Net Entertainment to fight extra tax decision

The decision of the Swedish Tax Agency to impose additional taxes on internet gambling software developer Net Entertainment NE AB has prompted the company to launch an appeal against the ruling, claiming the taxman’s decision is “unfounded” and announcing that it is to appeal.

After a tax audit in Net Entertainment NE AB concerning fiscal years 2007-2010, the Swedish Tax Agency announced its decision to impose additional taxes in the amount of approximately 92.1 million Swedish Kroner. The amount that was previously announced was 88.1 million SEK; the difference is due to an error in the previous audit memorandum from the Swedish Tax Agency and imposed interest.

The Swedish Tax Agency states in its decision that the transfer pricing that has been applied between the Swedish based parent company Net Entertainment NE AB and the Malta-based operations is not motivated. Thus, the Swedish Tax Agency gives certain agreements between companies within the Net Entertainment Group a different legal interpretation and economic substance to that reached by NetEnt‘s expert advisers PricewaterhouseCoopers and the law firm Lindahl.

Net Entertainment accordingly disputes the assessment of the Swedish Tax Agency, along with the financial sums involved as it relates to the income tax adjustment and the tax surcharges.

The company insists that it has followed applicable laws for taxation of its operations, which is also supported by the experts that it has consulted on the subject.

Net Entertainment sales, market and product strategic functions as well as customer support and hosting is based in Malta, where it has a licence to conduct business, while the group’s facilities for development are based in Sweden.

Net Entertainment claims it pays taxes according to the applicable laws, and based on the operations that are conducted in each country respectively.