Tax strategy

Handelsbanken plc (hereafter ‘Handelsbanken’ or ‘the Bank’) recognises that its success derives from the trust it enjoys from its customers, counterparties, employees, investors, government authorities and the public in general. It also understands how taxation plays a key role and contributes to a sustainable development of society. Ethical, moral, and sustainable conduct in relation to tax matters, are therefore vital. 

The Bank’s Tax Policy (‘TP’) sets out the general framework within which the Bank will operate when considering tax related matters. It reflects the Bank’s core values and its commitment to act as a responsible corporate citizen and to comply with the HMRC Code of Practice on Taxation for Banks. 

The TP provides a number of ‘principles’ which must be followed by all employees  with regard to tax risk management, tax planning, professional conduct, and best practice when working with tax authorities. It complements and supports the Bank’s Ethical Standards and Sustainability policies, and forms the basis for this Tax Strategy statement.  

This Tax Strategy statement summarises Handelsbanken and its UK subsidiaries’*  approach to UK tax risk management, tax planning, and is relationship with HMRC. It is  reviewed and approved by the Handelsbanken board on an annual basis, and the Bank regards its publication as complying with its obligations under paragraph 19(2) Schedule 19 Finance Act 2016. 

The Bank holds a very conservative approach to risk, and there are few areas where it is willing to accept more than the minimum level of exposure. This low risk tolerance is one of the fundamental tenets of the Handelsbanken business model, and also applies to tax related matters. The key risks linked to the Bank’s business operations are assessed to be:-

• Compliance risk - failure to submit timely and accurate returns or make payments to the tax authorities resulting in financial sanctions and/or reputational damage.

• Operational risk - failure in internal processes, systems or people resulting in unexpected tax costs, damages or reputational damage.

• Transactional risk - failure to adequately consider or control tax consequences of transactions entered into by the Bank, resulting in financial losses and/or reputational damage.

• Reputational risk - failure to comply with the Bank’s standards, resulting in a deterioration of its standing with customers, tax authorities, shareholders and the general public.

The Board of Handelsbanken holds ultimate responsibility for ensuring that tax related risks are managed effectively. Its tax risk tolerances, which articulate the level and type of risks the Bank is prepared to accept in pursuing it business objectives, are set out in the Bank’s Tax Control Framework. The TCF is approved by the Board on an annual basis, and details how tax related risks are identified, assessed, monitored, mitigated, and escalated through effective procedures and processes.**

The UK Chief Tax Officer (‘CTO’) is responsible for ensuring that tax risk tolerances are effectively embedded into risk management processes across the Bank. Material risk events and risks outside approved risk tolerance are reported by the CTO to the UK Chief Risk Officer and the Chief Financial Officer, and escalated to the relevant management and/or Board Committee at the earliest opportunity.

The effective execution of risk management roles and responsibilities is enabled through the adoption of the three Lines Of Defence (‘LOD’) risk governance model. 

The first line of defence is responsible for the day-to-day management of risks, as well as ensuring an effective control environment.  The second line consists of an independent risk management capability that provides objective independent review, monitoring, and challenge. The third line of defence provides independent assurance through a programme of risk-based audits (audit plan) approved by the Board Audit Committee.

As tax related risks may be found in numerous business areas, various departments within the Bank act as the 1st LOD. Oversight and independent challenge is provided by the CTO (supported by Operational Risk Control, and the in-house tax function). Additional assurance (3rd LOD), is supplied by the Bank’s Internal Audit Department, which carries out independent assessment of how key risks are being managed.

The Bank has a dedicated in-house tax function, and all staff involved with tax related matters hold (or are studying towards) relevant qualifications. To the extent that there is significant tax uncertainty or complexity, the tax (or other relevant) function will seek external professional advice or, where applicable, consult with the relevant tax authority.

The Bank endeavours to (at all times) act in accordance with all applicable tax laws and regulations, and to be guided by prevailing international agreements/standards dealing with tax related matters. This applies to both intra-group and business transactions with external parties, and to all products and services provided by the Bank. Handelsbanken supports  international efforts towards greater tax transparency and the Bank discloses its earnings and UK tax payments in the country-by-country report prepared and submitted by its parent company, Svenska Handelsbanken AB.

The Bank holds a conservative view towards tax planning. When providing products or services, or carrying out transactions, the Bank’s corporate social and ethical responsibilities (as set out in its Tax, Ethical Standards, and Sustainability policies) are always considered.

In relation to its own tax affairs, the Bank does not undertake transactions which, contrary to established tax practice, are designed to achieve tax results that circumvent or exploit gaps, mismatches, or disparities in tax legislations or international tax systems. All planning undertaken by the Bank supports genuine commercial activity, complies with both the spirit as well as the letter of the law and is in accordance with both the Bank’s corporate responsibilities and the HMRC Code of Practice on Taxation for Banks.

When working with its customers the Bank does not advise, promote or offer products or services designed to facilitate abusive tax avoidance or aggressive tax planning. Tax advantageous products, such as Individual Savings Accounts (‘ISAs’), are structured in accordance with the intentions of Parliament and/or established tax practice.

In the UK, tax advice and tax compliance services may only be provided by the Bank’s subsidiary, Handelsbanken Wealth & Asset Management Ltd.

Handelsbanken has adopted, and complies with HMRC’s Code of Practice on Taxation for Banks. In its dealings with HMRC and other tax authorities it seeks to be proactive, transparent and professional. Regular dialogue is maintained with the Bank’s HMRC Customer Compliance Manager to ensure any significant issues or uncertainties in relation to tax are discussed on a timely basis and that associated tax risks are minimised as much as possible.

Notes

• *These entities are Handelsbanken Wealth and Asset Management Limited, Handelsbanken ACD Limited, Handelsbanken Nominees Limited (Dormant), Handelsbanken Second Nominees Limited (Dormant) and Svenska Properties Nominees Limited (Dormant).
• **HWAM/ACD manage their tax related risks according to similar, but separate frameworks.