Skattenytt and Sensk Skattetidning - again

WebJournal on International Taxation in Sweden, WITS, no 1/2013


Skattenytt and Svensk Skattetidning – again.

As you surely are aware of I have had a long history of disagreements with Sweden's two major tax journals Skattenytt and Svensk Skattetidning which has had the result that a very large number of articles I have submitted for publication have been denied such publication. See my February 2012 blog ”How not to write an article for Skattenytt or Svensk Skattetidning” and also WITS no 9/2012. It is of course very disappointing after having devoted so much time and effort to put on paper one's thouhgts and opinions on issues which are intellectually quite demanding and contentious to have them denied publication. These denials have all taken place after my professional retirement from The Institute of Foreign Law in 2001. During the preceeding period at the Institute spanning almost twenty years I authored a great many articles and other materials on international tax matters and was probably 'spoiled' during that time of always being published in The Institute's Law Review (IUR-meddelanden). But of course, at that time I was also the editor of that publication! A number of these articles were also submitted for (re)publishing in Skattenytt and Svensk Skattetidning and then always accepted.

The main criterias for publication must of course always be that the material is of interest to the readership and that the required quality standards are satisfied. This has, however, never constituted an outspoken reason for the publication denials I have endured. Many times, quite frustratingly no reason at all has been given for refusals! In his latest message Mr Jan Bjuvberg, the editor of Svensk Skattetidning, when refusing publication of my article on the so called Cyprus case, went so far as declaring that he would deny publication also of all future papers submitted by me!

A special problem which no doubt also comes into play when publication is considered is that the space in the journal itself is limited. This problem, which indeed I have suggested to both Skattenytt and Svensk Skattetidning, would be solved if one opens up a home page for surplus materials.

In last couple of months the following has happened in these matters:


Skattenytt

In late November last year I contacted Skattenytt and asked for a face to face meeting in order to sort out our disagreements. After nearly three (3) months I got a reply from Professor Mattias Dahlberg, who is chairman of the TOR/Skattenytt Foundation, the owner of the Skattenytt, and Mr Roger Persson-Österman who is chief editor and was informed that materials submitted for publication were scrutinized by both the editors – there are also two assistant editors - and the full editorial council which consists of ten high-profiled Swedish tax specialists. The final decisions of publication are taken jointly by the editors and the editorial council. This was a procedure that was said to have functioned well for many years. Dahlberg and Persson-Österman acknowledged my request for a personal meeting but considered there was no need therefor.

In my response hereto I declared my surprise that all decisions of publication are taken jointly by the editors and the editorial council, because this was at odds with the specific information that Mr Persson-Österman had reported earlier (in a November 2011 e-mail) emphasizing that he as chief editor ”made all decisions on publication independently and did not share this responsibility with anybody else”. I also reminded Mr Dahlberg that in late 2009 when he was editor of Skattenytt, upon submission by me of a 20 page paper on the OMX/treaty override case, (in which I criticized certain opinions that he had presented about that case in a previous Skattenytt article), had dismissed my article (as being irrelevant). And this was done within nineteen (19) minutes after receipt thereof (according to the time indication on his e-mail)! (My article (in Swedish) titled ”Treaty override” is accessible at www.skatter.se, http://www.skatter.se/?q=node/2533).


Svensk Skattetidning

As a follow up to the recent debacle with Svensk Skattetidning over my article on the Cyprus case (see WITS no 9/2012), Ms Isabel Carendi of Norstedts Publishers, and owner of Svensk Skattetidning, has raised the matter with the editorial board. She has reported that all decisions on publication ”are founded on objective grounds free from personal opinions” and that in accordance with the publication policies of Svensk Skattetidning, the refusal to publish my Cyprus article was made by majority vote of the full editorial board. It was also declared that the editorial board is under no obligation to disclose the reasons for non-publication, (which, in my view, demonstrates a deplorable disrespect for the efforts of contributing authors.)

In my Cyprus article I had applauded the (unanimous) decision by the Supreme Administrative Court (and previously the Advance Rulings Board) and had taken a critical view of an earlier article of the case in Svensk Skattetidning which was written by Martin Nilsson who had censured the Court's decision as beeing, inter alia, contrary to EU law and lacking consideration of the discrimination principles of tax treaties. Mr Nilsson is a partner and head of the Corporate Taxation group of Mannheimer Swartling Advokatbyrå. Also, he is a member of the editorial board of Svensk Skattetidning and participated in the decision to deny publication of my response to his article.

In explanation hereto Ms Carendi has declared that considering the majority voting system ”it is difficult for Martin alone to have a decisive influence on such matters”... Which of course – my comment – depends on how large the majority is....

Stockholm March 2013

Peter Sundgren

Exchange of Information and Cross-Border Cooperation Between Tax Authorities, IFA congress subject 2013

WebJournal on International Taxation in Sweden, WITS, no 1/2013

 

As you may recall from my webjournal no 8/2012 I volunteered for a place on the discussion panel of the upcoming IFA congress in Copenhagen on the subject ”Exchange of Information and Cross-Border Cooperation Between Tax Authorities”. I was advised by Mr Robert Couzin who is chair of the Permanent Scientific Committee (PSC) of IFA (and an old friend and co-member of both BIAC and ICC back in the nineties) that my request be endorsed by the Swedish branch of IFA.

In doing so, Mr Anders Erasmie, the Swedish branch chairman, reported (curiously coincidentally) that the branch had actually just launched an initiative, under a special ”format”, to nominate suitible Swedish IFA members for participation on the various congress panels. This was an undertaking that would take some time and I would be informed about the outcome of this procedure in due course.

Considering that Swedish participation on congress panels had been very poor in the past I congratulated Mr Erasmie on this initiative. Also, of course,it is a great honour to be nominated for panel participation even if one would not be finally elected by the PSC. From my own experience I can also assure that it is professionally very rewarding and great fun to be on an IFA panel and to meet specialists from other countries on the specific topic.

In late December Mr Erasmie reported that the branch had decided not to support my request and had nominated another Swedish IFA member for the exchange of information topic. Moreover he declared that this nomination should be kept strictly confidential and that it had been revealed to me only because of my prior interest in the matter. Mr Erasmie also reported that there had been no nomination for the other main congress subject (The Taxation of Foreign Passive Income for Groups of Companies) as Sweden would be well represented on that topic by the two Swedish general reporters (Professors Mattias Dahlberg and Bertil Wiman). In line with his his strict policy of secrecy, the reasons for which were declared as ”various”, Mr Erasmie gave no details about any nominations for the panels of the congress seminars.

