Application for an accord regarding Church of Scientology in Stockholm, 802010-2623

Decision of the Tax Office (November 23, 1999)

The application for an accord is approved.


The Church of Scientology, through its representative Lars Engstrand by letter of 30th August 1999, has applied for an accord with the state regarding income tax assessments in the Commune of Stockholm for the years 1986-89.

In brief, the following has been stated as the basis for the application. In its decision, the Tax Office has arbitrarily imposed upon the Church of Scientology assessments for national income tax for the years 1986-89. The amount was conclusively decided by the Administrative Court of Appeal in Stockholm by a judgement handed down on the 1st of March 1999.

The church has not had any taxable income concerning the tax years 1990-1999. The Church of Scientology is an idealistic association with a religious purpose which is pursued entirely without any profit-making purpose. The activity consists of, among other things, worship, services such as baptizing, marriages and funerals, spiritual counselling and study of the Church's scripture. The Church of Scientology is coordinated in a national organization without common activity and otherwise, the various congregations are independent legal entities.

The Church is registered as an employer and has fulfilled its duty to report and timely pay withholding tax and employer's taxes in proper order. The income mainly consists of contributions received in the form of voluntary donations from its members. Further, certain income is received from the Church's sale of books and course activities. The bookkeeping has been reconstructed in order to be accepted by the tax office, even though the Church is of the opinion that it already fulfilled the requirements for an idealistic association, exempt from taxes.


In reviewing an application for an accord, the state must first adjudicate the outcome of any execution actions. Further, the state must estimate the economic outcome of the debtor being placed in bankruptcy, with a deduction of the costs that would thereby be incurred.

Another factor in the overall adjudication as to whether an application is to the advantage of the public, is the time remaining until it is statute barred. In this case, debts totalling 256,589 SEK (including penalties) are time barred as of 31 December 1999. The remaining debt totalling 1,035,397 SEK (including penalties) is time barred as of 31 December 2001.

Another condition for accepting an accord is that the applicant is judged to have the ability to continue as a viable activity after having executed the accord, and thus not incurring further tax debts. According to its statement, the Church of Scientology carries out its activities through voluntary contributions from its members without a profit-making purpose.

The Tax Office made a fiscal adjudication in October 1999 that the Church of Scientology is to be considered as an idealistic association for the public benefit which carries out an economic activity. The Tax Office further considers that the economic activity being conducted is a natural part of the publicly beneficial purpose and the association is thereby exempted from income tax pursuant to section 7, -5 of the Law about National Income Tax. With this, it also follows an exemption from Value Added Tax pursuant to the 4th chapter, section 8 of the Value Added Tax Law. It can be established that the Church of Scientology will not be charged income tax or VAT for the way that the activity is presently carried out.

In light of what has been stated about the debts and the costs related to a bankruptcy, and where the state cannot expect to receive any revenue and in light of the amount of the accord, the Tax Office considers that taking into account all the circumstances in this case the accord which is offered is advantageous to the public.

The Enforcement Office has, in an opinion, stated that they are not opposed to an accord, considering among other things that execution actions would not be expected to give revenue to the states. The Enforcement Office further states in its opinion that a forgiveness should not be granted in an amount which is larger than what would result in fully paying the principle debt. The Church of Scientology has been notified of this opinion.

The Accord

The total debt today to the Tax Office equals a principle of 629,041 SEK, auxiliary taxes of 589,600 SEK, and penalties of 73,325 SEK, totalling 1,291,966 SEK.

The accord offered includes payment of 630,000 SEK. Payment will be made in 5 installments with a larger initial payment (which has also been agreed upon by the Enforcement Office), as follows:

400,000 SEK 5 Dec 1999
60,000 SEK 30 Jan 2000
60,000 SEK 29 Feb 2000
60,000 SEK 31 Mar 2000
50,000 SEK 30 Apr 2000

The payment shall be made to the Enforcement Office in Stockholm, postgiro 220650-6.

If the terms of this decision are not fulfilled, the accord is cancelled and the entire original debt will be due for immediate payment.

Pursuant to the law about accords concerning debts to the state, etc. this decision cannot be appealed.

Goran Berglund Christine Bergner

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