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Swedish tax agency resumes fight with private equity industry

19 Feb 2014

Sweden’s tax agency, Skatteverket, has appealed a 2013 ruling from the Supreme Administrative Court in a bid to ensure the country’s private equity industry pays higher taxes.

Nordic Capital had previously lost a case arguing carried interest should be classed as capital gains rather than income tax, but that ruling was overturned in a follow-up hearing in December.

The case could have wider implications for the Nordic buyout industry, as other Scandinavian governments could look to recoup more tax from private equity houses in the same manner.

AltAssets reported in August that EQT had also vowed to fight a decision by the Swedish tax authority to hit it with SEK647m of carried interest-based back-taxes. At the time EQT COO Johan Bygge said the decision to tax the company, partners and employees’ carried interest returns as income rather than the lower-rate capital gains was made “without any reasonable grounds whatsoever”.

Sweden is not the only country to take a closer look at the carried interest tax situation. In April it emerged that US private equity and venture fund managers could see their tax rates nearly double if US President Barack Obama succeeded in pushing his 2014 budget proposals through Congress.

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