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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] The National Pension Service of Korea (NPS) has secured a major tax victory in Sweden, with Swedish tax authorities formally granting the fund tax-exempt status on dividends from Swedish listed equities. As a result, NPS will receive a refund of approximately KRW 11.5 billion (USD 8.4 million) in withholding taxes previously paid.
NPS announced on November 20 that Sweden’s tax authority finalized the refund decision on October 28, recognizing the pension fund as tax-exempt—an identical status already enjoyed by Sweden’s own public pension buffer funds (AP Funds).
With this decision, NPS will no longer be required to pay roughly KRW 8.6 billion in dividend withholding taxes annually, based on 2024 figures. The fund is also pursuing additional refunds totaling KRW 11.8 billion for taxes paid between 2021 and 2024.
Although Sweden’s AP Funds are exempt from domestic taxation, NPS—despite serving a similar public mandate—had been subject to dividend withholding taxes purely on the basis of being a foreign institution. In 2021, NPS filed for exemption, citing EU non-discrimination principles that prohibit differential treatment of foreign institutions comparable to domestic entities.
However, the review process faced years of delay due to ambiguous decision timelines. NPS continued to submit supporting documentation and sought local tax advisory support throughout the process. The breakthrough came earlier this year, when Finland’s public pension fund won a similar case in Sweden. Citing this precedent, NPS formally urged Swedish authorities in May to finalize its exemption.
The successful outcome marks the first time a Korean public pension fund has been granted tax-exempt status in Sweden without resorting to litigation. NPS achieved a similar win in Finland last year, recovering approximately KRW 8 billion based on the same EU non-discrimination principles. Refund procedures are also underway in Germany, Italy, Austria, and Poland.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
