Hard to value intangibles from a Swedish perspective

Abstract: The purpose of this thesis is to study the work of the OECD presented in the Final BEPS-Report under Action 8 concerning hard to value intangibles in a Swedish context. Further, the OECD Model Tax Convention and its Commentaries are discussed in terms of their validity as a source of law in a Swedish perspective, or if there is a requirement now or after the implementation of Action 8 for changes to the Inkomstskattelagen, and particular the Korrigeringsregeln. The OECD introduces in the Action 8 of the Final BEPS-Report an ex post approach with a correction mechanism to transfer prices set prior to the conclusion of the agreement. This change will certainly give rise to a more complicated process for the involved companies to assess the “reasonable” transfer price. The ex post mechanism will also increase business risks and most likely affect the structuring of the MNE's business in a way where tax concerns will at least partly overshadow strictly commercial considerations. The conclusion in this thesis is that the ex post adjustment mechanism constitutes a substantial risk for situations of double taxation due to uncertainties regarding whether the ex post adjusted price is in line with the arm's length principle, and how different states interpret and classifies the adjusted transfer price concerning if and to what extent ex post tax reductions are allowed. From the Swedish case law involving transfer pricing of hard to value intangibles, the courts have without hesitation adopted the Model Tax Convention including its Commentaries as source of law. The conclusion in this paper is that after the implementation of BEPS, the courts will still accept them as a source of law, but possible situations of double taxation will eventually lead to the need for a re-write of the Inkomstskattelagen instead of relying on the soft law of the OECD.