The non-statutory anti-avoidance rule, which has been developed in case law and theory, consists of a basic condition and an overall assessment (the overall assessment being the additional condition).
The transaction consisted of several individual elements. The Court of Appeal agreed with the tax authorities that the individual elements of the transaction could be separated and assessed in isolation. The Court of Appeal pointed out that the acquisition of the parent company had very little commercial content, while the tax position was well known to the buyer. The acquisition of the parent company therefore appeared to be an unnecessary intermediary, and mainly tax motivated. The basic condition to set aside the transaction was therefore found to be met.
In order for the anti-avoidance rule to be applicable, it follows from case law that, after an overall assessment, the transaction must appear to be contrary to the purpose of the tax rules. A basic principle of tax law in relation to Section 6-1 of the Tax Act is that deficits and losses must benefit the person who has had the deficit or has suffered the loss. Here, the parent company had suffered the losses, while it was the purchaser of the parent company that generated the income and wanted to benefit from the losses. The purchase of the parent company with subsequent group contributions and utilisation of the tax loss carry-forward was, in the Court of Appeal's view, contrary to the aforementioned allocation principle and the purpose of Section 6-1 of the Tax Act. The additional condition for application of the anti-avoidance rule was therefore also met.
On this basis, the court ruled that the purchase of shares in HP Malmø Holding constituted an unnecessary step in the acquisition of the property Malmø Oscar 28 and that the transaction appeared to be contrary to the purpose of the tax rules, thus justifying the application of the Norwegian anti-avoidance rule on the disposition.
Even though it was assumed that the Dyvi case had significant similarities with the HP Malmø case, the Court of Appeal referred to factual differences between the two cases as well as clarifications of the legal basis in subsequent cases for the Supreme Court regarding the anti-avoidance rule (i.e., the "IKEA case").
However, the HP Malmø case has also significant differences with the IKEA case. The IKEA case concerned an internal reorganisation, which will be a true difference from purchasing a company from a third party.
In addition, the clarifications of the legal basis in the subsequent IKEA case are based on the assessments already made by the Supreme Court in another case (the "Aker Maritime case"). Hence, it is difficult to see how the IKEA case clarifies much compared to what was already stated by the Supreme Court with regards to the legal basis prior to the Dyvi case. This indicates that the court has been too modest in their emphasis on the similarities and the judgment laid out in the Dyvi case.
Furthermore, the threshold for applying the Norwegian anti-avoidance rule on cases where the transaction likely would have been carried out regardless of the tax positions, has historically been high. Much suggests that the purchase of HP Malmø Holding in order to acquire the property Malmø Oscar 28 would have been made regardless of the tax benefits resulting from the utilisation of tax positions through group contributions.
Lastly, the choice of the transaction structure appears natural from a corporate perspective. Based on this, the verdict – although seemingly too strict – may imply a lower threshold for applying the anti-avoidance rule than what has historically been the case. Hence, the result could seem contrary to the threshold previously laid out by Norwegian courts, and thus contrary to the threshold for changing the basis for tax calculations with reference to the Norwegian anti-avoidance rule.
The judgment from the Borgarting Court of Appeal has been appealed to the Supreme Court.