Swedish Court of Appeal Rules Against Fortum in Income Tax Case

Fortum will book a tax cost of 1,175 MSEK (EUR 123 million) in the second quarter 2017 results. The booking will not have any cash flow effect for Fortum, as the additional taxes and interest have already been paid in 2016.

The Court of Appeal in Stockholm, Sweden on 30 June 2017 ruled against Fortum related to the company’s income tax assessments in Sweden for the years 2009-2012. Due to the decision of the Court of Appeal, Fortum will book a tax cost of 1,175 MSEK (EUR 123 million) in the second quarter 2017 results. The booking will not have any cash flow effect for Fortum, as the additional taxes and interest have already been paid in 2016.

The case concerns Fortum’s right to deduct intra-group interest expenses in Sweden in the years 2009-2012. Fortum restructured its operations and reallocated loans in 2004-2005 to ensure future operations. Even though these reallocations did not impact Fortum’s tax base in Sweden, the Swedish tax authorities considered that the Swedish interest deduction limitation rules were still applicable in Fortum’s case.

“We do not agree with the court’s decision and we will apply for the right to appeal from the Supreme Administrative Court“, said Reijo Salo, Fortum’s Vice President, Corporate Tax.