Sandvik Comments on the Administrative Court of Appeal’s Ruling

  Sandvik Comments on the Administrative Court of Appeal’s Ruling

Business Wire

STOCKHOLM -- June 27, 2013

Regulatory News:

In 2005, Sandvik AB (STO:SAND) implemented a reorganization of ownership and
management of intellectual property rights. All Swedish-owned patents and
trademarks were transferred to Sandvik Intellectual Property AB (IP Company).
The reasons for this reorganization were the need to gather the activities
relating to intellectual property rights into one company to highlight the
considerable worth of the intellectual property rights and to gain operational
advantages. This reorganization subsequently gave rise to two legal cases
relating to taxation – one concerning Sandvik AB and one concerning the IP
company. These have been considered in a coordinated action by the
Administrative Court and the Administrative Court of Appeal.

In December 2007, the Swedish Tax Agency did not approve the tax returns for
the 2005 and 2006 fiscal years filed by the IP Company and denied deductions
for amortization of the intellectual property rights. The following year, the
Tax Agency also denied the IP Company’s deduction for such amortizations. The
IP Company appealed the Tax Agency’s decision. The Tax Agency approved Sandvik
AB’s tax return for 2005. Subsequently, the Tax Agency, through the Public
Commissioner, filed an appeal against its own decision relating to the
reorganization. The Public Commissioner requested that Sandvik AB be taxed in
2005 for a capital gain or, alternatively, an underpriced transfer of
intellectual property rights, totaling approximately 18 billion SEK and, in
both cases, that the deductions for amortization of the intellectual property
rights in the IP Company should then approved. In June 2010, the
Administrative Court approved the Public Commissioner’s request for the
taxation of a capital gain. Sandvik appealed the decision to the
Administrative Court of Appeal.

Information relating to the case has been provided on a continuous basis in
Sandvik’s annual reports since 2007.

Sandvik’s appeal has now been addressed by the Sundsvall Administrative Court
of Appeal. The Court of Appeal’s decision is, if the ruling gains legal force,
that Sandvik will be taxed for a capital gain in 2005 totaling 18,063 million
SEK at the same time as it approves the amortization of the intellectual
property rights in the IP Company. However, this will not affect the Group’s
earnings, since the additional tax cost of approximately 5 billion SEK would
largely correspond to the tax value of the increased amortization for tax
purposes in the IP Company which according to IFRS policies, would be
recognized as income. However, Sandvik AB will be required to pay
approximately 5,800 million SEK in tax and interest relating to 2005. In this
case a significant part of the amount would be recovered through reduced tax
payments related to increased amortizations in the IP Company. It primarily
implies a reallocation of tax payments over time.

Sandvik is currently analyzing the Administrative Court of Appeal’s decision
and can therefore not give further comments at this point in time. The ruling
will most likely be appealed to the Supreme Administrative Court.

Stockholm, 27 June 2013

Sandvik AB

The information was submitted for publication on 27 June 2013.

Sandvik Group

Sandvik is a global industrial group with advanced products and world-leading
positions in selected areas – tools for metal cutting, equipment and tools for
the mining and construction industries, stainless materials, special alloys,
metallic and ceramic resistance materials as well as process systems. In 2012,
the Group had about 49,000 employees and representation in 130 countries, with
annual sales of approximately 99 billion SEK.

This information was brought to you by Cision http://news.cision.com

Contact:

Sandvik AB
Magnus Larsson, Vice President Investor Relations
telephone +46 8 456 12 40
or
Pär Altan, Vice President Group External Communications
telephone +46 8 456 12 37.
 
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