Significant indirect tax developments at a glance
The Swedish Tax Agency, Skatteverket, has published three opinions concerning increased cost base for VAT recovery in respect of costs for corporate hospitality.
Instead of the previously applied cap of SEK 90, the Swedish Tax Agency accepts VAT recovery on a cost base up to SEK 300 for cost relating to external corporate hospitality (spirits and wine are not included). These changes are a result of a new interpretation of the rules surrounding Sweden’s entry into the European Union.
For internal corporate hospitality, the applied cap will be SEK 200, and for demonstrations and displays the cap will be SEK 300.
As an alternative, companies may choose to apply the rules from 1996 which allowed taxable persons to recover VAT for both external and internal corporate hospitality costs on a cost base up to SEK 180 per person and meal (spirits and wine included). The cap for demonstrations and displays is in this case SEK 60, spirits and wine included.
Letting of immovable property
There has been a change in the possibility to opt for a volountary VAT liability of letting of immovable property. Historically, a company had to apply to opt to VAT the letting of immovable property. However, from 1 January 2014, a company is automatically liable for reporting and paying VAT for letting of immovable property if the company has issued an invoice with VAT.
As from January 1, 2015, an importer that is registered for VAT in Sweden will pay and report the import VAT to the Swedish Tax Agency instead of to the Swedish Customs.
If the importer has a full right to deduct the import VAT, the importer can report the import VAT and deduct the same amount in the same accounting period. This is a great opportunity to improve the cash flow.
2015 place of supply
The Swedish Tax Agency has not yet issued any guidelines to the 2015 place of supply changes in the EU. Guidelines are expected to be presented sometimes during fall 2014.
The Swedish Government has proposed that the VAT grouping rules should be abolished from 1 January 2015. The proposal means that the VAT grouping rules are removed completely for companies in the financial sector as well as for companies engaged in a commissionaire structure for CIT purposes.
On the other hand, the opposition has declared that they will keep the rules if they win the election but that a financial tax should be introduced instead. With an upcoming election this September, it is at this stage uncertain whether the VAT grouping rules will be abolished or not.
Scope and Rates
Value-added tax (VAT) is due on any supply of goods or services made in Sweden, where it is a taxable supply made by a taxable person in the course or furtherance of a business carried on by said person. Supply includes all forms of supply.
Supply does not include anything done otherwise than for a consideration. However, certain actions carried out for no consideration are deemed to be supplies; for example, private use of business assets.
The standard rate of VAT is 25 percent.
Yes. There is a reduced rate of 12 percent for certain goods and services, including:
- food and drinks except alcohol
- hotel accommodation
- restaurant services except alcohol.
In addition, there is a reduced rate of 6 percent for certain goods and services, including:
- books and newspapers
- passenger transport
- certain sporting and cultural events
- copyright to certain cultural work of art.
There is an extensive list of zero-rate supplies, including:
- international supplies of services
- intra-EU supplies of goods
- certain transport services
- drugs and medicines provided on subscription or to hospitals
- aircraft fuel
- monetary units
- insurances connected to goods that are exported out of the European Union (EU)
- banking and financing services connected to goods that are exported out of the EU or when the services (including insurances) are provided to customers established outside of the EU
- gold sold to the Swedish National Bank
- aircrafts and ships for commercial transportation including services
- insurance policies supplied to customers outside the EU.
The list of exemptions (without credit) includes:
- health and welfare
- library activities
- museum activities supported by the public authorities
- periodical publications issued by non-profit-making organizations
- banking and financing services
- insurance services
- transfer of business
- radio and television broadcasting services if financed by government grants
- human organs, blood, or breast milk
- lotteries, betting, and other forms of gambling
- funeral and burial
- sale or letting of real property (possible to opt for VAT provided that certain criteria are met).
Note: it is not possible to recover VAT incurred in making exempt supplies.
Customs duties and excise duties. The following indirect taxes exist in Sweden:
- alcohol tax
- tobacco tax
- taxes on energy, carbon dioxide and sulphur
- pesticide tax
- tax on thermal effect of nuclear power reactor
- lottery tax
- natural Gravel tax
- advertising tax
- tax on prizes from savings, etc.
