Swedish court finds Canadian fund comparable to Swedish special fund despite precious metal investments

The Swedish Administrative Court of Appeal of Sundsvall issued a ruling in June this year granting a Canadian mutual fund corporation a Swedish withholding tax (WHT) refund. The ruling challenged the Swedish Tax Agency’s interpretation of the WHT regulations concerning non-Swedish, non-UCITS funds.  

The case centers on Swedish WHT on outbound dividends to non-residents, governed by the Swedish Withholding Tax Act. The Act exempts foreign funds comparable to Swedish special funds from any WHT liability. The Canadian fund’s investments in precious metals were the primary issue, resulting in the Swedish Tax Agency denying the WHT exemption.

Despite the Swedish Tax Agency's argument that investments in precious metals disqualified the fund from being comparable to a Swedish special fund, the court argued that comparability does not require identical characteristics in all respects. The court highlighted the fund’s limited investments in precious metals and argued that its limited ability to invest in precious metals should not undermine its status as comparable to a Swedish special fund. 

Although not a Supreme Administrative Court precedent, the ruling highlights the difficulties in interpreting Swedish WHT regulations as well as the restrictive view generally taken by the Swedish Tax Agency in these matters and may indicate a welcome change in the regulatory landscape.

To learn more – read our article in International Tax Review: “Canadian fund deemed comparable to Swedish special fund despite precious metals investment | International Tax Review”. 

Should you require any assistance or wish to discuss the permissible asset classes for your fund’s investments, or to determine your eligibility for the domestic special funds exemption, please do not hesitate to contact us.