Fnatic fined over one million SEK after avoiding payroll taxes

United Kingdom-based esports organization Fnatic has been fined over one million SEK by the Swedish Tax. This punishment was due to the organization being found guilty of not paying their payroll taxes in 2016 and 2017. The esports organization can appeal the decision in the next two months, though.

Fnatic’s Payroll Taxes

The Administrative Court of Sweden has determined that Fnatic will be responsible for paying employer contributions and tax surcharges. This was after the organization asked to be exempt from paying employer contributions and also reimbursed for agency costs in the initial appeal. Fnatic also claimed that since the organization was based in London, they shouldn’t be forced to pay Swedish employment taxes.

“The Administrative Court initially states that in the cases it is uncontested that the recipients are covered by Swedish social [security] and that they have not been approved for F-tax during the periods in question. Furthermore, it is undisputed that the company paid compensation to the recipients,” writes a translation of the verdict.

Administrative Court of Sweden

The investigation by the Court of Sweden began when Fnatic’s competitive players reported that their payroll fees were paid by the organization. This information was found in their tax declarations. However, Fnatic had not been paying such fees on behalf of their players. Fnatic then claimed that it was the players who were responsible to pay the right taxes. However, the Swedish Tax Authority disagreed because the players weren’t cleared for a program where they would pay their own corporate and social security contributions.

The resulting one million SEK fine is nearly $105,000 USD. No further information has been disclosed whether Fnatic will appeal the court decision again or accept the fine. While this news comes after reports that Ninjas in Pyjamas didn’t pay previous players, this might just be an error on the Fnatic organization’s side. Based on the information provided, there may just have been a misunderstanding in communication on the ‘paying’ of payroll taxes.