Targeted Interest Deduction Limitations - Why do the Swedish rules clash with EU Law and what can be done?
(2024) HARN60 20241Department of Business Law
- Abstract
- This thesis evaluates how and why the targeted Swedish interest deduction limitation rules in Chapter 24 of the Swedish Income Tax Act have repeatedly clashed with the TFEU Freedom of Establishment, despite several revisions of the rules.
A thorough review of statutory text, legal preparatory works and case law pertaining to each of the three renditions of the Swedish rules is carried out, and key topics are identified and analyzed against a selection of doctrinal contributions.
The main conclusions are that both the legislator and The Swedish Supreme Administrative Court have had several opportunities to move closer to EU compatibility but have not done so. The Court’s recently upheld distinction between organizational and commercial... (More) - This thesis evaluates how and why the targeted Swedish interest deduction limitation rules in Chapter 24 of the Swedish Income Tax Act have repeatedly clashed with the TFEU Freedom of Establishment, despite several revisions of the rules.
A thorough review of statutory text, legal preparatory works and case law pertaining to each of the three renditions of the Swedish rules is carried out, and key topics are identified and analyzed against a selection of doctrinal contributions.
The main conclusions are that both the legislator and The Swedish Supreme Administrative Court have had several opportunities to move closer to EU compatibility but have not done so. The Court’s recently upheld distinction between organizational and commercial reasons is a problem, so is its failure to uphold the GAAR. The Court of Justice of the European Union (ECJ) Leur-Blom case, which was also mentioned in the recent C-585/22 AG Opinion, clearly shows a different understanding of commercial reasons. Both the legislator and the Court have done little to ensure a comprehensive evaluation of all related circumstances in practice, which may lessen the focus on base erosion.
The author disagrees with several remarks in the AG opinion for C-585/22. Rather than reconsidering Lexel, it can be expected that the ECJ will uphold its Cadbury doctrine of wholly artificial arrangements to justify restrictions based on abuse of rights, while they may add some nuance to what artificiality means related to internal loan arrangements. It can further be expected that the ECJ will clarify that the ALP should be understood in a broad sense which makes the Lexel judgment less dramatic.
New rules will need clear criteria, like the Dutch “tainted transactions,” to focus on cases which actually matter from abuse and base erosion perspectives. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9158449
- author
- Johansson, David LU
- supervisor
- organization
- course
- HARN60 20241
- year
- 2024
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- SAAR, interest deduction limitation, abuse, avoidance, ALP, Lexel, C-585/22, BEPS
- language
- English
- id
- 9158449
- date added to LUP
- 2024-06-10 09:20:09
- date last changed
- 2024-06-10 09:20:09
@misc{9158449,
abstract = {{This thesis evaluates how and why the targeted Swedish interest deduction limitation rules in Chapter 24 of the Swedish Income Tax Act have repeatedly clashed with the TFEU Freedom of Establishment, despite several revisions of the rules.
A thorough review of statutory text, legal preparatory works and case law pertaining to each of the three renditions of the Swedish rules is carried out, and key topics are identified and analyzed against a selection of doctrinal contributions.
The main conclusions are that both the legislator and The Swedish Supreme Administrative Court have had several opportunities to move closer to EU compatibility but have not done so. The Court’s recently upheld distinction between organizational and commercial reasons is a problem, so is its failure to uphold the GAAR. The Court of Justice of the European Union (ECJ) Leur-Blom case, which was also mentioned in the recent C-585/22 AG Opinion, clearly shows a different understanding of commercial reasons. Both the legislator and the Court have done little to ensure a comprehensive evaluation of all related circumstances in practice, which may lessen the focus on base erosion.
The author disagrees with several remarks in the AG opinion for C-585/22. Rather than reconsidering Lexel, it can be expected that the ECJ will uphold its Cadbury doctrine of wholly artificial arrangements to justify restrictions based on abuse of rights, while they may add some nuance to what artificiality means related to internal loan arrangements. It can further be expected that the ECJ will clarify that the ALP should be understood in a broad sense which makes the Lexel judgment less dramatic.
New rules will need clear criteria, like the Dutch “tainted transactions,” to focus on cases which actually matter from abuse and base erosion perspectives.}},
author = {{Johansson, David}},
language = {{eng}},
note = {{Student Paper}},
title = {{Targeted Interest Deduction Limitations - Why do the Swedish rules clash with EU Law and what can be done?}},
year = {{2024}},
}