The Supreme Administrative Court of Sweden (SAC) decided on 24 January 2023 to make a reference to the European Court of Justice (CJEU) regarding the withholding tax treatment of foreign public sector pension institutions. The reference comes after that the EU Commission initiated an infringement procedure against Sweden.

Three Finnish public sector pension institutions have engaged KPMG Finland to assist them in claiming refund of withholding tax suffered on Swedish source dividends. In their claims, the pension institutions have argued that they should be compared to the Swedish AP-funds (Allmänna pensionsfonder), which are part of the Swedish state and therefore exempt from tax. This has resulted in a situation where the Finnish pension institutions pay 15% withholding tax on Swedish source dividends, but the AP-funds receive the dividends completely free of tax. Thus so far, the Swedish Tax Administration and Administrative Courts have rejected the comparison between the Finnish pension institutions and the AP-funds.

In addition to assisting with the refund claims, a pension institution engaged KPMG Finland to file a complaint to the EU Commission regarding this discriminatory tax treatment. Because the Swedish authorities (including the SAC) have earlier rejected all claims filed by Finnish pension institutions, it is assumed that the SAC’s decision to make the reference to the CJEU is impacted by the infringement procedure.

Link to the reference: Mål: 6973--6977-21, 7550--7558-21, 664--669-22

Kaj Grüssner

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Kristiina Äimä

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