SWEDEN - A legislative proposal has been submitted regarding the taxation of foreign IORPs, Alex Inkapool writes.

It follows a ruling in the Swedish Supreme Administrative Court which itself was followed on from the European Court of Justice’s ruling in the so-called Skandia case.

That had ruled - much to everybody’s surprise - that foreign pension provisions could have different tax rules than Swedish provisions.

This ruling has been followed up by Skandia in advance notice from the Advance Tax notice board that upheld the Swedish court ruling.

“In Sweden you must have a established a legal domicile otherwise there will be no deduction for the pension provision,” says Ulf Rehnberg, senior director at the Ministry of Finance.

“This means that there is a distinction between Swedish pension provisions and foreign IORPs [institutions for occupational retirement_provision].

“Such a distinction is not self-evident according to EU law. However the conclusion is that the ECJ ruling it is still in accordance with the EG rules and regulations to differentiate between Swedish and foreign pension provisions.”

This view has been heavily criticised by the Swedish Confederacy of Employers, the Swedish Association of Insurers and most of the Swedish legal community.

They say you cannot discriminate foreign pension provisions and that is only a matter of time until the rules much change once again.

But Rehnberg points out that if the Commission’s case against Denmark for discrimination of foreign pension provisions is successful it could put Sweden in a difficult position. This is because Danish and Swedish rules are similar.

According to the legislative proposal, a foreign IORP that has a licence to conduct occupational retirement provisions in its own jurisdiction or is registered to conduct such business can engage in similar business in Sweden.

IORPs comparable to Swedish pension foundations are to be treated according to the law on Occupational Retirement Provisions, tryggandelagen, and IORPs that provide benefits comparable to insurance contracts is to be treated according to the rules applying for insurance companies.

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