Swedish private equity victory

City A.M. Reporter
SWEDISH private equity firm EQT secured a major victory yesterday as a court struck down an earlier tax verdict that would have meant billions of crowns in higher taxes.

The legal battle was the first in a string of similar cases and likely to set a decisive precedent between Sweden’s tax agency and private equity firms, which were facing more than 4bn Swedish crowns (£372m) in back taxes.

EQT said in August it would appeal the original decision, which involved taxing profit sharing, known as carried interest, earned between 2007 and 2009 at a higher rate.

An administrative court of appeal said carried interest received by partners in fellow private equity firm Nordic Capital should not be considered as salary paid from Nordic’s Swedish advisory firm, which the tax agency had argued.

The tax agency said it would analyse the verdict before deciding whether to appeal.