Swedish Court Annuls Power Deal Transfer Pricing Adjustment (1)

Sweden’s Supreme Administrative Court has overturned a transfer pricing-based adjustment against aluminum producer Kubikenborg Aluminium AB (Kubal) after the tax authority sought to cancel a deduction for damages resulting from an early electricity contract termination.

According to the Swedish Tax Agency, the deduction of 211 million Swedish krona ($23 million) lowered Kubal’s taxable income in Sweden, while its Cyprus‑based parent, United Company Rusal Plc, benefited from a group‑wide reduction in electricity costs.

The court ruled May 19 that Kubal, by terminating the contract in consultation with Rusal and paying the damages with only a shareholder contribution as compensation, was in ...