- gambling tax
- tax on traffic insurance premiums
- special tax on group life insurance premiums
- waste tax.
If a business makes taxable supplies in Sweden it will be required to register and account for Swedish VAT. No VAT registration threshold exists in Sweden.
The registration rules that apply to Swedish entities also apply to non-Swedish entities which are making taxable supplies in Sweden except non-established companies providing reverse charged goods and services.
If a business is not registered for VAT in Sweden but sells and delivers goods from another EU Member State to customers in Sweden who are not VAT registered (distance sales), where the value of those sales exceeds a threshold of SEK 320,000, it is required to register and account for VAT in Sweden.
Foreign entities making intra-EU transfers of goods to Sweden are also liable to register for VAT.
Foreign companies supplying taxable services to customers not registered for VAT are required to register for VAT. For supply of services referred to in Art 44 of the VAT Directive reverse charge is, however, mandatory. There is no threshold for registration when supplying services.
The VAT registration form can be accessed on the Swedish tax authority's web site Skatteverket. The form is called Skatte- och avgiftsanmälan and the identification number of the form is SKV 4620. For entities that are liable to register for VAT, but not established in Sweden the form called “Tax application for foreign entrepreneurs” is to be used. The form is available in Swedish and English. The identification number of the form is SKV 4632 (the English version is SKV 4632b).
There are no penalties for late registration or non-registration. However, interest charges will be assessed in cases of late registration for failure to report VAT on time. The interest charged is compound.
Foreign companies without a fixed establishment in Sweden making taxable supplies of goods or providing taxable services related to real estate in Sweden (except construction services) can request to register voluntarily for VAT and thus not apply the reverse charge. However, voluntary registration entails that reverse charge cannot be applied on any such transactions in Sweden. This, of course, excludes services referred to in Art 44 of the VAT Directive, where mandatory reverse charge applies. Voluntary registration cannot be made with retroactive effect. The date of the application is therefore the first date of possible VAT liability.
Voluntary VAT registration enables the company to recover input VAT through the VAT return on a monthly or quarterly basis.
If a business makes supplies of goods or services in Sweden, then it is required to register and account for Swedish VAT. However, it is possible to avoid registering and accounting for Swedish VAT when making certain supplies.
In the following examples the obligation to account for the VAT due can be shifted to the customer provided that he is registered for Swedish VAT. Other situations also exist when registration can be avoided if the customer is registered for VAT in Sweden.
If a business is an intermediate supplier to a Swedish buyer of goods purchased from a business in a EU Member State other than its own and are delivered from there to Sweden, VAT due can be accounted for by the Swedish customer (see section Invoices).
A transfer of goods from another EU country to the stock in Sweden requires registration and reporting. On the subsequent supply the Swedish customer can account for any VAT due under the reverse charge scheme. If the overseas company is established in Sweden from a VAT perspective the simplification does not apply. The overseas company can also opt for taxation and charge VAT on all its sales in Sweden. Please note that this simplification rule also apply to supplies following local purchases of goods.
Supply and Install
If a business supplies goods and installs or assembles them in Sweden, its VAT registered Swedish customer can account for any VAT due, in effect, as an acquisition of goods.
Natural Gas and Electricity
Supplies of natural gas or electricity to a wholesaler or to a VAT registered customer for consumption in Sweden, the reverse charge applies.
Reverse Charge on Services
These services are covered in more detail at (section International Supplies of Goods and Services).
The reverse charge is mandatory for certain construction services provided to another construction company. This applies both to Swedish and overseas companies.
All companies with the exception of companies from within the EU, Norway and Iceland must appoint a fiscal representative. Companies not required to appoint a fiscal representative are however entitled to do so.
Yes, provided various criteria are met. Primarily only business in the finance and insurance sector, and those businesses that make 70 to 80 percent of their supplies to these sectors may be grouped.
VAT grouping are also possible for companies engaged in a commissionaire structure for CIT purposes, that is, when the operations of a company are carried out on behalf of another company under a special agreement, and the taxable result is reported in the principal's income tax return.
