FORTUM CORPORATION PRESS RELEASE 29 April 2016
The administrative court in Stockholm, Sweden, has on 29 April given its decisions related to Fortum's income tax assessments in Sweden for the years 2009–2012. Part of the court decisions were in Fortum's favour. Fortum will appeal those not in favour, as Fortum disagrees with the interpretation of the court.
If the decisions remain despite the appeal, the impact on net profit would be approximately SEK 1,106 million (EUR 121 million). Fortum has not made a provision, as based on existing legal analysis, EU Commission's view and supporting legal opinions the decisions should be ruled in Fortum's favour.
"Fortum restructured its operations and reallocated loans in 2004–2005 to ensure future operations. These reallocations did not impact Fortum's tax base in Sweden. We find the assessments problematic, as even the rules as such allow interest deduction, the tax authorities interpretation makes the rules unpredictable. The matter concerns Fortum's right to deduct interest expenses which relate to the reallocation of loans between Fortum's Swedish subsidiaries, which according to the Swedish tax authority (STA) Fortum would not be entitled to deduct. According to the court there were good business reasons behind the restructuring, but court found them not to be such business reasons that would allow interests to be deductible", says Reijo Salo, Fortum's Vice President, Corporate Tax.
Fortum Corporation
Corporate Communications
Further information:
Reijo Salo, VP, Corporate Tax, tel. +358 50 45 24443
Background information:
Fortum received income tax assessments in Sweden for the years 2009–2012. According to the tax authorities, Fortum would have to pay additional income taxes for the years in question for the reallocation of loans between the Swedish subsidiaries in 2004–2005, as well as additional income taxes for the years 2010–2012 for financing of the acquisition of TGC-10 (current OAO Fortum) in 2008. The claims are based on the Swedish interest deduction limitation rules which entered into force in 2009.
In January 2015 the Swedish tax authority informed the Administrative Court that it has abandoned its claim for the year 2010 and in February 2016 it has abandoned its claims for the years 2011 and 2012 regarding the financing of the acquisition of TGC-10. Moreover, in December 2015 and in February 2016 the Swedish tax authority abandoned a part of the claims relating to the reallocation of loans in 2004–2005.
Read more:
Fortum's Interim Report January-March 2016, Note 22: Legal actions and official proceedings: http://apps.fortum.fi/investors/Fortum_Interim_Report_Q1_2016.pdf
Fortum's tax footprint is available online: http://apps.fortum.fi/gallery2/Fortum_as_a_Taxpayer.pdf
Related press releases:
Press release 10 November 2014: Fortum will appeal Swedish tax authority decision on additional tax for 2012: http://www.fortum.com/en/mediaroom/Pages/Fortum-will-appeal-Swedish-tax-authority-decision-on-additional-tax-for-2012.aspx
Press release 18 October 2013: Administrative court approved Fortum's appeal on the Swedish tax authority's decision on additional tax for 2009: http://www.fortum.com/en/mediaroom/Pages/administrative-court-approved-fortums-appeal-on-the-swedish-tax-authoritys-decision-on-additional-tax-for-2009.aspx
Press release 14 January 2013: Fortum will appeal Swedish STA decision on additional tax for 2010: http://www.fortum.com/en/mediaroom/Pages/fortum-will-appeal-swedish-sta-decision-on-additional-tax-for-2010.aspx
Press release 4 January 2012: Fortum will appeal the Swedish tax authority decision on additional tax for 2009: http://www.fortum.com/en/mediaroom/Pages/fortum-will-appeal-the-swedish-tax-authority-decision-on-additional-tax-for-2009-1.aspx
Fortum
Fortum's vision is to be the forerunner in clean energy. We provide our customers with electricity, heat and cooling as well as other energy solutions that improve present and future life. Already 64% of our electricity generation is CO2 free. Our main markets are the Nordic and the Baltic countries, Russia, Poland and India. In 2015, we employed some 8,000 energy sector professionals, and our sales were EUR 3.5 billion. Fortum's share is listed on Nasdaq Helsinki. www.fortum.com