Fortum to Appeal Income Tax Decisions Made in Sweden
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.
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