The Swedish Government has proposed that the VAT grouping rules should be abolished from 1 January 2015. The proposal means that the VAT grouping rules are removed completely as well for companies in the financial sector as for companies engaged in a commissionaire structure for CIT purposes.
On the other hand, the opposition has declared that they will keep the rules if they win the election but that a financial tax should be introduced instead. With an upcoming election this September, it is at this stage uncertain whether the VAT grouping rules will be abolished or not.
Yes, provided the company has an establishment in Sweden the Swedish establishment (e.g. branch) can be included. Generally an establishment requires human and technical resources to be present.
Companies with annual turnover exceeding SEK 40 million must report VAT on a monthly basis. VAT is reported on a special VAT return.
Companies with annual turnover below SEK 40 million reports VAT quarterly. However, they can opt for monthly filing.
Businesses with an income tax liability in Sweden and with an annual turnover less than SEK 1 million report VAT on a yearly basis. VAT is reported in VAT returns. However, it is possible to apply for monthly or quarterly submissions, as above.
European Sales List (ESL)
If a business supplies goods which are shipped from Sweden to VAT registered businesses in other EU Member States and it wishes to zero rate the supply (see section International Supplies of Goods and Services), it is required to complete ESLs. Further, it is required to complete ESLs for zero rated supplies of services to customers established in other EU member states. ESLs are completed on a monthly basis, however if the company supplies only zero rated sales of services (i.e. not any goods) the ESLs are completed on a calendar quarter basis.
Intrastat Supplementary Declarations
VAT registered businesses with a value of dispatches or arrivals to or from other EU Member States, which exceed a certain threshold (SEK 4,5 million for arrivals or dispatches per annum) must complete supplementary declarations each month.
A VAT registered business that exceeds the Intrastat threshold has an obligation to file Intrastat reports. Statistics Sweden sends out Intrastat reports automatically when the threshold is exceeded. Businesses do not have an obligation to notify Statistics Sweden that they are required to complete and submit Intrastat returns.
If the Intrastat report is not completed and filed, a reminder is sent to the business. If the reminder is ignored, a further reminder will be sent to inform the business that a fine will be imposed if the Intrastat report is not completed and returned.
The Swedish Tax Agency accepts the Swedish Central Banks daily average rate.
Local/established businesses which incur VAT
For Swedish businesses or businesses established in Sweden, a VAT registration is required in order to receive a refund of locally incurred VAT.
Overseas businesses with no local presence and no local VAT/GST registration
Yes. A company established in another EU member state should make a claim on the website maintained by its own country's tax authority (under the VAT Directive). A non-EU business should recover the VAT under the 13th Directive. Under both of these provisions there are strict time limits for making claims. The companies established in other EU member states must submit the claims by 30 September of the following year. The companies established in outside EU must submit the claims by 30 June of the following year.
Access to the 13th Directive claim form is provided on the Swedish tax authority's web site, www.skatteverket.se. The form called SKV 5811 must be used by entities from Albania, Bosnia-Herzegovina, Croatia, the Faeroe Islands, Greenland, Iceland, Macedonia, Montenegro, Serbia and Turkey. The form called SKV 5801 should be used by entities from all other non EU Member States.
No reciprocity requirements exist in Sweden.
- The input VAT must relate to purchase (acquisition) or import of goods or services for business activites carried out in other countries than Sweden.
- The sale (turnover) would have been subject to VAT, or would have entailed the right to a refund if it had taken place in Sweden.
- If the sale (turnover) takes place in another EU country, it is subject to VAT or entitles a refund in that country.
As a foreign entrepreneur in Sweden (i.e. no fixed establishment for VAT purposes in Sweden), it is possible to get a VAT refund for goods or services that are subject to reverse charge in Sweden (.i.e when a VAT-registered buyer is liable to account for and report the VAT).
Yes. There are certain items that businesses cannot recover VAT on. For example:
- VAT exempt supplies: where input VAT relates to both taxable and exempt supplies, an apportionment is needed.
- non-business (including private) activities: where input VAT relates to both business and non-business activities, an apportionment is required.
- motor cars (excluding commercial vehicles): with certain exceptions taxpayers cannot recover VAT on the purchase of a motor car, and a 50 percent restriction applies on the recovery of lease charges.
