Activision Blizzard's Coming 370-Million-Dollar Tax Liability

Feb. 08, 2019 9:15 AM ETActivision Blizzard, Inc. (ATVI)17 Comments
Alexander Johansson profile picture
Alexander Johansson
342 Followers

Summary

  • Activision Blizzard (ATVI) bought King in march 2016 and its Swedish subsididiary Midasplayer AB is fined extra on immaterial rights.
  • Swedish tax Agency (Skatteverket) is claiming 370 million dollars in tax.
  • This is not the first time King or its owners have been forced to pay more tax to "Skatteverket"

King was founded in 2003 and created the enormously successful game Candy Crush in 2012. The following two years it registered about 300-350 million dollars in profit. King was listed on the NYSE in 2014 and bought out soon after by Activision Blizzard (NASDAQ:ATVI) for 5 billion dollars in 2016.

Now the Swedish tax Agency wants its share of the slice. It claims that Sweden has lost the immaterial rights to games like Candy Crush and Farm Heroes and demand that King's Swedish Company Midasplayer AB pay 3.6 billion Swedish Crowns (SEK) or about 370 million dollars.

We believe that there has been a transfer of rights of the Company in Sweden. We want to tax this transaction by half of the value on the immaterial rights.

Says Roberth Glansberg, specialist for internal pricing at Skatteverket.

Previously it has claimed over half a billion SEK, equaling 55 million dollars, because it believes profits belonging in Sweden have been moved to Malta. This time the fine is considerably larger.

The tax claim was decided in December 2018 and covers everything from King's software and collected data for brands like Candy Crush and Farm Heroes. When the deal was made with Activision Blizzard in 2016 they were valued at about 32 billion SEK or about 3.4 billion dollars.

And Skatteverket now wants to tax half that amount since it believes the immaterial rights was disposed outside of Sweden.

King must pay the fine by the end of February.

The lawyers of King want Skatteverket to follow the guidelines from OECD regarding the pricing of immaterial rights, but the Swedish agency says no.

The guidelines constitute of no law from a Swedish perspective and can only be used as guidance.

Writes Skatteverket in its decision.

King has not yet appealed the decision.

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This article was written by

Alexander Johansson profile picture
342 Followers
Investor since 1998, joined the boom in tech and made some good money only to see it disappear again when the bubble burst. Now I run a company called AInvest, we focus on technical and model driven analysis of Cryptocurrencies and Forex. We create Machine Learning models to analyze fundamentals in data and the behavior of the markets.Contact me if you like a Machine Learning model made just for you and your investment.

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