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Sweden's Administrative Court of Appeal has ruled in favor of NetEnt AB, a provider of software to the online gaming industry, in its dispute with the Swedish tax authority concerning certain transfer pricing arrangements.
The Swedish Tax Agency, Skatteverket, imposed additional tax of approximately SEK94.4m (USD11.3m) on NetEnt in January 2013 following an audit of the company's accounts for the tax years 2007-2010.
According to the firm, the assessment was based on an adjustment of transfer pricing arrangements between the group's Swedish parent company, Net Entertainment NE AB, and its Malta-based subsidiary, which is responsible for sales, marketing, customer support, and hosting.
Insisting that it "has followed applicable laws for taxation of its operations," the company appealed the assessment and a later ruling by the Administrative Court, which supported Skatteverket's conclusions. However, the ruling by the Administrative Court of Appeal on March 10 reversed the Administrative Court's decision.
Because it was confident in its legal position, the company said that it has not made any provision for additional taxes in its accounts, and therefore the ruling will not impact its reported earnings or financial position. However, NetEnt was awarded costs of SEK1.8m.
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