As you may also recall from my earlier report I raised serious concerns over the general scope of the directives that had been issued by the general reporter and the PSC on the information exchange subject, narrowing the approach to an academic study and interpretation and application of the tax information clauses in exchange of information treaties. Such a discussion before an audience of the worlds 1500 (or so) leading tax experts, in my view, is a waste of time. Like polishing the chandeliers on Titanic! Instead the panel should broaden the discussion to the overall problem of the rampant tax evasion conducted by all the world's tax criminals in this regard threatening the economies of our countries. The recent conviction and prosecution of several high-ranking government officials in Greece are outrageous examples hereof. Beside exchange of information agreements the congress should discuss and strongly support all kinds of legal and administrative measures to counteract the abuse of offshore financial centres and secrecy jurisdictions. In particular IFA should endorse the idea that automatic exchange of information be introduced on a broad scale.

It will be interesting to see to what extent the General Reporter Mr Xavier Oberson, member of the PSC and an expert on Swiss bank secrecy, (see in particular The IFA's Wealth Gram, Volume 1, No 1, Février 2012: Le futur du secret bancaire en Suisse et l'application de la nouvelle politique fiscale en matière d'echange de renseignements fiscaux), and the panel discussion leader (not yet announced) will open up for such a debate.

Stockholm March 2013

Peter Sundgren

Glädjande utgång i Cypern-målet

WebbJournal on International Taxation in Sweden WITS, no 9/2012 November

Rubriken ovan motsvarar den jag skrev på min blogg för en tid sedan vad gällde det s.k. Peru-målet och ger uttryck för tillfredsställelsen att vårt skattesystem faktiskt kunnat hålla stånd, och något överraskande kan man nog tillägga, mot vad som i båda fallen varit fråga om synnerligen utmanande skatteupplägg vilka, om de godtagits, skulle ha gett upphov till enorma skattebastapp till utlandet - motsvarande kostnaderna för sisådär ett par tre sjukhusbyggen. Ett utmärkande kännetecken i båda fallen, och något som för övrigt förekommer i väldigt många andra internationella skatteupplägg, är att man med utnyttjande av de avregleringar som skett på kapitalmarknaden, särskilt inom EU, överför avyttrings-/kapitalvinster till utlandet, och då alltid till länder med låg eller obefintlig skatt på dessa vinster. Man undflyr med andra ord det andra ledet i den dubbla beskattning vi har på bolagsvinster vilka som regel helt hänför sig till värdestegring avseende verksamhet som bedrivits i Sverige. Under den tid som verksamheten bedrivs utnyttjar man sig alltså, som en engelsk chief justice en gång uttryckte saken, ”of the protection of the laws” i detta fall i Sverige för att därefter ”kränga av” värdestegringen utomlands. Anledningen till att avyttringsvinster tilldrar sig ett särskilt intresse vid skatteplaneringen är att fråga är om engångstransaktioner som regelmässigt rör mycket stora belopp. En annan fördel med dessa inkomster är vidare möjligheten att tidsmässigt styra transaktionen eller transaktionerna i fråga. De flesta av dessa upplägg, vilket framstår som särskilt stötande för rättskänslan, går också ut på att dra icke avsedda fördelar av våra avtal för undvikande av dubbelbeskattning, vilka ju är tillkomna för just detta ändamål och inget annat. Ett väsentligt syfte med avtalen är ju just för övrigt att de skall förhindra skatteflykt. I kommentarerna till artikel 1 i OECDs modellavtal finns en hel katalog med rekommendationer för att förhindra missbruk av skatteavtal. Finansdepartementet fick redan 2009 svidande kritik från Riksrevisionen över de skatteläckage som förekommer i våra skatteavtal men mycket litet har hänt sedan dess.¹

Vad som hänt i Cypern-målet är att Högsta Förvaltningsdomstolen HFD, (Billum, Dexe, Jermsten, Stenman, Saldén Enerus), den 30 maj 2012, mål nr 4799-10 – och i överensstämmelse med Skatterättsnämndens (också enhälliga) förhandsbesked - ansett att det aktuella Cypern-upplägget utgjort skatteflykt enligt vår allmänna skatteflyktsklausul. Detta har föranlett Herr Martin Nilsson, advokat och delägare i Mannheimer Swartling att i Svensk Skattetidning, sid. 397 ff. skriva en mycket kritisk (niosidig) artikel över HFDs dom. Sammanfattningsvis menar han att varken rekvisit 1, 3 eller 4 i skatteflyktslagen är uppfyllda. Han har retoriskt beslöjat sin kritik över domen med uttrycket - upprepat elva gånger - att han "inte förstår" HFDs resonemang. I sin slutkläm uttrycker han sig dock mer oförtäckt när han förklarar att ”domstolen tyvärr återigen har skapat betydande rättsosäkerhet och att dess domskäl med hänsyn till domens principiella betydelse inte uppfyller de krav som man bör ställa på en prejudikatinstans.

Enligt Dagens Industri (18 juni) kommer utgången i målet att föranleda enorma upptaxeringar för en rad svenska bolag särskilt inom fastighetssektorn. Skatteverket driver över 100 skatteprocesser som handlar om upptaxeringar på 70 miljarder kronor.

Omständigheterna i målet var följande: Salénhuset AB ägde 100 % av ett cypriotiskt aktiebolag, Candice Ltd.. Tillsammans bildade bolagen ett svenskt handelsbolag i vilket Salénhuset ägde 0,1 % av andelarna och Candice resterande 99.9%. Salénhuset övervägde att till underpris överlåta en fastighet till handelsbolaget, varefter andelarna i detta bolag skulle avyttras till en extern köpare till marknadspris. De 99,9 % av vinsten som förvärvades av Candice var skattefri i Cypern enligt cypriotiska regler och givetvis också i Sverige eftersom bolaget är utländskt. Frågan som prövades i ansökningen var huruvida underprisöverlåtelsen av fastigheten till handelsbolaget eller försäljningen av handelsbolaget till en extern köpare för marknadspris stred mot skatteflyktslagen.

HFD ansåg alltså att skatteflykt förelåg och anförde i sina domskäl att underprisöverlåtelsen av fastigheten innebär en betydande värdeöverföring till Candice , som inte är skattskyldigt för kapitalvinst vare sig i Sverige eller Cypern. Denna värdeöverföring, fortsätter HFD ”är inte betingad av bolagens verksamhet utan har tillkommit enbart för att förbereda den externa försäljningen av fastigheten genom handelsbolaget, vilket kommer att kunna ske utan att den latenta skatteskuld som åvilar fastigheten behöver infrias.”

