VAT, GST and Sales Tax in Sweden

Summary

Name of the tax Value-added tax (VAT)
Local name Mervärdesskatt (Moms)
Date introduced 1-Jan-69
Trading bloc membership European Union (EU) member state
Administered by Ministry of Finance (http://www.sweden.gov.se/ sb/d/2062)
VAT rates
Standard 25%
Reduced 6% and 12%
Other Exempt and exempt with credit
VAT number format SE 5 5 6 1 2 3 1 2 3 4 0 1
VAT return periods Monthly (if turnover exceeds Swedish kronor [SEK] 40 million), Quarterly (with the possibility to opt for monthly), Annually (if turnover is below SEK1 million)
Thresholds
Registration SEK30,000
Distance selling SEK320,000
Intra-Community acquisitions (for exempt taxable persons) SEK90,000
Recovery of VAT by non-established businesses Yes

Scope of the tax

VAT applies to the following transactions:

  • The supply of goods or services made in Sweden by a taxable person
  • The intra-Community acquisition of goods from another EU Member State by a taxable person
  • Reverse-charge services received by a taxable person in Sweden
  • The importation of goods from outside the EU, regardless of the status of the importer

Who is liable

A taxable person is an individual or business entity that makes taxable supplies of goods or services, intra-Community acquisi­tions or distance sales in the course of a business in Sweden.

A domestic reverse charge applies to construction services that a company provides to a construction company, to emission allow­ances that a company sells to a VAT-registered purchaser, and to certain waste and scrap metals when supplied to a VAT-registered purchaser. This rule also applies to foreign traders that sell or purchase such services.

A VAT registration threshold of SEK30,000 applies in Sweden. If a taxable person exceeds transactions subject to VAT of SEK30,000 annually, it must notify the VAT agency of its liability to register. Any taxable persons conducting business transactions that have not yet exceeded the threshold for the fiscal year are not liable to report and pay VAT for those transactions unless registered for VAT. Taxable persons whose annual turnover subject to VAT does not exceed the threshold may opt to register for and pay VAT.

Special rules apply to foreign or “non-established businesses.”

Group registration. Companies in the financial sector as well as companies in “an agency relationship” for income tax purposes may form a VAT group. If a VAT group is formed, the group is liable for tax if it engages in business that implies tax liability.

Only entities with a fixed establishment in Sweden may be part of a Swedish VAT group. A VAT group consists of taxable per­sons that are closely connected to each other “financially, economically and organizationally.” All three of these require­ments must be satisfied. The following are the applicable rules:

  • A “financial link” exists between two companies if one company holds more than 50% of the votes in the other.
  • An “economic link” exists if the companies continually exchange goods or services.
  • An “organizational link” exists if the group members have some joint administrative functions, such as joint management or joint marketing.

Non-established businesses. A non-established business that makes supplies of goods or services in Sweden must register for VAT if it is liable to account for Swedish VAT on the supply or if it makes intra-Community supplies or acquisitions of goods.

A domestic reverse charge generally applies to supplies made by non-established businesses to VAT-registered persons in Sweden. Under this measure, the taxable person that receives the supply must account for the Swedish VAT due. If the reverse charge applies, the non-established business is not required to register for Swedish VAT. The reverse charge does not apply to the trans­port of persons, cultural services or supplies made to private persons or nontaxable legal persons.

Consequently, non-established businesses must register for Swedish VAT if they make any of the following supplies:

  • Intra-Community supplies or acquisitions (see the chapter on the EU)
  • Distance sales in excess of the threshold (see the chapter on the EU)
  • Supplies of goods and services that are not subject to the domes­tic reverse charge

Businesses that are established in the EU are not required to appoint a tax representative to register for VAT in Sweden. How­ever, EU businesses may opt to appoint a tax representative. This measure also applies to businesses established in any non-EU country that has mutual assistance provisions with the EU or with Sweden.

Businesses that are established outside the EU must generally appoint a resident tax representative to register for Swedish VAT. A tax representative is not jointly liable for VAT debts with the business that it represents.

Registration procedures. The most effective way to register is online at https://www.verksamt.se/en/web/international/home. A Swedish electronic identification is required to use the online service. Otherwise, fill out the hard copy SKV 4620. Non-established taxable persons use form SKV 4632, application for foreign entrepreneurs.

The Swedish Tax Agency’s website provides a how-to guide, application forms to fill out and other necessary information. The site is also available in English. See www.skatteverket.se. The how-to guide is under the “Employers, Businesses and Corporations” heading and more information is available under the “Tax Information” and “VAT Information” headings.

Normally, it takes between three and six weeks to register for VAT.

Late-registration penalties. No specific penalty is assessed for late registration. However, interest is charged on any VAT paid late as a result of late registration.

Tax representatives. For information about representatives for non-established businesses, see above.

Reverse charge. The reverse charge applies for supply of con­struction and building services to other taxable persons selling construction and building services more than occasionally, for­eign companies without a permanent establishment in Sweden supplying goods stored in Sweden to taxable persons, trading with emission licenses, gold and other specific metals and scrap metal.

Digital economy. Effective 1 January 2015, new rules apply to the place of supply for supplies of telecommunications, broadcasting and electronic services to non-VAT taxable customers. For fur­ther details of the VAT rules on electronic services in the EU, please refer to the European Union chapter.

Mini One-Stop Shop. Taxable persons who provide electronic ser­vices, telecom applications, telecom services and broadcasting services to consumers or other nontaxable persons in another member state are reporting VAT to the state where the buyer is domiciled.

