By Dominic Chopping
STOCKHOLM--Swedish engineer Sandvik AB (SAND.SK) said Thursday
that the Administrative Court of Appeal has ruled the company must
pay SEK5.8 billion in tax and interest relating to a dispute over
tax payments on intellectual property.
MAIN FACTS:
-In 2005, Sandvik implemented a reorganization of ownership and
management of intellectual property rights. All Swedish-owned
patents and trademarks were transferred to Sandvik Intellectual
Property AB.
-In Dec. 2007, the Swedish Tax Agency did not approve the tax
returns for the 2005 and 2006 fiscal years filed by the IP Company
and denied deductions for amortization of the intellectual property
rights.
-The Court of Appeal decided Sandvik will be taxed for a capital
gain in 2005 totaling SEK18.06 billion at the same time as it
approves the amortization of the intellectual property rights in
the IP Company.
-This will not affect Group earnings, as the additional SEK5
billion tax cost would largely correspond to the tax value of the
increased amortization in the IP Company which would be recognized
as income.
-However, Sandvik will be required to pay SEK5.8 billion in tax
and interest relating to 2005.
-In this case a significant part of the amount would be
recovered through reduced tax payments related to increased
amortizations in the IP Company.
-It primarily implies a reallocation of tax payments over
time.
-Sandvik is analyzing the Administrative Court of Appeal's
decision. The ruling will most likely be appealed to the Supreme
Administrative Court.
-At 1215 GMT shares traded 1.2% lower at SEK81.
-Write to Dominic Chopping at dominic.chopping@dowjones.com;
Twitter: @WSJNordics
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