- dwelling-houses: VAT is not generally recoverable on costs related to a dwelling-house.
- business entertainment: VAT is not generally recoverable on business entertainment costs but can be recovered on meals up to SEK 200 (internal) / SEK 300 (external), wine and spirits not included, or SEK 180 (wine and spirits included).
- purchases falling within the Tour Operators' Margin Scheme. The VAT on goods and services which fall under this scheme cannot be reclaimed.
- goods sold under the margin scheme for second hand goods. Under this scheme VAT is to be accounted for on the sales margin, however VAT on the purchase of the goods is not recoverable.
International Supplies of Goods and Services
Exports - Goods
Intra-EU Supply of Goods
If a company sells goods to a customer who is registered for VAT in another EU Member State and the sale involves the removal of those goods from Sweden (either by the supplier or the customer) to another Member State, the company does not need to charge VAT and should consequently zero rate the supply as an intra-EU dispatch. The company must obtain its customer's VAT number and quote it on its invoice. It should also obtain evidence of the goods' removal from Sweden.
If a company sells goods, which are transported to another EU Member State, to a customer who is not registered for VAT in another EU Member State, it must charge Swedish VAT. If its sales exceed a certain threshold for that Member State it may have to register for VAT in the Member State under what is known as the Distance Selling Scheme.
If a company exports goods to a customer (business or private) outside of the EU, it does not need to charge VAT. However, it should make sure that in all cases it keeps proof of dispatch/delivery to support the zero rating.
Exports - Services
If a business established in Sweden supplies services to a foreign business customer (B2B), in general the supply of services is taxable in the country of the recipient under the reverse charge mechanism. If it, however, supplies services to a private consumer (B2C), the services are in general taxable in the country of the supplier and therefore subject to Swedish VAT.
The following exceptions apply to the B2B and B2C main rules as described above:
- services connected to real estate (taxable in the country where the real estate is located)
- restaurant and catering services (taxable in the country where these services are performed. Other rules apply if these services are performed on board a ship, aircraft, or train)
- passenger transport (taxable in Sweden if the transport is fully performed in Sweden)
- services relating to cultural, artistic, sporting, scientific, educational, entertainment, and similar activities, along with the ancillary services (taxable in the country where those activities are physically carried out). Since 1 January 2011, this exception applies to services performed for VAT entrepreneurs only with respect to admission to the aforementioned events and the associated admission-related services. No changes as of 1 January 2011, with regard to services performed for non-taxable persons.
- short-term hire of transport (for ships maximum 90 days/for other means of transport maximum 30 days); taxable in the country where the vehicle is actually put at the disposal of the customer.
The following exceptions apply to the B2C main rule only:
- intermediary services (taxable in the country where the underlying transaction is taxable)
- intra-EU transport of goods (taxable in the country of departure). For other types of goods transportation for non-taxable customers, the place of service is the place where the transportation is actually performed.
- transportation-related services (taxable in the country where the services are physically carried out)
- services relating to movable tangible goods (taxable in the country where the activities are actually carried out)
- services performed electronically by a VAT entrepreneur not established in the EU to non-taxable customers (taxable in the country where the customer of the service is located).
The following services performed for non-taxable customers that are established or resident outside the EU are not taxable in Sweden:
- the transfer of licenses and similar rights
- advertising services
- services performed by consultants, as well as data-processing and information-provision services
- the obligation to refrain, in whole or in part, from pursuing a business activity
- banking and insurance services
- supply of staff
- hiring out of movable property, with the exception of means of transport
- telecommunications services
- radio and television broadcast services and
- services performed electronically
- operating natural gas and electricity-distribution systems.
Use of enjoyment rules are applied to some extent for example to goods transportation services that are fully performed outside of EU.
Imports - Goods
Where goods are received by a Swedish VAT registered business from another EU Member State, the Swedish business must account for acquisition VAT. The rate of VAT due is that applicable to the supply of identical goods in Sweden (that is 25 percent, 12 percent or 6 percent). If the supply would normally be treated as zero-rated, then no acquisition VAT is due.