HFD tog alltså ställning till två transaktioner, dels fastighetspaketeringen dels försäljningen av handelsbolaget. Själva skatteupplägget avsåg emellertid ytterligare en transaktion, som alltså inte var föremål för prövning, nämligen hemtagningen av den vinst som uppburits av det cypriotiska dotterbolaget. Det får tas för givet att avsikten varit att ta hem densamma till Sverige genom en utdelning. Vad får då detta för skattekonsekvenser? Jo, att det kan ske helt skattefritt både i Cypern och Sverige. Och grunden för denna skattefrihet är att finna i det s.k. moder/dotterbolagsdirektiv som EU utfärdat som förbjuder alla dotterbolag inom unionen att ta ut skatt på utdelningar till moderbolag inom unionen och som tillika förbjuder alla moderbolag inom unionen att beskatta utdelningar från dotterbolag inom unionen. Cypern är som bekant också medlem inom unionen. Det torde således inte råda någon osäkerhet om att valet av hemvist för Candice har skett av en slump för att som HFD uttrycker det undvika att den latenta skatteskulden som åvilar fastigheten inte behöver infrias. Den totala slutliga skattebördan för avyttringen av det aktuella svenska fastighetsbeståndet skulle således under dessa förhållanden bli svensk bolagsskatt på endast 0,1 % av hela kapitalvinsten. I domen talar HFD om att förfarandet enligt skatteflyktslagen innebär en väsentlig skatteförmån för Salénhuset och syftar då av allt att döma på att vinsten överförs till Cypern. Men, såsom just påpekats, skatteförmånen består även efter en utdelning till Sverige. Jag menar alltså att det är viktigt att se skatteupplägget i hela sin vidd dvs. efter en hemtagning av vinsten från Cypern och att inte begränsa sin analys av detsamma på det sätt som skett i ansökningen. Detta för att därmed närmare belysa själva kärnan i HFDs domsmotivering som är att reglerna om underprisöveråtelser "inte varit avsedda att kunna utnyttjas för konstlade förfaranden som uppenbart saknar samband med organisationen av en näringsverksamhet och endast kommer till stånd för att undvika den beskattning som annars skulle ske vid avyttring av en tillgång i näringsverksamheten." Det kan också noteras att uttrycket ”att förfarandet uppenbart saknar samband med organisationen av näringsverksamheten” framstår som en upprepning av vad som dessförinnan sagts om att värdeöverföringen ”inte betingats av bolagens verksamhet”. Slutresultatet av domen är att Salénhuset, som också Skatterättsnämnden funnit, skall beskattas som om bolaget överlåter fastigheten till handelsbolaget till marknadsvärdet. Man kan tolka detta som att Candice i skattehänseende ses som en nullitet. Man har med andra ord bortsett från Candice. ”Disregarded the company”, som är ett etablerat concept i internationell skatterättsvetenskap.

Herr Nilsson har i sin artikel radat upp inte mindre än 12 numrerade punkter i vilka han går till angrepp på HFDs dom. Jag skall i det fortsatta ta upp två av dessa; nummer 7, som handlar om domens förhållande till EUs principer om fri etablering och nummer 8 om diskrimineringsproblematiken i skatteavtalet med Cypern. I båda dessa fall vill jag dra en lans till försvar av HFDs dom.

I punkten 7 framhåller Herr Nilsson att HFDs dom står i strid med EU-rätten. HFD har i själva verket avfärdat problemet pga att det inte förekommit någon unionsrättslig fråga. Herr Nilsson "förstår inte" hur domstolen kunnat undgå att diskutera den EU-rättsliga aspekten av sina ståndpunkter och resonerar sig fram till uppfattningen att tillämpningen av skatteflyktsklausulen medfört en "negativ särbehandling" pga att Salénhusets dotterbolag varit cypriotiskt. (Skatterättsnämnden, som tagit ställning till frågan, har ansett att någon negativ särbehandling inte skett).

Det är alltid mycket vanskligt att bedöma luxemburgdomstolens uppfattning om konflikter mellan en medlemsstats interna skatteregim och gemenskapens principer om fri etablering. Men det finns flera fall där man visat sig lyhörd för medlemsstaternas invändningar när dessa etableringar baserats på konstlade förhållanden (artificial arrangements) i syfte att enbart undandraga sig beskattning. Ett exempel härpå är EU-domstolens dom i Cadbury Schweppes (C-196/04) se Doc 2006-/19082 där domstolen uttalade att medlemsstaternas interna CFC-regler kunde accepteras men endast under förutsättning att det kontrollerade utländska bolaget utgör en ”wholly artificial arrangement” exemplifierat som letterbox companies utan anställda eller lokaler etc. Det finns inga närmare uppgifter i målet om när eller i vilket syfte Candice bildades eller om det haft några anställda etc. men det är svårt att föreställa sig att bolaget haft någon affärsmässig betydelse för Salénhusets svenska näringsverksamhet (fastighetsförvaltning). HFDs dom antyder att Candice utgjort ett rent brevlådeföretag utan annat syfte än att först skattefritt överföra 99,9 % av vinsten till bolaget för att därefter, också skattefritt, ta hem den till Sverige.

I betraktande härav, inte minst att detta skatteupplägg som lett till en total skattebelastning på 0,1 % av kapitalvinsten skett bl.a. med stöd av EUs egna moder/dotterbolagsdirektiv, tror jag att domarna i Luxemburg skulle ställa sig kallsinniga till Herr Nilssons argumentering om "negativ särbehandling". I själva direktivet finns för övrigt en specifik bestämmelse som tillåter tillämpning av en medlemsstats interna regler vars syfte är att förhindra missbruk av direktivet.

 

Herr Nilsson är vidare (i punkt 8) kritisk till att HFD förbigått diskrimineringsproblematiken i skatteavtalet med Cypern med tystnad och "förstår inte" hur man i sammanhanget kan undvika att diskutera alla de rättsfall - han radar upp fem tidigare regeringsrättsdomar - som innebär en diskriminering av utländskt ägande.

Det finns två skäl till att på denna punkt tillbakavisa Herr Nilssons kritik: För det första handlar ingen av de åberopade regeringsrättsdomarna om skatteflykt enligt skatteflyktsklausulen. Och för det andra har HFD nyligen meddelat, för övrigt just i den tidigare nämnda Peru-domen, att ingenting hindrar en avtalsslutande stat att tillämpa sina internrättsliga regler mot skatteflykt när det gäller förfaranden som berör en skatteavtalsstat. Detta får i princip antas betyda att Sverige, om skatteflykt anses föreligga enligt intern rätt, kan beskatta utan hänsyn till avtalets bestämmelser och rimligen även de som gäller diskriminering. Ett företrädande syfte med skatteavtal är ju, som redan påpekats, att förhindra skatteflykt. Det framstår för övrigt som ganska absurt, som det föresvävar Herr Nilsson, att ett konstaterat fall av skatteflykt skulle kunna omkullkastas genom att den skattskyldige kan åberopa diskriminering enligt ett skatteavtal!

Det kan nämnas att inte bara HFD utan även Skatterättsnämnden har förbigått frågan om diskriminering med tystnad och eftersom spörsmål som berör inkomstskatteavtal alltid skall iakttagas ex officio av domstol får det antas att man avsiktligt ignorerat denna fråga. Slutligen kan tilläggas att Salénhuset naturligtvis alltjämt kan vända sig till den s.k. behöriga myndigheten för våra skatteavtal - Skatteverket - för att få en ändring av HFDs dom i denna del. Personligen bedömer jag dock möjligheten till framgång med en sådan framställan som synnerligen liten.

