OSLO, Feb 20 (Reuters) - Norwegian state-owned utility Statkraft said it may have to put on hold some planned investments if the tax office goes ahead with a 4 billion crown ($511 million) claim for unaccounted taxes.
Statkraft said previously that it received a preliminary claim from the Norwegian tax office in October for unpaid taxes relating to the capital structure of its now closed Belgian unit Statkraft Treasury Centre SA (STC).
If the tax office formalises the claim, Statkraft would have to pay the amount immediately, meaning it would lose about a third of its record 2017 available cash, earned by selling all its offshore wind assets.
“Statkraft strongly disagrees that there is a legal basis for any reassessment ... A possible tax claim could affect Statkraft’s future financial capacity,” Statkraft spokesman Lars Magnus Gunther said on Tuesday, when asked about the possible consequences to investments of the tax claim.
“There is no formal decision yet ... (but) it will be possible to take it to court if necessary,” he added.
The utility last week reported record high cash and cash equivalents of 14.2 billion crowns, as of the end of its 2017 fiscal year, most of it intended to fund planned investments in onshore renewable energy projects.
Gunther said the company had no indication of when the tax authorities would make a final decision and had not made any relevant provisions in its balance sheet.
The Norwegian tax office found the company was not compliant with the “arm’s length principle,” Statkraft said its 2017 annual results statement.
The tax reassessment regards STC’s income tax returns for the fiscal years 2008-2014 and the total financial exposure until 2017 is seen at 4 billion Norwegian crowns, the firm calculated.
Norway’s tax authority declined to comment on Statkraft’s case. Speaking generally, it said that any company that receives a tax claim has to pay the full tax immediately.
“Such claims must be paid immediately (irrespective of any ongoing appeals, litigation, etc. in relation to the tax claim),” Astrid Dugstad Tveter, head of corporate law at Norway’s tax office, told Reuters in an email.
The arm’s length principle applies to transactions between related parties. It states that the amount charged by one related party to another for a given product must be the same as if the parties were not related, said Tveter.
Failure to comply with this principle can provide a basis for reassessment, it said. (Editing by Susan Fenton)