Swedish Court Overturns VAT Adjustment on Intra-Group Services

The Swedish Tax Agency must demonstrate the absence of open-market comparables before making a value-added tax adjustment to intra-group services based on a parent company’s costs, a top court ruled.

The mere fact the company’s services were expensive to produce isn’t enough evidence to prove there aren’t services it could be compared to, Sweden’s Supreme Administrative Court said.

The Jan. 27 decision aligns with last year’s ruling of the European Court of Justice rejecting the agency’s treatment of parent-to-subsidiary active management services as a single supply that precludes comparison-method valuation.

The case centers on Aktiebolaget Högkullen, a parent ...