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Flir Systems Inc in SEK 2.8 billion transfer pricing dispute with Swedish Tax Authorities.

Flir Systems Inc, a global leader in infrared Cameras, is involved in a SEK 2.8 billion transfer pricing dispute with the Swedish Tax Authorities.

In a recent 10Q filings Flir Systems Inc. provides information on the dispute:

“…the United States Internal Revenue Service (“IRS”) and other tax authorities regularly examine our income tax returns. Our financial condition and results of operations could be adversely impacted if any assessments resulting from the examination of our income tax returns by the IRS or other taxing authorities are not resolved in our favor. For example, during the quarter ending September 30, 2018, the Swedish Tax Authority (“STA”) issued a proposed tax assessment for the tax year ending December 31, 2012 to one of the Company’s non-operating subsidiaries in Sweden. The proposed assessment concerns the use of tax credits applied against capital gains pursuant to European Union Council Directive 2009/133/EC, commonly referred to as the EU Merger Directive, and indicates a suggested decision to assess taxes and penalties totaling approximately $300 million (Swedish kroner 2.8 billion). We believe the STA’s assertions in the proposed assessment are not in accordance with Swedish tax regulations and plan to defend our positions with the STA and through the Swedish court system, as necessary. Consequently, no adjustment to our unrecognized tax benefits has been recorded in relation to this matter. We believe that our recorded tax liabilities are adequate in the aggregate for our income tax exposures.”

Swedish news agency, Siren, reports:

Flir Systems, part of the Flir group with headquarters in the US, is required payment of SEK 3 billion by the Swedish Tax Agency in taxes and fines. According to the Swedish Tax Agency, the company has deliberately tried to avoid tax through a series of transactions involving a branch in Belgium.

For a long time, the Swedish Tax Agency has reviewed a restructuring within the Group that began in October 2011 when Flir Systems transferred a business area to a branch in Belgium. Assets were subsequently sold to a newly established Belgian company for payments in the form of shares.

Through a series of transactions, the assets have then been transferred to the US parent company in 2015. “The company claims that there are commercial reasons for the arrangement, but organizationally, the same result was achieved if the intangibles had been sold directly. The only difference is the tax effects, ”says Roberth Glansberg to the Siren news agency.

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