Sweden: Penalties for omission of Form N9 relating to negative net interest income (Court of Appeal decisions)
A Court of Appeal case concerning penalties for omission of Form N9 relating to negative net interest income.
Penalties for omission of Form N9 relating to negative net interest income
The Court of Appeal held in three different cases (case no. 5494-22, 2428-22 and 5692-22) that taxpayers that omitted Form N9 (relating to negative net interest income) from their income tax returns were subject to penalties.
Since the general interest deduction limitation rules were introduced on 1 January 2019, taxpayers that take deductions for negative net interest income according to the EBITDA rule (including negative net interest for previous years or that arose at another group company (so-called group equalization)) must attach Form N9 to their income tax returns. In addition, taxpayers that make deductions for negative net interest income according to the simplification rule must attach Form N9 if they are part of a community of interest or the taxpayers’ negative net interest incomes exceed five million kroner.
Court of Appeal decisions
All of the taxpayers in the cases before the Court of Appeal claimed deductions for significant interest expenses without attaching Form N9 to their income tax returns.
The court held in all cases that it was not possible to deduce from the information in the income tax return alone that the company had negative net interest, which meant that a Form N9 form was required to be submitted and the tax authority’s special investigation obligation was triggered. Nonetheless, the court found that the taxpayers’ failure to attach Form N9 meant that the taxpayers provided incorrect information and were thus subject to penalties.
The court further found that the requirement to attach Form N9 did not constitute new and complicated legislation that would provide grounds for exemption from penalties.
Read a January 2023 report (Swedish) prepared by the KPMG member firm in Sweden
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