Sweden: Tax exemption for industrial activities under energy tax law
A ruling addressing whether certain industrial activities qualify for a tax exemption under the energy tax law
Tax exemption for industrial activities under energy tax law
The tax board (Skatterättsnämnden) issued a ruling addressing whether certain industrial activities qualify for a tax exemption under the energy tax law.
The energy tax law (Lagen om skatt på energi—LSE) does not define the term “industrial activity.” The Swedish tax agency's position has been that the company's main activity, based on turnover, must be industrial in order for tax exemption to be considered. This approach, however, has resulted in different opinions in several court decisions.
A company applied for a ruling. The company conducted grain processing at facilities that required large investments in machinery such as scales, dryers, aspirators, and crushers. The question was whether the business’s activity was industrial according to the energy tax law and thus eligible for the tax exemption for the consumption of electricity and fuel in the manufacturing process.
The tax board considered that the activity described in the ruling application could be considered industrial even though the Swedish standard industrial classification (SNI) code for the activity was not industrial in this context. Furthermore, it was noted that the company's main activity must be industrial, but what constitutes the company's main activity would need to be determined based on energy consumption. The conclusion in this matter was that the company's activities were considered industrial for purposes of the energy tax law.
Read a February 2022 report (Swedish) prepared by the KPMG member firm in Sweden
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