Tax evasion ended with a setback of several hundred million kroner for Swedish BCG partners

A group of partners at the Boston Consulting Group’s Stockholm office have received a juicy tax hangover after the Swedish Tax Agency has gone through a dozen tax returns from a group of partners at the consulting giant.

According to Today’s Industrywhich mentions the agency’s decision, it is about 19 consultants who will have their tax bill adjusted up by a total of NOK 300 million.

The reason for the scandal is that the Swedish Tax Agency has put the brakes on what the Swedish newspaper refers to as a complicated bonus scheme for the BCG partners. The company is said to have issued warrants, or call options, in unlisted Delaware-registered companies, which enabled the partners to classify bonuses as capital income instead of ordinary income. The latter has a much higher tax rate.

450 mill. underrapportert

A total of 40 assessments have been made, from the income years 2017 to 2021, where SEK 450 million have been underreported according to the Swedish Tax Agency. As a result of the reclassification of the income, the basis has been increased to SEK 799 million for the years in question, distributed among the 19 consultants.

On an individual level, the taxable income is increased by anything from just over a million Swedish kroner to over 20 million kroner. This means that several of the consultants are now listed with annual salaries of anywhere between four and 37 million Swedish kroner.

Erik Flinck, head of BCG’s Stockholm office, has informed DI that the company plans to appeal the decision, while BCG’s country manager in Sweden has refused to comment on the matter to the newspaper.

– After investigations, the Swedish Tax Agency has come to the opinion that income from warrants should be taxed in the same way as ordinary employment income, and not as capital income. If the decision is appealed, it will be up to the court to decide how the income should be taxed, says the Tax Agency’s legal representative Thomas Bjurberg to DI.

Global brake

In a number of cases this autumn, DN has discussed the salary level in the consulting industry in Norway, about everything from starting salaries to “particularly independent positions” and incomes for the Norwegian top brass.

At the same time, it has become clear that last year’s strong monetary policy tightening, in the face of an increasingly turbulent macroeconomic climate, has put a brake on the growth estimates. At the beginning of November, the Financial Times wrote that McKinsey and BCG are freezing new graduates’ salaries next year, when demand among customers and higher prices have contributed to a change in mood in the industry.

In February wrote Bloomberg that McKinsey will cut around 2,000 positions, with the hope that the downsizing will be able to help maintain the juicy bonus payments to the partners. (Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For further terms see here.