Sweden – Transfer Pricing (2025)

Legal framework and scope

The arm’s length principle is referenced in Swedish domestic law through Section 14, paragraph 19 of the Swedish Income Tax Act (1999:1229). The definition of related parties is contained in Section 14, paragraph 20, which deems parties related where one party, directly or indirectly, participates in the management or supervision of the other party’s enterprise or owns shares in that enterprise, or where the same persons, directly or indirectly, participate in the management or supervision of both enterprises or own shares in both. These provisions set the domestic scope for transfer pricing rules. In practice, Supreme Administrative Court decisions (RÅ 1991 ref. 107 and HFD 2016 ref. 45) have been pivotal in interpreting and applying the arm’s length principle within Sweden.

Arm’s length principle and the role of the OECD Guidelines

Sweden does not rely on a detailed domestic codification of transfer pricing methods; instead, it applies the OECD Transfer Pricing Guidelines (TPG) as interpretative and practical guidance. The TPG are referenced in Supreme Administrative Court decisions and in preparatory work for transfer pricing documentation legislation, so methods and criteria described in the TPG are effectively implemented in Swedish practice. Consequently, Swedish authorities and courts apply OECD methods and guidance concerning method selection, comparability analysis, commodities, intangibles, intra-group services and financial transactions.

Definition of related parties

Pursuant to Section 14, paragraph 20 of the Swedish Income Tax Act (1999:1229), related parties are defined by management or supervisory participation and share ownership, including direct and indirect relationships. The provision addresses both the scenario where one party participates in the management or supervision of another and the scenario where the same persons participate in the management or own shares in both enterprises. The country profile does not contain alternative statutory definitions or additional numerical thresholds for familial relationships. If more granular domestic guidance on complex identification issues is required, no specific domestic guidance is provided in the profile and recourse to the OECD TPG is appropriate.

Methods and criteria for application

Sweden’s legislation does not enumerate specific transfer pricing methods as statutory choices; the profile explicitly states that domestic law does not provide methods. However, Sweden considers the TPG effectively implemented through Supreme Administrative Court decisions. Therefore, practitioners in Sweden use the OECD-recognized methods including CUP, Resale Price, Cost Plus, Transactional Net Margin Method (TNMM), Profit Split and other methods when appropriate. Regarding method selection, Sweden follows the OECD principle of the “most appropriate method” rather than a fixed hierarchy, so method choice is fact-specific and driven by the ability to reach an arm’s length outcome given the available comparables and facts.

Comparability and ranges

Sweden follows the comparability analysis guidance in Chapter III of the OECD TPG. There is no domestic preference for purely domestic comparables over foreign comparables, and the tax administration does not use secret comparables for transfer pricing examinations. While the legislation does not explicitly prescribe the use of an arm’s length range or statistical measures, Swedish interpretation of the TPG permits the use of arm’s length ranges and statistical measures where appropriate. The profile indicates that comparability adjustments are not required under domestic law; nevertheless, because Sweden follows the TPG, adjustments are considered and applied where necessary to improve comparability between transactions.

Intangibles and HTVI

Sweden does not have detailed domestic statutory guidance specifically for pricing transactions involving intangibles; it follows the OECD TPG on this subject. Concerning Hard-to-Value Intangibles (HTVI), Sweden has not enacted specific legislation to adopt the HTVI approach, but the profile notes that HTVI guidance may be considered, in relevant parts, when applying the arm’s length principle domestically; further details are available in Sweden’s HTVI Implementation Questionnaire. The profile does not report additional rules outside transfer pricing for intangibles.

Intra-group services and financial transactions

Sweden follows the OECD TPG on intra-group services and applies the simplified approach for low value-adding intra-group services (LVAIGS) described by the OECD. For financial transactions, Sweden likewise follows the OECD TPG; however, Swedish domestic law also contains provisions outside the transfer pricing rules that affect the tax treatment of financial operations. Specifically, Section 24, paragraphs 16–29 and Section 24 a of the Swedish Income Tax Act (1999:1229) include targeted interest deduction limitation rules and a general limitation on the deduction of financial expenses consistent with BEPS Action 4 standards.

