Nordic Roundtable: Riding out the storm


An experienced Transaction Services partner, Burton has worked extensively with private equity clients since 1993. He moved to Sweden in 2012 to head PwC’s private equity team.

Karlsson joined Nordic in 1998 and is the firm’s managing partner, based in Stockholm. He previously worked in the advisory group at JPMorgan in London.

A partner with the Swedish law firm since 2004, Kokko has extensive M&A experience and advises domestic and international private equity firms across a wide range of industries.

Nyquist is the Head of Buyout Fund Investments for Skandia Liv. He joined the insurer in 2008, having previously worked for Arthur D Little.


Riding out the storm

PEI: The industry has been closely watching the carry tax situation in Sweden, where the tax agency has been applying a new interpretation of law retroactively to some firms and presenting them with large tax bills. Where do things stand now?

Karlsson: There have been recent tax decisions for Altor, IK, EQT, but they go very much along the same lines as previous cases, so fundamentally very little has changed since last year.

It causes a fair amount of anxiety, because you could basically summarise the tax authority’s argument as: ‘In our opinion, carry should be taxed as salary’, rather than pointing to specific legislation. If that argument wins, then I think the entire tax law comes into question. What’s the next case where the tax authority says ‘this is our opinion’ and then that becomes the law? So it goes beyond private equity in terms of importance and uncertainty.

What will happen next?

Karlsson: We happened to be the front-runner in this process and will be in a second round of courts at the end of November where there will be a new decision. That will not be final, because there is a third round, the Supreme Court, to which we may get our case admitted.

Are you expecting them to rule in your favour?

Karlsson: We feel very strongly that the tax authority has not yet explained what sort of legal basis they have for their case. We have talked to virtually all tax experts in Sweden and – outside of the tax authority – all agree that the tax authority have no legal basis for their claims. We even have former Supreme Court justices and people who have written the tax law supporting us, so we feel very confident … but we’ll have to see.

Kokko: The outcome is of course difficult to predict. But needless to say, all of us who are interested in and working with private equity are waiting for this ruling, [which is] expected around the year end. Depending on the outcome, it may have a significant impact on the private equity community in Sweden.