Det viktigaste är emellertid, som Herr Nilsson diskuterar i avslutningen av sin artikel, att fastställa de vidare konsekvenserna av det aktuella domslutet. Jag instämmer därvid i hans bedömning att Cypern-målet får anses utgöra en liberalisering vad avser möjligheterna att underkänna underprisöverlåtelser med stöd av lagen mot skatteflykt och att man hädanefter måste utgå ifrån att alla sådana överlåtelser som innebär en skatteförmån för någon skattskyldig och som inte huvudsakligen är affärsmässigt motiverade kan underkännas enligt skatteflyktslagen.

Till skillnad mot vad som synes vara Nilssons uppfattning välkomnar jag den utveckling som HFD ger uttryck för i Cypern-målet vad gäller vår skatteflyktslag. I en artikel jag skrev 2008 under rubriken "Swedish CFC Taxation and the 'Business Purpose' Concept" - en artikel som nekades publicering i Svensk Skattetidning men som sedermera togs in i Tax Notes International (Volume 50, Number 2, April 14, 2008) och som också återfinns på www.skatter.se - har jag starkt förordat att alla förfaranden och transaktioner för att godtagas skattemässigt måste karakteriseras av vad som kallas 'business purpose', ett uttryck som jag menar överensstämmer med HFDs krav att den skattskyldiges förfaranden måste kunna visas utgöra ett led i dennes näringsverksamhet eller varit betingade av verksamheten, och att de inte endast kommit till stånd för att undfly den svenska beskattningen.

I Peru-målet samt i de allra flesta aktievinstutflyttningsfall där en svensk aktieägare transfererar sitt bolag till ett av honom bildat utländskt bolag till underpris vilket bolag därefter realiserar värdestegringen på det svenska bolaget utom räckhåll för svenska skatteanspråk ligger det nästan alltid alltid nära till hands att se upplägget som ett konstlat förfarande som uppenbart saknar samband med organisationen av den verksamhet som den skattskyldige bedriver och endast kommit till stånd för att undvika den beskattning som annars skulle ske vid avyttring av en tillgång i näringsverksamheten". Man kan förmoda att denna skrivning kommer att citeras och refereras i många skatteverksyrkanden och skattedomstolar i framtiden.²

 

Kanske kommer domen, vars betydelse också stärks av det faktum att utgången varit enhällig i både Skatterättsnämnden och HFD, att framstå som en milstolpe i ansträngningarna att motverka skatteflykt.

Stockholm i november 2012

peter@sundgren.net

 

1På finansdepartementet grubblar man sedan ca två års tid på hur man skall förhindra vissa typer av aktievinstutflyttningar. På upprepade förfrågningar uppges endast att ”ärendet bereds.”

2Ett alternativ till att förhindra en utflyttning av den svenska bolagsskattebasen på det sätt som skett i Cypern-målet är att se över vår CFC-beskattning så att bolag av typ Candice Ltd., ett nollbeskattat utländskt dotterbolag, omfattas av denna lagstiftning. På det sättet behöver man inte heller vänta i sju år på ett förhandsbesked för att, såsom skett i det aktuella fallet, få svar på sina skatteproblem.

Swedish IFA branch seminar on beneficial ownership and permanent establishments

WebJournal on International Taxation in Sweden, WITS, (no 8/2012 November)

I have recently attended a tax seminar arranged by the Swedish branch of the International Fiscal Association (IFA) regarding the changes considered by the Fiscal Committee of the OECD of the commentaries to their Model Tax Treaty on the application of the rules on

• ”beneficial ownership” in articles 10-12 on dividends, interest and royalties
• and on the definition of ”permanent establishment” in article 5. 

See the homepage of the OECD.

Beneficial ownership

Considering the recent blogs I have written (WebJournal on International Taxation in Sweden, WITS, numbers 1,6 and 7 posted on petersundgren.blogspot.com) on the beneficial ownership issue, involving specifically certain royalty payments made within the IKEA group, my interest at the seminar was of course mainly focused on the development in the OECD of this matter.

Moreover, which is also gearing up the interest in this field is that the Swedish Supreme Administrative Court (Högsta Förvaltningsdomstolen, HFD,) has issued a ruling regarding the  meaning in Swedish tax law of the expression ”the true recipient of income” (faktiskt har rätt till inkomst) which closely resembles the beneficial ownership concept in our tax treaties. David Kleist has recently published an article in Skattenytt 2012 page 619 ff. about this case titled ”HFDs bedömning av vem som ”faktiskt har rätt till inkomsten” - det första svenska avgörandet om beneficial owner?” (The HFD's opinion on who is ”the true recipient of income” - Sweden's first case on beneficial ownership?) Mr Kleist concludes that these issues are now squarely on the table (”uppe på banan”).

In my afore mentioned blogs I have raised the question of who is the beneficial owner of the (very substantial) royalty payments made by all IKEA stores in Sweden – and in fact by all such stores worldwide – to Inter IKEA B.V. in the Netherlands. This question has become highlighted since the revelation in the Swedish television broadcast ”Uppdrag Granskning” (Mission Investigation) in early 2011 that Inter IKEA was owned by a hitherto completely unknown Liechtenstein based trust (Stiftung) called Interogo which was fully controlled by IKEA's founder Ingvar Kamprad and his family and which trust also owned the IKEA trademark(s). Kamprad has further confirmed that Interogo has a capital of - are you ready - about 100 billion SEK, approximately 15 billion USD. (It has subsequently also been anounced that as per 1 January 2012 the trademarks have been transferred by Interogo to Inter IKEA for 75 billion SEK).

OECD's proposals for the update of the commentaries to the model treaty on the beneficial ownership concept were published on 29 April 2011. After considering comments submitted thereto by various interested parties the OECD has recently issued a somewhat revised version published on 19 October 2012.

The main focus of the OECD proposals made in the spring of 2011 and which remain unaltered in the revised version is to determine whether the recipient of the royalty (or the dividend or interest for that matter) has ”the full right to use and enjoy the income received unconstrained by any contractual or legal obligation to pass the payment received to another person.” If so the recipient is considered the beneficial owner of the income. Or, in other words regarding Inter IKEA and Interogo: Does Inter IKEA in the Netherlands have the right to fully use and enjoy its royalty payments received from Sweden unconstrained by any contractual or legal obligation to pass them on to Interogo in Liechtenstein?

