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Swedish Parliament approves lowered tax rates for data centers from January 1st, 2017

November 2016 by

The decision taken yesterday by the Swedish legislator lowers the electricity tax rate for data centers in Sweden to 0.005 SEK or USD 0.00054 per kWh. This 97% tax cut will come into effect by January 1st, 2017 and will be applicable to both existing and new data centers exceeding 0.5 MW capacity.

The issue of lowering tax rates for data centers has been under political scrutiny for several years. The initiative has had a strong consensus across political aisles and has undergone an analysis by the Government to assure that it gives a long-term incentive for the industry. Yesterday the Swedish Parliament decided upon the proposed tax legislation which lowers the tax rate.

The new tax rate for data centers will correspond to the same rate as for other industrial sectors in Sweden. The changed tax rate from today’s 0.194-0.295 SEK or USD 0.02-0.03 per kWh to 0.005 SEK or USD 0.0006 per kWh, will result in a 97% electricity tax cut for data centers. The new tax scheme applies to both existing and forthcoming actors and is applicable for data centers exceeding at least a 0.5 MW capacity, measured as installed effect excluding cooling facilities.

”This Parliamentary decision sends a clear message that Sweden is serious about becoming the green home of the internet and taking global cloud service leadership over the short and long term”, comments Peter Ericson, Chairman of The Node Pole.

The decision has been expected from a global marketplace perspective, according to The Node Pole.

“The combination of low electricity prices, a competitive tax rate and the abundance of renewable energy provides a case for a long-term investment climate that is extremely competitive.” Peter Ericson adds. Effectively, Sweden as of January 2017 provides a 3.5-4.5 ¢/kWh market case with close to zero carbon emissions and favorable conditions for long-term cloud industry development.

“Data center investors are now looking at a total running electricity cost – which is the cost of energy, grid and tax - somewhere between 3.5 to 4.5 cents (USD) per kWh, which is a very strong case, most likely the strongest in the world compared to average total electricity prices for running data centers” comment Rick Abrahamsson, Industry Expert at the Swedish energy company Vattenfall. In order to facilitate sector wide investments for energy intensive industries under these favorable conditions, two Swedish energy companies, Vattenfall and Skellefteå Kraft, were earlier this fall announced as new owners of The Node Pole– and are expected to attain the formal ownership of the organization by February 2017.

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