Dividends from a Swiss subsidiary were taxable

The Norwegian parent company, Elopak ASA, received dividends of approximately NOK 200 million in both 2010 and 2014 from its Swiss subsidiary. Until 2009, the subsidiary was taxed in Switzerland under particularly favorable rules (effective tax rate around 10 percent). However, from 2010, the company chose to be taxed under the ordinary Swiss rules (effective tax rate around 20 percent). Norwegian tax authorities disregarded the company's choice and taxed the dividends, arguing that Switzerland was a low-tax country.

The Supreme Court upheld the State's decision to tax the dividends. In line with previous case law, the assessment of whether Switzerland is a low-tax country should be based on the effective tax level in Switzerland for a typical company in the industry. Therefore, atypical choices by the company should be disregarded.

Two justices dissented, arguing that the dividends should not be taxable. These justices emphasised the wording of the tax law.

The Supreme Court unanimously concluded that the EFTA Convention does not require the dividends to be tax-free. The relevant rules in the Convention should be interpreted differently from the corresponding rules in the EEA Agreement.

This case clarifies the content of the Tax Act's concept of low-tax countries and the content of the EFTA Convention.

Read the judgment from the Supreme Court (PDF)

Areas of law: Tax law and international law, sections 2-39 and 10-63 of the Tax Act and the EFTA Convention. 

Key paragraphs: 42, 46–50, 65–67 and 70–73 

Justices: Falkanger, Falch, Høgetveit Berg, Sæther, Sivertsen