Net Entertainment Against Additional Taxes

Following the decision of the Swedish Tax Agency to charge online gambling software developer Net Entertainment NE AB with additional taxes, the company announced filing an appeal against the ruling, claiming that the taxman's decision is "unfounded".

Based on the completed tax audit in Net Entertainment NE AB encompassing fiscal years 2007-2010, the Swedish Tax Agency decided to impose extra taxes amounting to cca. 92.1 million Swedish Kroner. The initially requested amount of 88.1 million SEK was increased after an error was discovered in the previous audit memorandum from the Swedish Tax Agency and due to imposed interest.

As one of the reasons for adjustment, the Agency states the transfer pricing applied between the Swedish based parent company Net Entertainment NE AB and the Malta-based operations which is not motivated. Therefore, the Swedish Tax Agency gives a different legal interpretation and economic substance to certain agreements between the Net Entertainment Group subsidiaries compared to the opinions issued by company’s expert advisers PricewaterhouseCoopers and the law firm Lindahl.

In view of the above, Net Entertainment disagrees with the appraisal given by the Swedish Tax Agency and the financial sums involved as they refer to the income tax adjustment and the tax surcharges. Furthermore, the company underlines that it has been acting in accordance with applicable taxation laws, corroborating the statement by the experts’ opinion on the subject.

The business activities of Net Entertainment are divided so that the group's development unit operates from Sweden while other facilities including sales, market and product strategic functions together with the customer support and hosting department have their base and licence in Malta. Net Entertainment insists that all their taxes are paid in accordance with the valid regulations and stem from the operations carried out in the respective country.

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