According to the information in the Uppdrag Granskning broadcast and various other press reports together with the somewhat contradictory (and paternalizing) information I have received from Inter IKEA's head of information (see WITS no 6-7/2012) it cannot be excluded that Inter IKEA has been obliged to pass on its Swedish sourced royalties (or parts thereof) to Interogo. Particularly indicative hereof is a) as afore mentioned, that Interogo has owned the IKEA trademarks, b) that there has existed a license agreement, i.e. a contractual obligation, for Inter IKEA to pass on, as it seems, its received royalties to Interogo and c) that Interogo, which as it appears, has not conducted any other business, has amassed a 100 billion SEK fortune therefrom. The IKEA group is well-known for its very ingenious and often secretive business structure consisting of companies, trusts etc, around the world. And one has never denied fhat the the purpose hereof has been to shelter the group from tax exposure. As further implied in my earlier blogs it may also be argued that Interogo has engineered an unacceptable tax avoiding treaty shopping set-up which, according to the OECD Model Treaty commentaries, sometimes could deny treaty benefits.

My own conclusions of the application of the beneficial ownership rules in our tax treaty with the Netherlands as far as IKEA is concerned, as mentioned above, is based only on official sources and without exact knowledge of ownership relations, business agreements or timing issues etc. and a final decision of the implications hereof for the beneficial ownership determination must of course await a thorough investigation of all relevant facts and circumstances in the particular case.

It would be surprising if none of the tax administrations in countries that have tax treaties with the Netherlands including beneficial ownership clauses and tax information exchange agreements with Liechtenstein would not test those treaties.

A further tricky question, which Mr Kleist has brought to my attention, is how to determine the royalty income if Interogo would be considered the beneficial owner of the royalty payments or parts thereof made from Sweden to the Netherlands and subsequently passed on to Liechtenstein. According to Swedish tax law royalty income derived by foreign residents is taxed as regular business income (from a permanent establishment in Sweden) subject to ordinary income tax rates. (It has been suggested several times that Sweden should switch to a withholding tax regime on gross income but this idea has been rejected). Inter IKEA in the Netherlands should thus report its gross Swedish royalties as taxable income but also deduct all royalties passed on to Interogo (and other business costs).

Example: Inter IKEA receives 100 million SEK in royalties from its Swedish IKEA stores and passes on (directly or indirectly) 70 million thereof to Interogo in Liechtenstein. The remaining 30 million SEK is subjected to regular Swedish corporate tax (which qualifies for tax credit purposes in the Netherlands). What then happens to the 70 million passed on to Liechtenstein? It remains an open question but it is a fair guess that the Swedish fisc will consider this to be permanent establishment income in Sweden of Interogo. What an irony it would otherwise be in these situations if Sweden should lose its taxing rights on outgoing royalties to foreign licensors because it taxes them as net (business) income instead of a final source gross income by withholding!

Permanent establishments

The second issue, as mentioned above, discussed at the IFA seminar was the OECD's new commentaries in the model treaty of the definition of permanent establishments. These problems, however, are too comprehensive to discuss in this report. See again OECD's home page.

However, my main reaction to what was said is the desperation one feels from the level of complexity and detail to which this problem has now risen! From the original 15 pages of commentaries these have now grown to 37! And considering further that this material shall apply to constantly varying facts and circumstances in each and every case, one can easily imagine the misery of the tax payer and the fiscal authorities of dealing with these problems.

But to solve these problems - like Alexander's slicing of the Gordian knot - I propose, which I did in an article already in 1996 in Skattenytt, that Sweden should unilaterally abolish taxation alltogether of ”small” permanent establishments during (say) the first five years of their presence in our country. This, actually, was something that was suggested in some long-forgotten EU report. And the idea as such was indeed adopted by Sweden and Denmark (in our tax treaty) during the construction of the Öresund bridge. It could be worth while introducing this idea again to a new generation of policy makers.

The taxation of permanent establishments is something particularly complicated (and expensive) for small and mid-sized businesses. Moreover, in many cases, there is nothing or very little to tax as the start up period of a business is often burdened by high costs. Cost which to a large extent represent wages paid to employees who are subject to tax in Sweden. Or, in other words, we are considering a system that creates new jobs! Also, of course, the business will allways generate employers fees, value added taxes etc. And - which I especially thought of during the seminar presentation - think of all the costs and head-ache spared for employers, taxpayers and their experts, the fiscs and our tax courts by doing away with permanent establishment taxation of this kind.

First of all in a tax regime of this kind one must of course determine what is meant by a ”small” permanent establishment. In my 1996 article I referred to an explanation hereof by the EU. Personally I suggested a business employing up to 25 people and/or with a turnover of not more than 7 million ECUs. In order to prevent an undue competitive situation (= double non-taxation) only enterprises that are subject to business taxation in their home countries (and which countries do not have a tax treaty with Sweden that prevent double taxation of business income by exemption) should be eligible for the proposed tax system. Maybe, too, financial institutions, which do not generate so many jobs, and tax haven companies which may engage in improper tax avoidance operations should be excluded. Losses made during the five year start up phase should of course not be deductible in the sixth and following years of operation. A good idea would also be to persuade our treaty partners, especially our Scandinavian neighbors, to introduce this system on a reciprocal basis in our multilateral tax treaty.

Finally and most importantly, just imagine the psychological effect of being able to present Sweden as a country where foreign entrepreneurs can settle and operate tax free! (And, by the way, where also – see my earlier blogs hereon – there are a number of very generous tax breaks for foreigners assigned to work in Sweden.)

Stockholm in November 2012

peter@sundgren.net

Correspondence with Robert Couzin, Canada, Chairman of the Permanent Scientific Committee of the International Fiscal Association (IFA) regarding tax information exchange

WebJournal on International Taxation in Sweden, WITS, (no 8/2012 November)

25 October 2012

Dear Robert,

 

As you may recall, but it is a long while ago, I recommended that you and the PSC should put international tax information exchange on the agenda for an IFA congress. Not that I am suggesting that this had any decisive influence but I am of course delighted that this topic now has been chosen as a subject for next year's meeting in Copenhagen.

I think we can all agree that information exchange and the worldwide rampant tax evasion it is trying to reverse is one of the most pressing issues today in international taxation. The amounts of capital and the income thereon which today is being hidden in the multitude of secrecy jurisdictions around the world is now of unbelievable and mindboggling proportions. Recent studies, see at www.taxjustice.net , estimate that high net wealth individuals held between 21-32 trillion dollars in offshore unreported accounts at the end of 2010. This sum is equivalent to the size of the United States and Japanese economies combined. A moderate rate of return of 3% hereon these sums subjected to an income tax at  30% would generate income tax revenues of 190 – 280 billion dollars roughly twice the amount of what OECD countries spend on all overseas assistance around the world. Inheritance, capital gains and other taxes would boost this figure considerably. The top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than 12.1 trillion dollars 2010 in cross-border invested assets for private clients at the end of 2010 a sharp rise from 5.4 trillion in 2005. In Sweden the tax authorities, in an official report (Skattefelskarta för Sverige, Rapport 2008:1), have estimated the non-reported foreign holdings by Swedish residents at 500-600 billion SEK. The Confederation of Swedish Enterprise' estimate is 900 billion SEK. If this latter figure is correct it would mean that each and every Swedish resident would have a foreign secret bank account of 100 000 SEK! About 75 000 swedes are suspected of having bank accounts in Switzerland.

