Value Added Tax (VAT) Guidelines: Sweden

Anyone that in an economic activity supplies goods or services is considered to be a taxable person and is thus liable to pay VAT. An economic activity means any activity of producers, traders or persons supplying goods or services.

 

Economic activities do not include activities pursued by a non-profit organization or a registered religious community, when the income of the activity is exempt from income tax according to the Swedish Income Tax law.

 

A taxable person is exempt from VAT on the supply of goods or services within Sweden if the turnover is not estimated to exceed SEK 30,000 for the current fiscal year and has not exceeded SEK 30,000 for any of the two previous fiscal years.

 

The exemption is not applicable for taxable persons that are not established in Sweden.

 

All forms of supplies of goods and services by a taxable person for consideration made in Sweden, the import of goods to Sweden from a third country (non-EU Member State) with customs clearance in Sweden or intra-Community acquisition of goods in Sweden. 

 

Certain actions carried out for no consideration are deemed to be taxable for VAT, for example, intracommunity transfers of goods to Sweden within the same legal entity and the private use of business assets (withdrawal taxation).

 

The standard VAT rate is 25 percent. Two reduced VAT rates are also applicable – 12 percent and 6 percent. 

 

Several supplies expressly mentioned in the Swedish law are exempt from VAT. Such exemptions can be of two types, exemption with the right to recover input VAT (zero rated supplies) and exemption without the right to deduct input VAT (exempt supplies).

 

Zero rated supplies, for example, are exports or intra-Community supplies of goods from Sweden to a third coun­try or another EU Member State or pharmaceuticals dispensed on prescription or sold to hospitals. 

 

Examples of VAT exempt supplies without input VAT deduction are the transfer and letting out of immovable property (regarding the possibilities for voluntary tax liability, see below) or supplies in connection to dental- and healthcare and social care.      

            

If a business sells goods to a customer who is a taxable person and acts in that capacity in another EU Member State and the goods are transported from Sweden (either by the supplier or the customer) to another EU Member State, the supplier does not need to charge VAT and may zero rate the supply as an intra-Community supply of goods. A precondition is that the buyer in the other EU Member State should report the acquisition as an intra-Community acquisition of goods. 

 

The seller also must also make a correct report of the sale in an EC sales list/recapitulative statement for the zero rate to apply.

 

If a supplier delivers goods to a place outside the EU, or if direct transport of the goods to a place outside the EU is provided by a shipper or carrier, or if a foreign entrepreneur purchases goods for his activities abroad and retrieves the goods for direct transport to a place outside the EU, the supply is not deemed to take place in Sweden and subsequently the supplier does not need to charge VAT.

 

The rules on place of supply for services were changed considerably with the implementation of the so-called VAT Package in January 2010 and VAT for e-Commerce in July 2021.

 

According to the main rule, supply of services provided to a taxable person for business purposes (B2B servi­ces) is deemed to be made where the recipient of the service is established. 

 

Place of supply of main rule services to private individuals or to taxable persons who acquire the services for other than their business (B2C services) is where seller of the service is established.

 

The place of supply of services by an intermediary in the case of B2C services is the place where the underlying transaction is supplied.

 

If the customer is resident outside the EU, the place of supply of certain B2C services is where the customer is resident or domiciled. 

 

Most imports are taxable. When a VAT registered company import taxable goods a form of reverse charge is applied and the VAT need to be self-assessed in the VAT return. VAT should be reported in the period when the customs bill is issued by Swedish Customs.

 

Foreign companies not registered for VAT will not be able to use the reverse charge and will be charged VAT on the import by Customs. This VAT can in normal cases be.

If a business performs taxable supplies in Sweden – other than OSS services – it will be required to notify the Swedish Tax Authorities of the date of commencement of taxable activities; the business will be assigned a VAT number (“momsregistreringsnummer”).

 

Also, if a business makes intra-Community acquisitions of goods in Sweden, it will be required to register for VAT. 

 

The registration rules which apply to Swedish entities also apply to non-Swedish entities providing taxable supplies in Sweden.

 

Foreign companies that perform intra-Community transfers of goods from another EU Member State to Sweden also must register for VAT.

 

A foreign company that performs distance sales to customers in Sweden may choose to register for VAT in Sweden and report Swedish VAT if the seller’s total supplies in the EU exceeds EUR 10,000 during the current or previous calendar year. The seller may also opt to use the OSS registration in another EU Member State to report Swedish VAT.

 

There are some simplification rules to avoid a registration for VAT purposes in Sweden:

 

A foreign company registered for VAT need to appoint a fiscal representative, however from EU countries are accepted and do not need a representative. In addition, a few other non-EU-countries are also excluded from this demand, for example Norway.

 

Rödl & Partner in Sweden also provides VAT compliance/declaration services for foreign companies which are obliged to register for VAT in Sweden.

Businesses liable to Swedish VAT are required to submit a VAT return. The VAT return is normally filed on a quarterly basis (the reporting period). The return must be submitted and the VAT paid at the latest on the 12th of the second month following the reporting period.

