Key Regulations for Transfer Pricing in Sweden

Sweden follows the OECD Guidelines for its transfer pricing regulations, although this is not explicitly stated in the country’s statute. Instead, it’s based on indications from the Swedish Supreme Administrative Court.

OECD Guidelines as a Reference

The arm’s length principle is the cornerstone of Sweden’s transfer pricing framework. The Swedish Tax Agency has the authority to make adjustments when non-arm’s length pricing occurs in transactions between Swedish and non-Swedish taxpayers with common economic interests.

Documentation and Reporting

The Swedish Income Tax Act (Chapter 14, Paragraph 19-20) serves as the legal basis for the arm’s length principle. It’s essential for taxpayers to maintain detailed documentation following OECD standards. Regulations on transfer pricing documentation have been aligned with the OECD’s recommendations as part of the BEPS project, starting from April 1, 2017. These include the preparation of master and local files.

APA Availability

Sweden offers bilateral and multilateral Advance Pricing Agreements (APAs) from January 1, 2010, but not unilateral ones. Fees are applicable for filing APAs and renewals, with a typical APA term ranging from three to five years.

Transfer Pricing Audits

Local tax authorities conduct transfer pricing audits, with larger multinational groups generally audited every five to seven years. Companies with a higher risk of tax avoidance may face more frequent audits. The focus on transfer pricing issues has grown since formal documentation requirements were introduced in 2007.