While Sweden and the United States have a tax treaty obligating the tax agencies in both countries to exchange information with each other, the Swedish Tax Authority (Skatteverket) hasn’t received any information from its US counterpart since 2005.

As a result, Swedish tax authorities have been unable to cross-check information about income earned in the United States for the last five years, leaving the door wide for companies and individuals based in Sweden to cheat on their Swedish taxes.

Between 2001 and 2004, Sweden received information on 60,000 Swedish taxpayers who had earned a total of 48 billion kronor ($7.2 billion) in the United States, Sveriges Television (SVT) reported on Tuesday.

According to SVT, the United States stopped sending tax information to Sweden because a subcontractor used by the US tax agency, the Internal Revenue Service (IRS), processed the data in a way the made it impossible to differentiate between companies and individuals, thus rendering the information useless.

Despite going without data on Swedish taxpayers US-based earnings for more than five years, the Swedish tax agency has yet to take action.

Neither Sweden’s Ministry of Finance nor US authorities have been contacted about the matter.

“We can’t request that the hand over the information,” the agency’s Susanne Lindblom told the TT news agency.

The Swedish Tax Agency estimates that international tax fraud costs Sweden 46 billion kronor per year. However, the cross-checking international filings is not the most important tool for bringing tax cheats to light.

“From the income declaration side, it’s about 35 million kronor that we check and which gets caught through back taxes,” said Lindblom.

Chris Dunnett, press officer with the US embassy in Stockholm, said the issue had not previously come the embassy’s attention, but he said the IRS had now been informed and was looking into the matter.

“It’s important to emphasise that, whatever is going on, it isn’t something that’s being done on purpose,” he told The Local.

Later on Thursday, the Swedish Tax Agency issued a statement clarifying the information in the SVT report, explaining that the agency had in fact received information from United States for the 2005 and 2006 tax years, but that it had arrived after the publication of an internal analytic report which served as the basis for the SVT report.

However, the statement made no mention of the agency having received any information from the United States from 2007 onwards.

Swedish tax authorities added that exchanging tax information between countries is a complicated task and that the system is “still under construction”.

Nevertheless, Lindblom issued a warning to anyone looking to take advantage of the slow pace of information flow from the US to Sweden.

“We can uncover tax cheating and correct tax filings after the fact even if we’re lacking control information at the time of the filing,” she said in a statement.

“Sweden and other Nordic countries are ahead of the pack and have gone further than many countries in exchanging and handling tax filing information.”

According to the Swedish Tax Agency’s statement, the United States sends information on fewer than 20,000 tax filings annually and more than 90 percent of them concern financial transactions between companies and banks where the likelihood of irregularities is relatively small.

“We’re now going to carry out a more thorough review of which information still hasn’t come into our system and contact the United States and the other countries for which we still lack information from certain years,” said Lindblom.

The current tax treaty between the US and Sweden went into effect in 1996, and was amended in 2005 to eliminate source-country withholding taxes on certain intercompany dividends and certain dividends paid to pension funds.