Attracting multinational tech-companies through environmental tax incentives

12 Pages Posted: 7 Dec 2020 Last revised: 4 Mar 2022

See all articles by Yvette Lind

Yvette Lind

Copenhagen Business School - CBS Law

Date Written: December 7, 2020


In this contribution, Sweden´s favourable tax regime which awards a significantly reduced electricity tax rate to data centres is examined. Facebook´s data centre in the North of Sweden (Luleå) is used as an illustrative case.The findings of the paper are applicable to other jurisdictions, such as Denmark and Finland, as they are subject to similar conditions. Data centres are, when subject to the tax regime, subject to less than 2% of the normal electricity tax tariff. Multinational tech-giants benefit heavily from it while many domestic companies (colocation centres) are excluded due to its technical design and attached administrative case law.

Initial calculations indicate there is tax savings of more than SEK 500 million (circa Euro 50 million) on an annual basis. Therefore, the tax regime acts as an international tax competition tool through its fiscal state aid function while, at the same time, eroding the tax bases and business life of northern Sweden.

It does not initially appear to infringe on EU state aid rules nor the principle of non-discrimination. This Illustrates that there is still some margin of freedom for individual Member States to compete through tax measures. Additionally, tax policy objectives of the tax regime are considered and analysed. In particular, the impact it has had on not only international tax competition but also the economy of local municipalities, local business life, and progressive climate goals. A critical commentary focusing on sustainability is applied throughout the paper.

Keywords: multinational enterprises, IT companies, tax incentives, energy taxation, state aid, international tax competition, data centres, tech-giants, co-location centres, climate goals, sustainability, tax policy

JEL Classification: K34, K32, K21

Suggested Citation

Lind, Yvette, Attracting multinational tech-companies through environmental tax incentives (December 7, 2020). Intertax vol 49 no. 11 2021, pp. 885-896, Available at SSRN:

Yvette Lind (Contact Author)

Copenhagen Business School - CBS Law ( email )

Porcelaenshave 18B, 1
Frederiksberg 2000

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