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Sandvik motions for a legal review of the judgements on leasing of aircraft

As has previously been announced, the Swedish Supreme Administrative Court 24 June 1998 disallowed depreciation deductions in connection with aircraft leasing.

This lead to an extra tax cost of SEK 110 M, which was charged to the Group's result for the first half year 1998.

The company has in conjunction with the other parties involved, Skanska and Stora, made an extensive analysis of the judgements and decided to motion for a legal review of the judgements by the Supreme Administrative Court.

The Supreme Administrative Court has based its decision primarily on a specific clause of the lease agreement. However, the Court did not take the contents of the whole clause into consideration. If this had been the case, the Court would – in the companies opinion – not have come to the same conclusion. The Court did not allow the parties to express their opinions on the meaning and function of the clause. The lower courts have not discussed the clause in their judgements and the National Tax Board has not put forward any argument in respect of the clause. The companies believe that they could have prevented the Supreme Administrative Court's misinterpretation of the clause if they had got the opportunity to express their view before the judgements were given. Since there are also other shortcomings with respect to the Supreme Administrative Court's interpretation of the relevant agreements, the companies have concluded that there are specific grounds for a legal review by the Court.

Although it is very unusual to require a legal review of a judgement by the Supreme Administrative Court, the companies have – after having received opinions from legal scholars – decided to require such a review.

Sandviken, 22 October 1998

Sandvik AB; (publ)