Islamophobic Danish leader banned from Sweden
"We suspect that he was going to break the law in Sweden," Calle Persson, spokesman for the police in Malmo told AFP.
"There was also a risk that his behaviour... would pose a threat to society," he added.
Paludan was due to visit Malmo on Friday for an anti-Muslim rally where he had asked people to burn the Quran, Islam's holy book. Friday is the Muslim sabbath and people gather at mosques for weekly prayers.
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Paludan was arrested near Malmo.
Paludan's supporters however staged rallies and burnt the Quran, local media reports said. Three people were arrested for inciting racial hatred.
Paludan put up a scathing message on Facebook.
"Sent back and banned from Sweden for two years. However, rapists and murderers are always welcome!" he wrote.
A lawyer, Paludan last year burnt a Quran surrounded by bacon - a meat that is anathema for Muslims.