 

If the yearly taxable turnover exceeds SEK 40,000,000 (the equivalent of approx. EUR 3,920,000) the return must be submitted on a monthly basis. The return must in that case be submitted and the VAT paid at the latest on the 26th of the month following the reporting period.

 

If the yearly taxable turnover is estimated to a maximum of SEK 1,000,000 (the equivalent of approx. EUR 100,000), the VAT return can be submitted yearly (not applicable for foreign companies).

 

 The VAT return can be submitted on paper or electronically.

 

Failure to furnish a VAT return in time may result in a late-filing penalty. The penalty for late filing is SEK 625 (approx. EUR 60).

 

ESL reporting pertaining to supply of goods should be made monthly. Supply of services should be reported quarterly. If both goods and services have been supplied, the report should be submitted monthly also for the services.

 

The report can be submitted on paper or electronically. If the report is submitted on paper it should be submit­ted to the Tax Authority no later than on the 20th day of the month following the period to which the report relates and no later than on the 25th day if the report is submitted electronically.

 

The penalty for late reporting is normally SEK 1,250 (approx. EUR 125).

 

The Intrastat report is a statistical record concerning the intra-Community trade of goods (not services).

 

VAT registered businesses with a value of dispatches or deliveries to or from EU Member States, which exceed a certain threshold must submit supplementary declarations each month. The threshold is currently SEK 4,500,000 (approx. EUR 450,000), for deliveries to other EU Member States and SEK 9,000,000 (approx. EUR 900,000) for deliveries to Sweden.

 

The Intrastat report should be submitted at the latest ten working days after the end of the reporting period. The information can as from year 2014 only be submitted electronically. If information is not submitted within the prescribed time the entrepreneur can under penalty be ordered to fulfill obligation.

 

There are as such no penalties for failing to register for VAT in time. However, there is a fee of SEK 625 (approx. EUR 65) for late filing of the tax return. The fee may be doubled to SEK 1,250 if the return after the tax agency order (föreläggande) the return to be submitted and the return within given time frame is still not submitted.

 

The interest rate is calculated based on base rate that is 125 percent of the interest rate for six months Treasury bills. The base rate may not be calculated to less than 1.25 percent.

 

The base rate is applicable for example for deferment of payment of tax or additional tax payable due to recon­si­deration of a previous decision.

 

For late payment the interest rate is the base rate plus 15 percent.

 

Sweden also applies a system of tax surcharges. The surcharges are levied if a taxpayer has provided incorrect information for the taxation, for example in a VAT return. The tax surcharge is 20 percent of the tax that – if the incorrect information had been accepted – not would have been decided or wrongly would have been credited.

 

The Tax Authority can under certain specific circumstances grant exemption from or reduction of the tax surcharge.

 

Businesses registered for VAT purposes in Sweden, should declare and deduct Swedish VAT within the normal VAT return.

 

It is also possible to recover Swedish input VAT if an entrepreneur is not registered for VAT purposes in Sweden and do not have its domicile, registered office, place of management or a permanent (fixed) establishment in Sweden.

 

There is in principle no difference in the conditions for refund for businesses established in the EU or outside the EU, except for how the application for refund should be submitted.

 

For the right to a refund the following conditions must be met:

 

Foreign entrepreneurs who are established in the EU must apply for refund by submitting an electronic appli­ca­tion to the competent authority in the EU Member State where the entrepreneur is established.

 

The application must be submitted to the competent authority no later than 30 September of the calendar year following the refund period.

 

Applicants established outside the EU shall apply to the Swedish Tax Authority for refund of VAT in a special form.

 

The application for refund must be submitted at latest in 6 months after the end of calendar year to which the application is pertaining.

 

There are certain items for which input VAT cannot be recovered, for example, exempt supplies (VAT relating to both taxable and exempt supplies must be apportioned) or business entertainment (possibility to deduct VAT on entertainment expenses is linked to the income tax rules, i.e. if an expense is not deductible in terms of income tax, it is not deductible for VAT). 

 

Input VAT on certain employee expenses:

There are formal invoicing requirements to be fulfilled according to the Swedish VAT Act.

 

In addition, there is from a VAT point of view no obligation to issue Invoices for supplies to private individuals, except for the sale of new means of transport to buyers in other EU countries, for distance sales to buyers in Sweden and for building or construction services. If OSS is used an invoice is not a requirement. If invoices do not content all of the necessary requirements or if some indications are not correct it is possible to amend these invoices via different ways, for example via cancellation and new issuing or amendment with an addi­ti­onal document and respective references to the original invoices.

 

An electronic submission of invoices (e.g. via email, computer fax) is generally possible. Specific conditions must be fulfilled regarding the validity and the integrity of the issued/received invoice.

 

To operate via self-billing, i.e. the invoice is issued by the customer and not by the supplier, is possible, provi­ded that the supplier and the customer beforehand have agreed on this. A self-billing invoice must contain the same information as would an invoice issued by the supplier. 

 

A credit note is issued by the supplier and normally means a retroactive reduction of an invoice issued earlier. A credit note needs to refer to the invoice number(s) of the invoice(s) that it is meant to correct.