    • Q&A
    • Comment
    • Videos
    • Podcast
    • Reports
    • Data Snapshots
  •  
    Unquote Data
    • Deals search
    • Exits search
    • Funds search
    • Sponsors search
    • Advisers search
    • LPs search
    • League tables
    • Reports
  • Sign in
  • Sign in
    • You are currently accessing unquote.com via your Enterprise account.

      If you already have an account please use the link below to sign in.

      If you have any problems with your access or would like to request an individual access account please contact our customer service team.

      Phone: +44 (0)203 741 1137

      Email: Georgina.Lawson@acuris.com

      • Sign in
     
      • Newsletters
      • Account details
      • Contact support
      • Sign out
     
  • Follow us
    • Twitter
    • LinkedIn
  • Free Trial
  • Subscribe
Unquote
Unquote
  • Home
  • Regions
  • Deals
  • Funds
  • GPs & LPs
  • Secondaries
  • People
  • Analysis
  • Unquote Data
  • You are currently accessing unquote.com via your Enterprise account.

    If you already have an account please use the link below to sign in.

    If you have any problems with your access or would like to request an individual access account please contact our customer service team.

    Phone: +44 (0)203 741 1137

    Email: Georgina.Lawson@acuris.com

    • Sign in
 
    • Newsletters
    • Account details
    • Contact support
    • Sign out
 
Unquote
  • Nordics

"Skatteverket doesn’t have a case” – Nordic Capital’s Klas Tikkanen

Klas Tikkanen of Nordic Capital
  • Mikkel Stern-Peltz
  • Mikkel Stern-Peltz
  • @msternpeltz
  • 17 September 2014
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Send to  

Mikkel Stern-Peltz speaks to Klas Tikkanen, COO of NC Advisory (adviser to the Nordic Capital funds), about the ongoing carried interest tax case in Sweden.

Just before last Christmas, the Swedish mid-level administrative court (Kammarrätten) ruled in favour of Nordic Capital, in a three-year case against the Swedish tax authority (Skatteverket) about taxation of carried interest payments.

The authority remains adamant carry should be taxed at the income tax rate of 55%, rather than as capital gains at 25%. Skatteverket appealed the verdict to Sweden's highest administrative court, Högsta Förvaltningsdomstolen, in March and the court is now deliberating whether or not to go ahead with the appeal.

Tikkanen says NC Advisory (NC) expects to win, because the GP is confident it has the law on its side.

Mikkel Stern-Peltz: What issues does NC have with Skatteverket's claims?

Klas Tikkanen: As you can read in the verdict from Kammarrätten, the court actually directs very serious criticism towards Skatteverket, insofar that it says Skatteverket has not presented any legal basis for its claims, nor any factual basis for its claims. This is what we have been saying to whoever wants to listen for the last six years.

It's very hard to defend yourself against somebody who just stands up and says: "We feel that this should be taxed as salary." It defeats the whole notion of a civilised society and legal system: we live in a society where laws and regulations should govern how we act and work. You put your own code of conduct on top of that, but ultimately when somebody stands up and says, "Those guys over there did something wrong,' and those guys refute that, you have to fall back on law and common practice.

Here it seems the tax authority hasn't even bothered to present any facts or law, and that's actually something Kammarrätten has picked up on. If you read page 28 of the court verdit, it summarises everything quite clearly.

Skatteverket's disregard for law and evidence is something that is extremely frustrating for us, and is also why we won in Kammarrätten, and why we are confident we will ultimately win.

Secondly, we have been declaring our income in the same way as the whole industry has done for 20 years. We've had two tax audits over the last 15 years without any remarks, so it doesn't feel good to have Skatteverket retroactively come and change its view, and on top of that say that it should be able to "after-tax" which in Sweden you're only able to do if the person declaring income has done something wrong in the declaration.

On top of that, Skatteverket wants to add fines, which should only be done if there has been gross negligence or criminal conduct. It feels unjust and frustrating.

MSP: With implications for the broader Swedish private equity industry, has the case had an effect on how the industry is operating while it remains unresolved?

KT: I would say the effects have been quite limited as of yet. I think most of our colleagues in the industry are fairly confident the tax authority will fail. Skatteverket has been kind of creative in this way in a few different areas for the past couple of years – for example, they have attacked interest rate deductions on shareholder loans, also in a way that has no basis in law – and they have lost in all areas.

After having seen how the courts in the end have fallen back on law, people are fairly hopeful and confident that we will ultimately win. Largely our peers and us have been going about our business as usual.

