Klarna UK Tax Strategy 2025

Scope
Klarna Group plc is the ultimate parent company of the Klarna Group (referred to hereafter as “Klarna”). Klarna is headquartered operationally in Stockholm, Sweden and has operations, directly and through its subsidiaries and branches, around the world, including in the UK.

This tax strategy applies to Klarna Group plc, Klarna Group Midco Ltd, Klarna Group Holco Ltd, Klarna Financial Services UK Ltd, Klarna Bank AB UK Branch and all other Klarna presence in the UK relevant for UK tax purposes. While this document is specifically for the purposes of compliance with the UK Finance Act 2016, Schedule 19, paragraphs 16, 19 and 22 and thus may differ in form, it does not diverge in substance from the overall strategy of Klarna. This document shall be amended and updated, as appropriate, in subsequent annual periods.

References in this document to “UK taxation” and “UK taxes” are to the taxes and duties set out in paragraph 15(1) of the Schedule to Finance Act 2016, which include income tax, corporation tax, diverted profits tax, amounts for which Klarna is accountable under PAYE regulations, NIC, value added tax, customs duties, excise duties, stamp duty land tax and stamp duty reserve tax.

Governance arrangements
The responsibility of Klarna’s tax operations is primarily divided between the Board and the CFO. The Board is responsible for reviewing the UK Tax Strategy on an annual basis and for ensuring that there is a framework in place for the management and reporting of Klarna's tax affairs. The CFO has the overall responsibility for the finance operations within Klarna including tax management.

Within the Financial and Regulatory Reporting domain, there is a group of tax professionals who are primarily responsible for making sure that Klarna follows the UK Tax Strategy. In addition, local, external support and advice is sought as required.

Tax risk management is governed by Klarna’s Risk Policy and the Risk Assessment and Internal Control framework. Key members of the Tax team and other participants in Klarna’s Tax Function, as well as Klarna’s compliance and risk control teams, are all involved in the related processes. The framework includes, among other things, tax related controls, yearly risk and control assessment, and control testing. In addition, Klarna has a New Products/ Processes Approval Process to ensure that any major changes within Klarna are in line with the tax risk strategy and risk appetite of the Risk Policy.

Klarna’s attitude to tax planning and tax risk
Klarna aims to comply with local requirements and disclose information where required in all jurisdictions where business is carried out, while taking into account applicable rules on data protection and confidentiality. Klarna will declare and pay tax in the jurisdictions where taxable profits are earned in accordance with international transfer pricing rules.

Klarna does not engage in aggressive tax planning or tax avoidance. Aggressive tax planning is defined as transactions that are carried out solely or with the principal purpose of avoiding tax and where the substance of the transaction is not in accordance with its form. Tax avoidance occurs when planning frustrates the intention or spirit of the law for the purpose of reducing a person’s tax burden in a way that runs counter to the spirit or intention of the law, without being strictly illegal. Klarna has not entered into any structures of an artificial or contrived nature and works within the OECD framework as well as local domestic tax legislations.

Klarna’s strategy is to strive to achieve a fair tax level, meaning that Klarna’s tax positions are aligned with the business set up, compliant with applicable tax law and in line with the values and principles of Klarna. Tax positions adopted must be capable of being supported through technical assessments which apply both the letter and the spirit of legislation and case law. For substantial transactions where a tax position must be adopted, Klarna shall ensure that a technical assessment is made and, where deemed appropriate, obtain an external opinion.

Klarna monitors tax risk in the UK as well as in all major jurisdictions where business is carried out. This includes the identification and assessment of existing and pending tax laws and regulations and the evaluation of any major changes within Klarna through the New Products/Processes Approval Process to ensure alignment with Klarna’s tax strategy and risk framework.

Working with HM Revenue & Customs (“HMRC”)
Klarna is committed to having an open, honest and constructive working relationship with HMRC and other tax authorities, ensuring prompt disclosure and transparency in all tax matters and avoiding unnecessary disputes. The approach includes, where appropriate, seeking pre-transaction clearances from HMRC, and making tax compliance procedures, controls and records readily available for review by HMRC upon request. All inquiries by HMRC will be handled in a courteous, timely and professional manner.

From FY2025, Klarna’s UK incorporated legal entities fall within the scope of the Senior Accounting Officer (SAO). Klarna has established an internal governance framework along with documentation of key tax processes and controls to ensure appropriate tax accounting arrangements are in place to be compliant with the SAO regime.

Tax evasion
Klarna does not tolerate the evasion of tax, or the deliberate facilitation of another’s tax evasion, whether carried out by an employee or business partner acting for or working with Klarna.