LONDON/STOCKHOLM Aug 21 Sweden is demanding
that private equity firm EQT Partners and some of its employees
pay 647 million Swedish crowns ($100 million) in tax on past
profits as it cracks down on buyout firms.
Sweden has been trawling through tax returns and earnings
declarations going back to 2005 of private equity firms that
were paying tax at low rates or, in some cases, not at all.
It wants to tax the majority of private equity carried
interest, a share of profit on deals, at the highest income tax
rate of 55 percent, not at the capital gains rate of up to 30
The prominent and powerful Wallenberg family's EQT, said the
Swedish tax authorities would retroactively tax about 20 current
and former employees of EQT as well as the company itself for
income between 2007 and 2009.
The tax authority said it had asked EQT to pay 334 million
crowns and the employees 313 million for that period. It has
already demanded 100 million crowns more for 2006.
EQT said it would challenge the demand.
"The parties concerned have followed all rules and
regulations in Sweden, fully declared income and provided all
relevant information to the tax authorities. Our view is that
nothing new has been found in the investigations that warrant a
retroactive change," chief operating officer Johan Bygge said.
EQT said income declarations from the individuals concerned
had been approved by the tax authorities for the last 18 years.
"The behaviour of the tax authorities creates a high level
of uncertainty for EQT Partners AB and its employees," the
company said in a statement.
Among other buyout firms facing retrospective tax charges,
Nordic Capital was asked for $118 million and nearly $32 million
of penalties in 2010. It is also contesting the tax demand and
is yet to pay anything.
($1 = 6.4788 Swedish crowns)
(Editing by Louise Ireland)