Fortum to appeal income tax decisions made by the Swedish Administrative Court regarding years 2009–2012

The administrative court in Stockholm, Sweden, has on 29 April given its

decisions related to Fortum's income tax assessments in Sweden for the years

2009–2012. Part of the court decisions were in Fortum's favour. Fortum will

appeal those not in favour, as Fortum disagrees with the interpretation of the

court.



If the decisions remain despite the appeal, the impact on net profit would be

approximately SEK 1,106 million (EUR 121 million). Fortum has not made a

provision, as based on existing legal analysis, EU Commission's view and

supporting legal opinions the decisions should be ruled in Fortum's favour.



"Fortum restructured its operations and reallocated loans in 2004–2005 to

ensure future operations. These reallocations did not impact Fortum's tax base

in Sweden. We find the assessments problematic, as even the rules as such allow

interest deduction, the tax authorities interpretation makes the rules

unpredictable. The matter concerns Fortum's right to deduct interest expenses

which relate to the reallocation of loans between Fortum's Swedish

subsidiaries, which according to the Swedish tax authority (STA) Fortum would

not be entitled to deduct. According to the court there were good business

reasons behind the restructuring, but court found them not to be such business

reasons that would allow interests to be deductible", says Reijo Salo, Fortum's

Vice President, Corporate Tax.



Fortum Corporation

Corporate Communications





Further information:

Reijo Salo, VP, Corporate Tax, tel. +358 50 45 24443





Background information:



Fortum received income tax assessments in Sweden for the years 2009–2012.

According to the tax authorities, Fortum would have to pay additional income

taxes for the years in question for the reallocation of loans between the

Swedish subsidiaries in 2004–2005, as well as additional income taxes for the

years 2010–2012 for financing of the acquisition of TGC-10 (current OAO Fortum)

in 2008. The claims are based on the Swedish interest deduction limitation

rules which entered into force in 2009.



In January 2015 the Swedish tax authority informed the Administrative Court

that it has abandoned its claim for the year 2010 and in February 2016 it has

abandoned its claims for the years 2011 and 2012 regarding the financing of the

acquisition of TGC-10. Moreover, in December 2015 and in February 2016 the

Swedish tax authority abandoned a part of the claims relating to the

reallocation of loans in 2004–2005.





Read more:



Fortum's Interim Report January-March 2016, Note 22: Legal actions and official

proceedings: http://apps.fortum.fi/investors/Fortum_Interim_Report_Q1_2016.pdf



Fortum's tax footprint is available online:

http://apps.fortum.fi/gallery2/Fortum_as_a_Taxpayer.pdf



Related press releases:



Press release 10 November 2014: Fortum will appeal Swedish tax authority

decision on additional tax for 2012:

http://www.fortum.com/en/mediaroom/Pages/Fortum-will-appeal-Swedish-tax-authorit

y-decision-on-additional-tax-for-2012.aspx



Press release 18 October 2013: Administrative court approved Fortum's appeal on

the Swedish tax authority's decision on additional tax for 2009:

http://www.fortum.com/en/mediaroom/Pages/administrative-court-approved-fortums-a

ppeal-on-the-swedish-tax-authoritys-decision-on-additional-tax-for-2009.aspx



Press release 14 January 2013: Fortum will appeal Swedish STA decision on

additional tax for 2010:

http://www.fortum.com/en/mediaroom/Pages/fortum-will-appeal-swedish-sta-decision

-on-additional-tax-for-2010.aspx



Press release 4 January 2012: Fortum will appeal the Swedish tax authority

decision on additional tax for 2009:

http://www.fortum.com/en/mediaroom/Pages/fortum-will-appeal-the-swedish-tax-auth

ority-decision-on-additional-tax-for-2009-1.aspx





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