It also turns out that this offshore sector which specializes in tax dodging is basically designed and operated not by shady no-name banks located in sultry islands but by the world's largest private banks, law firms and accounting firms headquartered in First World capitals like New York, London and Geneva. A detailed analysis shows that many of these banks are the very same ones that have figured so prominently in government bailouts and other recent financial chicanery.

And when at the same time debtridden countries around the world are standing on the brink of economic disaster and where ordinary citizens and loyal tax payers facing widespread redundancy are borne down by ever growing tax bills and other charges and where secrecy jurisdiction practices are giving rise to outright poverty in many third world countries, it is shameful and completely unacceptable that – and let the rhetoric be very clear in this respect – a number of criminals in Sweden and around the world do not shoulder their part of the tax burden for the common good of our societies. It is also frustrating, that when everything is being done to promote free trade, open markets and international investment opportunities, so many states are throwing wrenches into the machinery to prevent effective measures for information disclosure and transparancy in these matters.

A lot has been achieved regarding information exchange by the G 20 states and their executive arm The Global Forum of the OECD in the last couple of years. Most importantly is the doing away with bank secrecy which has been a formidable obstacle to information exchange. But, as many agree, the bar has been set to low by the Global Forum in prescribing information exchange only on request as the internationally agreed standard and disallowing fishing expeditions. The goal must be, as has been decided within the EU, to impose automatic exchange in tax information exchange agreements. Only this can have effect on the behaviour of all the tax criminals we are dealing with.

IFA consists of a body of the world's most experienced and influential tax experts and tax policy makers and thus commands a strong voice in international taxation affairs. Therefore the purpose of the congress must be to suggest proposals to enhance the effectiveness of information exchange and all measures that can be considered that will counteract the enormous tax evasion and other criminal activities we are witnessing today.

I have recently read the final directives by the general reporter Mr. Xavier Oberson¹ to be observed by the national reporters to next year's congress and I have recently also attended the annual meeting of the Swedish IFA branch to discuss the draft Swedish national report. And this has raised some doubts in my mind of what will be the scope and shape of the subject and its treatment at the congress. The directives have thus been limited to a rather technical investigation of the interpretation of information exchange agreements at the national level with particular emphasis on the limitations of their application including such aspects of procedural guarantees and taxpayers' protection under the European Convention of Human Rights and the International Covenant on Civil and Political Rights. I am not suggesting that such aspects are unimportant but they are not of such general interest as to merit a full IFA congress treatment thereof. The national reports may well serve as a comparative study/handbook for achademic purposes of the application of information exchange agreements but for the congress itself it is more important to set these agreements into their socio-economic context, which I have outlined above, underlining the urgency in these matters and, as already mentioned above, suggesting proactive measures of all kinds to stem the tsunami of tax evasion following from the use of secrecy jurisdictions.

It could thus be worthwhile exploring what other methods beside information exchange, that have been been adopted unilatterally by governments and tax administrations to obtain information about hidden assets around the world? In the US, I am told, there is a whistle-blower program where anyone that reports evidence that leads to the disclosure of tax evasion will be compensated from the tax collected thereof. In the U.K. the tax administration is using special internet spiders that can sift vast amounts of information - like tracing a property owner from foreign tax authority data to match with information about property to let on holiday web sites.The experiences of various offshore voluntary disclosure programs could be worth while discussing. In Sweden the tax administration has had some success checking credit cards geared to foreign bank holdings. And with regard again to information exchange agreements, what's wrong with a fishing expedition providing it is sensibly construed and paid for by the requesting state? And why should, by the way, always the requested state that has no fiscal interest in the matter, bear the costs for its efforts to provide information? It would make more sense that the requesting state should foot the bill and - why not - to share some of the tax collected from the information provided with the requested state! In this regard one should also consider, especially between high tax and secrecy jurisdictions, that requests for information will allways be running a 'one way street' meaning that the low tax secrecy jurisdiction will constantly be the requested state. Other secrecy barriers such as nominee shares etc. could be dealt with. Further lines of thought to follow up to improve tax payer compliance could be to increase tax penalties and jail sentences on international tax evasion and to lengten the periods of limitations for such criminal acts.

In his final directives Mr. Oberson has, it shall be admitted, raised an interesting issue of a tax policy nature regarding information exchange (which, considering his nationality, is not surprising). Namely the approach taken by Switzerland in agreements with the U.K. ad Germany where a withholding tax is levied on certain incomes deriving from holdings by U.K. and German residents instead of exchange of information and disclosure of the client's identity. The lump sum of the withholding tax thus collected is subsequently passed on to the first mentioned countries. This approach has been heavily contested by other states which could make this issue interesting to debate at the congress.

In summary I am thus suggesting that the discussion that will take place in Copenhagen on this subject should not limit the scope thereof to only the application of information agreements but to include also all conceivable aspects and proposals that can counteract the tax evasion that results from the use of secrecy jurisdictions.

The congress in itself offers an exellent opportunity to rouse public opinion in these matters and to inform about the vast amounts of tax revenue which is at stake. All efforts should be made and all opportunities taken to raise public opinion against tax evasion of the kind the congress is facing. (It is thus not helpful when the chief economist of the Skandinaviska Enskilda Banken Klas Eklund a wellknown public figure, in his book a couple of years ago ”The chase for the vanishing taxes” describes his bank clients who loyally declare their foreign assets in their Swedish tax returns as being naive.)

As you may have gleaned from the above I have a passionate interest in exchange of information matters and other aspects of counteracting international tax evasion something about which I have recently also posted my thoughts on my blog (in Swedish). My interest and knowledge in these matters, I would humbly suggest, is such that I would appreciate being considered to participate in the discussion panel in Copenhagen. If you also put an IFA member representing the banking community from Switzerland on the panel I believe we can look forward to a lively debate!

As I have a lot of IFA friends around the world who are 'subscribers' to my ”WebJournal on International Taxation in Sweden” (including yourself), which may have an interest in my views about the upcoming congress I intend to post this letter on my blog in the near future. I am also copying it to Mr. Anders Erasmie who is chairman of the board of Swedish IFA.