If by any remote chance we would not win in the end, I think that would have a profound effect on the whole industry.

MSP: Once the uncertainty created by this case has gone, do you think it will boost the trend of GPs moving their funds back onshore in Sweden?

KT: Absolutely. Nordic Capital has been looking at moving onshore on and off over the years, and I think the prerequisites for us to go onshore include a stable and – by international standards – attractive, competitive regulatory environment, and that includes the behaviour of the Swedish tax authority.

If we would win, that would obviously be a huge boost to our confidence in the Swedish legal system and that would be one important prerequisite for moving onshore.

If we could provide our investors with the confidence that Sweden can offer the same regulatory certainty and stability [as Jersey], we would love to move onshore.

MSP: Will you be seeking damages if you win?

KT: We were awarded costs in the previous case, and that's what we get. There's no legal basis to get further reparations for this, and we just don't see the point.

We want stability and we want to go about our business, and it would be much more productive for us, the Swedish industry, and for society if we could just go back to doing what we do best.

I do want to point out that we have been told by many sources that this is the largest ever award of legal costs in any tax case ever in Sweden.

The award we received was about 40-50% of Skatteverket's yearly budget for cost claims, so it clearly made a dent in its budget, and that says something about how the court viewed this case.

In the verdict, the court discusses how much it should award us, and since it gave us the largest amount probably ever awarded, I think the court wanted to explain why.

The court document says on page 28 that Skatteverket's claim was thoroughly unclear, both in fact and in law, and that the court has had to rely on NC's own legal analysis and investigation in order to render its judgement.

Combined with the fact that it's a huge process with big sums at stake, it seems the court felt it was in good order that we get paid for all the work that, implicitly, Skatteverket should have done instead of us.

MSP: If you win, what will happen once the case is finally closed?

KT: We and the Nordic Capital funds will continue doing what we do best.

 

Scroll down for an interactive timeline detailing the case so far.

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Send to  
  • Topics
  • Nordics
  • Regulation
  • Swedish tax case
  • tax
  • Sweden
  • Nordic Capital
  • Altor
  • IK Investment Partners
  • EQT
  • Top story

More on Nordics

EMEA Public to Private M&A
Change of mind: Sponsors take to de-listing their own assets

EQT and Cinven seen as bellweather for funds to reassess options for listed assets trading underwater

  • Investments
  • 04 September 2023
Reima Linnanvirta of Trind VC
Trind VC plans up to five early-stage investments in next six months

VC has deployed around 10% of its second, EUR 55m fund and plans to invest in up to 40 startups

  • Venture
  • 31 August 2023
Mergermarket
Letter from the editor: Unquote is moving to Mergermarket

Unquote Editor Harriet Matthews outlines Unquote.com's upcoming move to the Mergermarket platform and the new capabilities and intelligence that this brings to Unquote readers

  • Industry
  • 30 August 2023
HR software solutions providers
Main Capital’s Assessio to be sold to Pollen Street

Recruitment software company tripled in revenue under Main Capital’s ownership

  • Buyouts
  • 25 August 2023

Latest News

Fund closes in US dollars
  • Funds
Stonehage Fleming raises USD 130m for largest fund to date, eyes 2024 programme

Multi-family office has seen strong appetite, with investor base growing since 2016 to more than 90 family offices, Meiping Yap told Unquote

  • 05 September 2023
Clinical trials and biotechnology
  • Buyouts
Permira to take Ergomed private for GBP 703m

Sponsor deploys Permira VIII to ride new wave of take-privates; Blackstone commits GBP 200m in financing for UK-based CRO

  • 04 September 2023
Public sector software
  • Exits
Partners Group to release IMs for Civica sale in mid-September

Sponsor acquired the public software group in July 2017 via the same-year vintage Partners Group Global Value 2017

  • 04 September 2023
EMEA Public to Private M&A
  • Investments
Change of mind: Sponsors take to de-listing their own assets

EQT and Cinven seen as bellweather for funds to reassess options for listed assets trading underwater

  • 04 September 2023
Back to Top
  • About Unquote
  • Advertise
  • Contacts
  • About Acuris
  • Terms of Use
  • Privacy Policy
  • Group Disclaimer
  • Twitter
  • LinkedIn

© Merger Market

© Mergermarket Limited, 10 Queen Street Place, London EC4R 1BE - Company registration number 03879547

Digital publisher of the year 2010 & 2013

Digital publisher of the year 2010 & 2013