Importation of Goods
Swedish VAT (and possible customs duties) is payable on the import of goods. VAT is levied at the border as part of the customs procedure. VAT on importation is paid to the Swedish customs authorities. However, an importer that is registered for VAT in Sweden will pay and report the import VAT to the Swedish Tax Agency instead of to the Swedish Customs starting from 1 January, 2015. VAT is charged at the same rate as if the goods had been supplied in Sweden. In certain cases, the importation is exempt from VAT, that is, if the equivalent domestic sale would be VAT exempt.
Distance sales to consumers in Sweden
A nonresident retailer supplying goods to a consumer in Sweden is obligated to register for VAT in Sweden if such sales exceeds 320 000 SEK on a yearly basis. Such sales are then subject to Swedish VAT.
If the intra-EU acquisition is made by a Swedish VAT registered business, it must self account for VAT on the acquisition. This should be declared and paid by the company’s VAT return.
It should be noted that foreign entities are liable to register for VAT in Sweden when making intra-EU acquisitions, but the transaction is VAT exempt. Hence, only a notification duty is due.
Importation of Goods
The holder of the goods is liable to pay VAT on importation. The holder of goods is a person who issues a customs declaration form in its own name or a person on whose behalf and in whose name the declaration is issued by an agent. The forwarding agent can also issue the customs declaration in its own name but on behalf of the principal. In this case the forwarding agent is liable for VAT payable on the importation.
VAT is payable on importation at the time the goods are declared into the free circulation in the European Community. In general, the importer cannot receive the goods in his/her possession before the VAT on importation (and possible customs duty) has been paid to the Swedish Customs. However, the right to defer payment can be obtained after authorization by Swedish Customs. In such a case the importer is entitled to receive the goods in his/her possession immediately after the goods have been declared. Swedish Customs sends a customs invoice to the authorized customer within three weeks. The invoice must be paid within 11 days after it has been issued by Swedish Customs.
Starting from 1 January 2015, an importer that is registered for VAT in Sweden will pay and report the import VAT to the Swedish Tax Agency.
Imports - Services
When purchasing services from an overseas company, buyers will often be required to apply the reverse charge scheme provided they are Swedish entities. This is intended to take away any VAT advantage of buying those services from outside Sweden.
The reverse charge mechanism applies on a compulsory basis to purchases of services that fall into the scope of general rule of article 44 of the EU VAT Directive. This article covers as a default rule all the services that are not otherwise expressly mentioned in the other special rules for the place of supply. The following services are not covered by the general rule:
- services connected with immovable property
- passenger transportation services
- hiring of means of transport for short term
- cultural, entertainment and similar services
- restaurant and catering services
- travel agent services.
It should be noted that Sweden has a local mandatory reverse charge on certain construction services when rendered between construction companies.
If the overseas trader has an establishment in Sweden such as a branch, reverse charge is normally not applicable if the establishment has participated in the supply.
Under the reverse charge scheme the purchasers are required to account for a notional amount of VAT as output tax in the VAT return covering the period in which the invoice was received.
An overseas supplier is obligated to register for VAT in Sweden if they supply services to local businesses and the supply is deemed to be domestic supply in Sweden. The reverse charge mechanism applies to supply of services connected to immovable property if the purchaser is registered for VAT in Sweden, hence, there is no obligation for the overseas suppliers to register for VAT in Sweden on that ground.
Amount subject to VAT/GST
VAT is chargeable on amounts received from customer and any other third party (remuneration).
VAT is chargeable on the value of the imported goods plus incidental costs, such as transport and insurance, and other taxes (however not taxes paid to the Swedish customs for the import).
The taxable event takes place when the goods are delivered or when the services are provided. However, for advance payments the receipt of the payment triggers the taxable event.
A company is obligated to issue an invoice for supply of goods and/or services to taxable persons or legal entities. However, an invoice must not be issued if the supply is exempt from VAT and relates to immovable property, health care, education, financial and insurance services.
There is no obligation to issue an invoice for sales to consumers.
The invoice must meet the requirements set out in the Swedish VAT Act (below).
A tax invoice should contain the following data:
- date of issue
- a sequential invoice number. If the invoice adjusts an earlier invoice (such as a credit note), an unambiguous reference should be made to the original invoice.