Best regards

Peter

30 October 2012

Peter - Thank you for your note. Good to hear from you. The subject for the Copenhagen congress is meant to broadly consider exchange of information and related matters. The branch reports, and the directives, are meant to elicit national practices rather than commentary or personal views. Therefore they could not easily accommodate many of your issues. However I assume that some of these questions will come up in the panel discussion at the Congress. That depends largely on the approach taken by the chair and the general reporter, in consultation with the PSC. The composition of the panel has not yet been finalized. Our process is to develop a long list of persons proposed and choose from that list in trying to achieve balanced overall representation (not just on this panel but all the panels) taking into account professional backgrounds, regions, countries, etc. While we can put your name on the list as a "volunteer" that is somewhat unusual. Generally, the names are proposed by PSC members or the various branches. Perhaps you should consider asking the Swedish branch to propose you. This should be done soon as the panel will be settled shortly. Regards, Robert Couzin Chair, Permanent Scientific Committee International Fiscal Association

1Partner Oberson Avocats, Geneva, member of the PSC of IFAand author of several recent articles on bank secrecy, tax fraud and international exchange of tax information.

Further on: ”Kamprad / Interogo / beneficial ownership”

WebJournal on International Taxation (WITS) no 7/2012 (September 2012)

The following contains the further correspondence that has taken place between Mr Anders Bylund of the IKEA Group and myself regarding the above matters. See also WITS no 2 and 6/2012.

Email from Anders Bylund 19 September 2012 

Hej Peter,

Thanks for your mail. Unfortunately, I can see that you continue to make incorrect assumptions and to draw incorrect conclusions. To put an end to our discussion I would like to give three examples;

Firstly; your incorrect interpretations of Hans' quote regarding longevity and stability. I was in the room when the interview took place, and have also discussed with Hans. Hans' quote intended to answer on the overall ownership structure with Interogo Foundation as the ultimate owner of Inter IKEA Group, and that is the correct context of his answer.

Secondly; registered ownership is a legal term. Register ownership of intellectual property rights can be based on a licence or on full ownership.

Thirdly; Inter IKEA Systems B.V. was the beneficial owner of the franchise fee income, also before the trademark transaction.

Kind regards
Anders Bylund
Inter IKEA Group

 

My email to Mr Bylund 21 September

Hej Anders,

Thanks for your mail. Regarding my incorrect assumptions, incorrect conclusions and incorrect interpretations I have the followong comments:

Firstly, my reference to Hans' statement regarding the IKEA trademarks was not an interpretation thereof but a direct quote as reported in Dagens Industri. If facts and circumstances to which you now testify as a witness to the interview should suggest otherwise this would ultimately be something to be sorted out with the relevant tax authorities. Also to be sorted out in such a context is how 100 billion SEK has wound up (taxfree) in Interogo.

Secondly, under continental law systems in general, (and in contrast to some common law jurisdictions), ownership rights, under the principles of numerus clausus, are indivisible. Moreover, as Inter IKEA Systems B.V. has aquired Interogos trademarks as of 1 January 2012, why then, which must be concluded from your reasoning, has Inter IKEA Sytems B.V. paid 75 billion SEK for something it already owns?

Thirdly, a license, if you say so, may permit a registration of ownership under trademark law but that does not necessarily represent beneficial ownership as defined under tax treaty law. As I have declared earlier beneficial ownership is a complex matter, which in this case I would humbly leave to be determined by the tax Court. Maybe, too, such a Court should consider whether the franchise (royalty) fees paid by all IKEA stores ( alledgedly 3 percent of gross earnings) to Inter IKEA are in accordance with arm's length principles for tax purposes.

End of discussion.

Kind regards
Peter Sundgren
WebJoural on International Taxation in Sweden (WITS)

Kamprad / Interogo / beneficial ownership

WebJournal on International Taxation in Sweden (WITS) no 6/2012 (September)

In WebJournal on International Taxation in Sweden (WITS) no 1/2012. see www. petersundgren.blogspot.com (February 2012) I wrote an article titled ”Ingvar Kamprad'sLiechtenstein foundation to pay tax in Sweden (and 39 other countries)?

Recently I received further information regarding the said foundation and Inter IKEA Systems B.V. based in the Netherlands which has prompted me to further investigate the tax consequences that I had drawn in my article. This has given rise to the following email exchanges with IKEA:

1.My mail to IKEA 29 August 2012

2.Mail from Anders Bylund 7, Head of Group Communications Inter IKEA Group, September 2012

3.My mail to Anders Bylund 11 September 2012.

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1. Mail from me to IKEA 29 August 2012 (English translation)

To

Inter IKEA Group

attention:

Hans Gydell CEO

Thomas Bergström, Head of Franchise Division

Hi,

My name is Peter Sundgren and professionally I introduce myself as an analyst of international tax matters. I have a blog, www.petersundgren.blogspot.com. Where I publish miscellaneous information on international tax matters for my ”WebJournal on International Taxation in Sweden”.

 

Recently I have focussed on the tax consequences which in my view may occur concerning the royalty payments that are made by IKEAs national companies/stores to the Inter IKEA Group for the use of the IKEA concept. Briefly, but se my blog for a closer analysis hereof, I believe that it could be suggested that Inter IKEA is not the so called beneficial owner of the IKEA concept but instead that Interogo in Liechtenstein is the true owner of the concept for tax purposes. If so the tax exemption which normally is provided in those countries wherefrom the royalties are paid according to relevant tax treaties does not apply as such exemption requires that the recipient of the royalty is the beneficial owner.

My assertion that Interogo should be considered the beneficial owner of the IKEA koncept is that Interogo is the legal owner of the concept. This is based on the statement made by Hans Gydell, who in addition to his role as CEO of Inter IKEA is also a member of the board of Interogo.

On my blog I quoted the following statement by Gydell: ” In a recent statement to Dagens Industri, Mr Hans Gydell, the CEO of Inter IkeaHolding, has said that the ownership of the IKEA trademark has beenplaced for all eternity in the tax paradise Liechtenstein, ”andeven if Mr Kamprad would so wish it would be impossible to breakthis up and transfer ownership elsewhere. It was precisely for thepurpose of protecting the IKEA concept and trademark for the futurethat this very special and stable ownership arrangement was chosenand I have never heard him regret this decision.”

This statement has been an extremely important basis for the conclusions I have suggested regarding IKEA's tax exposure on the matter of the beneficial ownership test.

However, today when I study the Inter IEA website I find the following message:

”The Franchise Division with Inter IKEA Systems B.V.,the owner of the IKEA Concept, (emphasis added) franchises the systems, methods and solutions to franchisees worldwide for marketing and sale of IKEA products under the IKEA trademarks.

The suggestion on the web that Inter IKEA Systems B.V. owns the concept does consequently not harmonize with Mr Gydell's declaration.

Consequently, now, and which is quite embarrassing for me, I shall have to correct and further comment the information previously supplied to the readers of my blogg. And maybe, indeed, I shall have to revise the conclusions I have made regarding the the tax consequences I have discussed.

Before doing so, however, I urgently request that you carefully explain to me the relationship between Interogo and Inter IKEA and clarify the conflicting information you have provided regarding the ownership of the Inter IKEA concept.

Yours sincerely

Peter Sundgren

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2. Email to me from Anders Bylund 7 August 2012

Hej Peter,

Thanks for your mail sent to my colleague Kirsten Saugman. It looks like there has been some misunderstandings regarding some facts leading to incorrect conclusions. It is important to not mix up the different IP rights, i.e. retail system and trademarks.

