Sweden to close puzzling tax loophole with Peru
An advanced form of tax planning in which billions of Swedish kronor have been transferred to offshore companies in Peru appears to be confusing Sweden's Tax Agency. Shortly after a Stockholm appeals court acquitted one company on tax evasion charges, a similar court in Jönköping has found another company guilty even though the facts in the cases appear virtually identical.
Since discovering a loophole in a bilateral taxation agreement between Sweden and Peru in 2005, a number of small and mid-sized Swedish companies have set up subsidiaries in the South American nation that seem to have no purpose other than receiving profits earned in Sweden, which would normally be taxable at a rate of up to 55 percent, only to pay a 4 percent Peruvian corporate tax before handing the money back to the Swedish owners.
The Agency says at least 2 billion kronor, or some 350 million US dollars, may have fled Swedish taxation through the Peruvian scheme. The two countries have since re-negotiated their agreement to close the loophole, and the diverging legal judgments will now be taken to a higher court.