- supplier VAT number
- customer VAT number (on intra-EU supplies or other reverse charge transactions). If output VAT on a transaction will be accounted for by the customer and not the supplier such as the reverse charge mechanism applies, then an invoice is required and the invoice requires a written explanation for the basis of the transaction or a reference to the respective paragraph in the VAT Directive or local country VAT Act.
- supplier name and address
- customer name and address
- the quantity and nature of the goods/services supplied
- tax point (date of taxable supply) if different from date of issue
- the taxable amount per rate
- unit price (exclusive of any VAT)
- rate of any discounts (if not included in the unit price and if applicable)
- the VAT rate applicable
- the amount of VAT payable in SEK (Swedish kronor) per rate or in total. However, if the accounting currency is Euro (EUR), the amount of VAT should be in EUR. Any applicable exchange rate used must also be displayed.
- the wording “Self billing” (Sw: “Självfaktura”) if applicable
- legal basis for exemption (if applicable)
- new means of transport/margin schemes (if applicable)
- certain exempt supplies will still require an invoice (those in Article 136 of the VAT Directive).
Yes. Simplified invoices can be issued when the invoiced amount (including VAT) does not exceed 2000 SEK (currently a proposal to expand that amount to 4000 SEK but this has not yet been implemented).
Yes, provided that the supplier has the agreement of its customer. (Note that there are no specific requirements for electronic invoices compared to paper invoices). The agreement may be verbal.
Yes, provided the supplier has the agreement of its customer before doing so.
It is possible to invoice in a foreign currency, but the VAT amount due must always be invoiced in SEK or, if the business use EURO as the accounting currency, in EURO.
Transfers of Business
Yes. If a company sells its business as a going concern then VAT may not be due. There are certain conditions to satisfy, for example the purchaser should be registered for VAT at the time of the transfer (or immediately register as a consequence of the transfer). Also, business must be carried on by the party to who it is transferred. Also, even if the supply is VAT exempt, an invoice is required.
Options to Tax
There is an option to tax the letting of immovable property under certain circumstances.
Head Office and Branch transactions
If a head office makes a charge for services to its branch, or vice versa, that is not treated as a supply for Swedish VAT purposes. Transfers of goods between head office and branch must be reported, but is not considered as a sale for VAT purposes.
Businesses are able to claim VAT back on the unpaid amounts through their VAT return. If they subsequently receive payment for the supply then they will have to pay back the VAT in question to the tax authorities.
There are a number of penalties that apply in Sweden for compliance failures. Late VAT return penalties have already been addressed above.
If a business makes an error on a VAT return which understates its liability or overstates its entitlement to a VAT credit, it may incur a surcharge of 20 percent of the amount of tax that is assessed over and above the amount reported.
Credit interest is imposed automatically when payments have been made too late, or a reassessment results in additional tax to be paid.
Tax surcharges is almost always imposed if the Tax Agency has found errors in reported output or input VAT and the correction results in additional VAT to be paid.
How often do tax audits take place?
Tax audits are performed on an irregular basis in Sweden.
Are there audits done electronically in your country (e-audit)? If so, what system is in use?
Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?
It is not possible to apply for a formally binding advance ruling from the Swedish Tax Agency. However, it is possible to approach the Tax Agency to receive a formally non-binding written answer on the Tax Agency’s view on a certain query.
To receive a formally binding VAT ruling in Sweden an advanced tax ruling should be applied for at the Board of Advanced Tax Rulings, which is an impartial Board (i.e. the Tax Agency acts as the opposite party from the VAT payer).
Are rulings and decisions issued by the tax authorities publicly available in your country?
Advanced tax rulings from the Board of Advanced Tax Rulings are publically available but not a written answer from the Tax Agency. However, the Tax Agency´s official interpretations of certain tax issues are publically available on the Tax Agency’s web page.
Further, the Tax Agency’s tax decisions are also publically available, although only on an individual request.
The VAT regime on construction services is unique for Sweden. The rules imply that services defined as construction services must be invoiced with reverse charge when sold to a buyer falling under the specific definition of a construction company.
Yes, the reduced rates as listed above.