The transaction 1st of January 2012 involved the IKEA Trademarks. Other important IP rights such as systems, methods, proven solutions and confidential know-how and so on for operation of IKEA stores, what I here for refer to as the IKEA Retail System and also sometimes referred to as the IKEA franchise concept, has however always been fully owned by Inter IKEA Systems B.V.

Let me give you the background.

Inter IKEA Systems B.V. is the franchisor of the IKEA Retail System. Inter IKEA Systems B.V. always had full ownership of the IKEA Retail System. Inter IKEA Systems B.V. has also been the end receiver (beneficial owner) of the IKEA franchise fees.

Tax authorities in the Netherlands has consistently over the years confirmed that Inter IKEA Systems B.V. is the beneficial owner of the IKEA retail system and the franchise fee income.

Inter IKEA Systems B.V. is since January this year also the full owner of the IKEA Trademarks. On January 1st 2012 Inter IKEA Systems B.V. acquired the IKEA Trademarks from Interogo Foundation.

Inter IKEA Systems B.V. was before January 2012 the registered owner of the IKEA Trademarks according to a separate license agreement. In accordance with this license agreement, Inter IKEA Systems B.V. had an obligation to register and protect the IKEA trademarks. The agreement gave Inter IKEA Systems B.V. the exclusive right to utilize the IKEA Trademarks in its franchise operation.

Before the transaction Inter IKEA Systems B.V. paid a compensation for the rights to utilize the trademarks. This compensation was a separate payment and not linked to the franchise fee.

The franchise fee that the franchisees have paid to Inter IKEA Systems B.V. includes getting access to systems and methods to operate IKEA Stores, confidential IKEA know-how, and so on.

Inter IKEA Holding SA (the owner of Inter IKEA Systems BV) is fully owned by Interogo Foundation. This is the long term and stable ownership structure Hans Gydell was referring to in the article you mention.

The facts on our website and the comments on the overall ownership structure are consistent. Inter IKEA Systems B.V. is the beneficiary owner of the IKEA Concept and the IKEA Trademarks. Interogo is the owner of Inter IKEA Group.

We do realise that IP rights are complex topics. I myself have found it difficult to explain the previous structure and the complexity has caused misunderstandings. The transaction of the trademark in January consolidated and simplified the ownership structure of the IP-rights, and will hopefully help us avoid some misunderstandings.

Kind regards

Anders Bylund

Head of Group Communications

Inter IKEA Group

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3. Email from me to Anders Bylund 11 September 2012

Dear Mr Bylund,

Thank you for your email communication 7 September 2012.

I fully agree with your final statement therein that international propery rights are complex topics and I can understand that you yourself too have found it difficult to explain the structure and complexity of the IKEA concept and related matters.

The main specific piece of news provided by you in your email, and a fact of which I had absolutely no idea in March this year when I wrote my blog article, is that ”Inter IKEA Systems B.V. since January this year is the full owner of the IKEA Trademarks. On January 1st 2012 Inter IKEA Systems B.V. acquired the IKEA Trademarks from Interogo”. And also,I have now gained information that this, which, however, also slipped myattention at the time, was reported in the Swedish press sometime in July, some three to four months after my article was published.

But I still have a problem with the timing of Mr Gydell's statement that the IKEA trademarks were virtually locked into Interogo ”for all eternity” and that this arrangement, which Mr Kamprad had never regretted, could not be broken up even if he so wished. The statement by Mr Gydell was published in Dagens Industri 2 December 2011. And less than a month later - 1 January 2012 - the sale of Interogo's IKEA trademarks to Inter IKEA Systems B.V. to the tune of 9 billion euros (!) was completed. A suggestion that MrGydell, CEO of Inter IKEA and member of the board of Interogo, was unaware of this imminent and extrodinary deal is not convincing. Your explanation of Mr Gydell's statement about the (pre 2012) ownership of the trademarks as being a reference to Interogo's ownership of the shares of Inter IKEA at a time when the sale of the trademarks was under way also seems very bizarre.

Puzzling too is your declaration that ”Inter IKEASystems B.V. was before January 2012 the registered owner of the IKEATrademarks according to a separate license agreement” and that ”in accordancewith this license agreement, Inter IKEA Systems B.V. had anobligation to register and protect the IKEA trademarks. The agreement gave Inter IKEA Systems B.V. the exclusive rights to utilize the IKEATrademarks in its franchise operation”.

But it has just been established that IKEA Systems B.V. became the owner of the trademarks on 1 January 2012 and it is very odd, to say the least, that ownership should be aquired by a license agreement! And why should one have an agreement to license/franchise something that one owns? A natural interpretation of your information is rather that the pre 2012 situation, when Interogo still legally owned the trademarks, was that Interogo by the licence agreement, exacly as you mention and which I repeat, ”gave InterIKEA Systems B.V. the exclusive rights to utilize the IKEA Trademarksin its franchise operation.” This,if anything, clearly establishes a back-to-back sublicensing (chain) structure first between Interogo and Inter IKEA System B.V. and then between Inter IKEA Systems B.V and the various worldwide IKEAstores giving rise to license/franchise payments made in the opposite direction. And these payments which, it is suggested, have been made since 1989 when Interogo was set up, has amassed a (tax free) capital of about 100 billion SEK in Interogo. Mr Kamprad himself has confirmed this last mentioned sum.

As I mentioned in my blog article the beneficial ownership issue is a complex one (too) and is presently under review by the OECD Committe on Fiscal Affairs. In their 2011 discussion draft emphasis is placed on the ability of the recipient of a dividend or interest or royalty as the case may be ”to have the full right to use and enjoy the income received unconstrained by any contractual or legal obligation to pass the payment received to another person”.

In my view, and this has been strengthened by your information, the pre 2012 structure and payments of the royalties, does indeed establish that Inter IKEA Systems B.V. did not enjoy full ownership rights to the IKEA trademarks nor was the company unconstrained to pass its royalty payments received on to Interogo.This has therefore confirmed my view that Interogo for tax purposes is the beneficial owner of the franchise payments received by Inter IKEA B.V.

You have mentioned that the tax authorities in the Netherlands have consistently over the years confirmed that Inter IKEA Systems B.V. is the beneficial owner of the franchise fee income. This, it is suggested, is probably conluded without any knowledge about Interogo's existence in Liechtenstein, information about which surfaced only eighteen months ago. Moreover, such an interpretation,with all respect, does not preclude a different opinion by the tax treaty states that have so far exempted the payments from source taxes

I addressed my 29 August email to Mr Gydell and Mr Thomas Bergström,Head of Franchise Division. I trust that they are currently informed of these communications.

I for my part will keep my readership informed by putting this correspondence on my blog.

Kind regards

Peter Sundgren