The Swedish Supreme Court has taken up a case concerning a 63-year-old accountant who, through a limited company registered in the UK has helped other Swedish companies abroad to post revenues and expenses. However later the clients’ accounts were audited, several of them were convicted for economic crimes and accounting fraud in Sweden. The accountant is now himself serving a prison sentence for complicity.

The 63-year-old was however acquitted last spring, even though he had let the limited company pay private rentals and travel expenses for almost 1 million Swedish kronor. This was a result of the fact that the company’s financial dealings, which were considered a matter for the British authorities, had been approved by the limited company’s annual accounts without objection.

The Supreme Court recently announced an appeal and is expected to make a decision this autumn. The trial will, among other things, pay attention to a sentence of the European Court of Justice, stating that a legal person from one EU country may supply services in another country without being officially established there.

“It is obviously important to find out how this should be interpreted, considering that Swedish entrepreneurs have the right to start a company in any EU country they choose,” says Chief Prosecutor Lars Persson of the Swedish Prosecutor-General’s Office.

An increasing amount of Swedish companies are using this opportunity; according to the Swedish Companies Registration Office, 3 062 British limited companies are operating in Sweden through a foreign company branch, which is more than a 35 per cent increase over the last five years.

Even the Baltic states and especially Estonia are popular in this context. According to the Swedish Tax Agency’s latest data, 2 207 companies are registered in Estonia by Swedish representatives.
Many brokers claim that problems, such as a bad credit history, tax liabilities and other misdemeanours , do not constitute an obstacle to a fresh start across the Baltic Sea.

“Even if you have disqualifications or a bankruptcy behind you, it is possible to run an Estonian company in Sweden,” claims an intermediary who caters to entrepreneurs within the business sectors of construction, staffing, import, mail order and transport”.
“If anyone is saying that, then he is lying. Anyone with disqualifications is not allowed to operate subsidiaries in Sweden, regardless of where the registration took place,” says Ulf Sparring, who is part of the Swedish Tax Agency’s special initiative against organised crime.
The Authority regularly receives reports from the Estonian state about Swedish-owned companies and even brokers have been investigated.
“It is the marketing that is often false, including alleged promises that you can avoid having to declare taxes in Sweden despite being a resident here,” he continues. As for British limited companies, the Swedish Tax Agency has not been as active.
“We are also trying to start cooperating with Great Britain. It is a problem that there are still uncertainties regarding the accounting regulations over there,” says Ulf Sparring.

Read the full article in Dagens Nyheter here.