Cost contribution arrangements (CCAs)

There is no specific Swedish legislation on cost contribution arrangements; Sweden follows OECD TPG guidance when assessing CCAs in practice.

Documentation and reporting requirements

Sweden requires the three-tier documentation model consistent with the OECD: a Master file, a Local file and a Country-by-Country (CbC) report. The Swedish rules have been applicable since 1 April 2017 for fiscal years starting after 31 March 2017. The relevant statutory provisions are contained in Skatteförfarandelagen, Section 39, paragraphs 15–16. The Master file and Local file must be prepared by the taxpayer but are only submitted to the tax authority upon request. The Local file shall be prepared no later than the deadline for the company’s income tax return; the Master file shall be prepared no later than the date when the parent company must file its income tax return. The CbC report must be filed no later than 12 months after the last day of the reporting fiscal year of the multinational enterprise group. Documentation may be prepared in Swedish, Norwegian, Danish or English.

Safe harbours, exemptions and materiality

Sweden does not have formal safe harbour rules or broad simplification measures beyond the general regime. However, there is a materiality-related exemption for documentation: transactions are considered immaterial and thus need not be included in the Local file when the total value of a Swedish company’s transactions with a related foreign company is below SEK 5 000 000 for the fiscal year. This exemption does not apply to transactions involving intangible property unless the intangible is unimportant to the company’s business. Additionally, micro, small and medium-sized enterprises as defined in Commission Recommendation 2003/361/EC are not obliged to prepare transfer pricing documentation.

APAs, MAP and timelines

Mechanisms available to prevent or resolve transfer pricing disputes include Advance Pricing Agreements (APAs) and Mutual Agreement Procedures (MAP). The profile indicates availability of bilateral and multilateral APAs, while unilateral APAs are not marked as available in this summary. The statutory framework for APAs is provided by Lagen (2009:1289) om prissättningsbesked vid internationella transaktioner, and Sweden’s MAP profile contains further information on treaty-based dispute resolution. The country profile does not supply detailed procedural timelines or average processing durations for APAs or MAP in this document, so specific domestic timelines are not provided here.

Penalties and other administrative considerations

There are no penalties specifically for failing to prepare transfer pricing documentation per se. However, if an audit leads to additional tax due to insufficient or incorrect information in the taxpayer’s return, a penalty of 40% of the additional tax generally applies. Year-end adjustments are permitted and expected where necessary to achieve an arm’s length result; Swedish tax authorities may adjust prices if it is determined in audit that transfer prices were not at arm’s length. The profile indicates that Sweden does not have a secondary adjustment regime as presented in the questionnaire (marked as No).

Attribution of profits to permanent establishments (PEs)

Sweden follows the Authorised OECD Approaches (AOA) for attributing profits to permanent establishments. Swedish tax treaties largely follow the OECD Model Tax Convention; in those treaties based on the 2010 or later revisions of Article 7, Sweden explicitly follows the AOA. Where older treaties do not contain the revised Article 7, Sweden still applies the AOA principles and uses the Report on the Attribution of Profits to Permanent Establishments (17 June 2008) for guidance. The profile also notes that Sweden has made an observation on the Commentary to Article 7 concerning different approaches for attributing “free” capital.

Conclusion

Sweden’s transfer pricing framework is grounded in the Swedish Income Tax Act and is interpreted through Supreme Administrative Court case law and the OECD Transfer Pricing Guidelines. While the law does not enumerate specific statutory methods, Sweden applies the OECD methods and the “most appropriate method” criterion, follows OECD guidance for comparability and documentation, mandates the Master file/Local file/CbC model with practical exemptions for immaterial transactions and SMEs, and provides APA and MAP mechanisms for dispute prevention and resolution. Specific procedural timelines for APAs and MAP are not detailed in this profile and should be sought in the relevant national procedural guidance or the Swedish MAP profile.

References

For further information and access to the official OECD country profile, see https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html