Cecilie Amdahl
Partner
Oslo
Newsletter
Norwegian Supreme Court rules against Elopak in dividend taxation case
by Cecilie Amdahl and Morten Platou
Published:
In a recent ruling, the Norwegian Supreme Court has upheld the taxation of dividends received by Elopak ASA from its Swiss subsidiary, Elopak Systems AG (ESYS), during the years 2010 to 2014. This ruling confirms that the dividends are not comprised by participation exemption on the basis that Switzerland was classified as a low-tax jurisdiction outside the EU/EEA during the relevant period.
Background of the case
Elopak ASA, a Norwegian company specialising in carton packaging solutions, received approximately NOK 800 million in dividends from ESYS over the period from 2010 and 2014. During this time, ESYS benefited from Switzerland's Mixed Company Regime, which offered an effective tax rate of around 10%, being lower than Norway's corporate income tax rate. Although ESYS opted out of this regime in 2010, becoming subject to a higher tax rate of approximately 20%, the eligibility for the Mixed Company Regime remained a pivotal factor in the legal proceedings.
Legal proceedings and court findings
Our comments to the result in the Appeals Court can be found here.
The Supreme Court's recent verdict aligns with the earlier judgments, emphasising that the potential application of the Mixed Company Regime is sufficient grounds for considering Switzerland a low-tax jurisdiction, irrespective of ESYS's actual tax payments. The ruling was passed under dissenting votes, as the minority argued that the factual taxation of ESYS should be decisive.
Implications of the ruling
This ruling illustrates the importance of understanding local taxation of entities with Norwegian inbound or outbound investments, especially concerning jurisdictions with favorable tax regimes. It highlights that eligibility for certain tax benefits can influence Norwegian tax obligations, even if those benefits are not utilised. For multinational corporations, this decision serves as a cautionary tale about the complexities of cross-border taxation and the necessity for thorough tax planning and compliance.
This case sets a precedent in Norwegian tax law, clarifying the criteria for defining low-tax jurisdictions and the taxation of dividends from subsidiaries operating in such regions.