To make it easier for taxable persons to report VAT to different member states one can use the e-application MOSS (Mini One-Stop Shop). Suppliers report the VAT to this e-service, which automatically registers the information with the Swedish Tax Agency and transfers the right amount of VAT to the different Member States. With MOSS suppliers report VAT through one declaration and not to each country where they have customers.

To use this service suppliers must be registered for Swedish VAT and have a Swedish electronic identification. That enables them to sign in to MOSS through e-services at www.skatteverket.se and then receive a request for application to the MOSS service.

Deregistration. To deregister from VAT, the most effective way is to do it online at www.verksamt.se. You will need a Swedish electronic identification to gain access. If you do not have an electronic identification, use form SKV 4639 and send it to the address printed on the form. Foreign entrepreneurs must often use hard copies, since they do not have Swedish electronic iden­tification.

VAT rates

The term “taxable supplies” refers to supplies of goods and ser­vices that are liable to a rate of VAT.

The VAT rates are:

  • Standard rate: 25%
  • Reduced rates: 6% and 12%

The standard rate of VAT applies to all supplies of goods or ser­vices, unless a specific measure provides for a reduced rate or an exemption.

Examples of goods and services taxable at 6%

  • Books and newspapers
  • Copyrights and artistic rights
  • Cultural services (apart from cinema services, which are taxed at the standard rate)
  • Passenger transport

Examples of goods and services taxable at 12%

  • Foodstuffs
  • Hotel accommodation
  • Restaurant and catering services
  • Reparation of bicycles, shoes, leather goods, clothing and household textiles

The term “exempt supplies” refers to supplies of goods and ser­vices that are not liable to tax and that do not give rise to a right of input tax deduction (see Section F). Some supplies are classi­fied as “exempt with credit,” which means that no VAT is charge­able, but the supplier may recover related input tax. Exempt with credit supplies include exports of goods and related services, as well as supplies of intangible services made either to another tax­able person established in the EU or to any recipient outside the EU (see the chapter on the EU).

Examples of exempt supplies of goods and services

  • Immovable property
  • Medical services
  • Finance
  • Insurance
  • Pharmaceutical supplies (exempt with credit)

Option to tax for exempt supplies. Renting property or premises is an exempt service, but the supplier has the option to treat it as taxable when renting to taxable persons. Since 1 January 2014, the supplier can choose the option to tax by issuing an invoice with VAT.

Time of supply

The time when VAT becomes due is called the “time of supply” or “tax point.” The basic time of supply for goods is when the goods are delivered. The basic time of supply for services is when the service is completed. If the consideration is paid in full or in part before the goods are delivered or the services provided, the actual tax point becomes the date on which payment is received (but the tax point only applies for the amount paid).

Prepayments. For prepayments or advance payments, the tax point is the date on which the advance payment is received.

Intra-Community acquisitions. The time of supply for intra­Community acquisitions of goods is the same as the time of sup­ply for domestic supplies.

Intra-Community supplies. An invoice must be issued for a intra­Community supply at the latest on the 15th day of the month following the supply.

Imported goods. The time of supply for imported goods is when the import takes place.

Reverse charge. The time of supply for goods or services subject to the reverse charge is the earlier of the date of delivery or the date on which payment is received.

Cash accounting. Sweden operates a cash accounting scheme with a threshold of EUR350,000.

Continuous supplies of services. Not applicable.

Leased assets. Depends if it is a prepayment or not, see above.

Recovery of VAT by taxable persons

A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for business purposes. A taxable person generally recovers input tax by deducting it from output tax, which is VAT charged on supplies made.

Input tax includes VAT charged on goods and services supplied in Sweden, VAT paid on imports of goods and VAT self-assessed on intra-Community acquisitions of goods and reverse-charge services (see the chapter on the EU).

A valid tax invoice or customs document must generally support a claim for input tax.

Nondeductible input tax. Input tax may not be recovered on pur­chases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur). In addition, input tax may not be recovered for some items of business expenditure.

Examples of items for which input tax is nondeductible

  • Purchases of cars
  • Business entertainment (in excess of the allowable expense limits)
  • Private expenditure

Examples of items for which input tax is deductible (if related to a taxable business use)

  • Purchase, lease, maintenance and fuel for vans with a weight exceeding 3,500 kg and trucks
  • Maintenance and fuel for cars and 50% lease of a car used for business (1,000 km a year)
  • Conferences, seminars and training courses
  • Advertising
  • Business use of a mobile phone
  • Hotel accommodation (excluding restaurant expenses)
  • Restaurant expenses (SEK300 per person and occasionally alcohol included)
  • Business entertainment (SEK180 exclusive of VAT)
  • Business gifts (with a value of SEK180 or less exclusive of VAT and valued less than SEK225 inclusive of VAT)

Partial exemption. Input tax directly related to exempt supplies is not generally recoverable. If a Swedish taxable person makes both exempt and taxable supplies, it may not recover input tax in full. This situation is referred to as “partial exemption.” Exempt with credit supplies are treated as taxable supplies for these pur­poses.

The amount of input tax that a partially exempt business may recover is generally calculated in the following two stages:

  • The first stage identifies the input VAT that may be directly allocated to taxable and to exempt supplies. Input tax directly allocated to taxable supplies is deductible, while input tax directly related to exempt supplies is not deductible.
  • The remaining input tax that is not allocated directly to exempt and taxable supplies is then apportioned based on the value of taxable supplies compared with total turnover, or it is appor­tioned by another reasonable method. If turnover is used to calculate the recoverable amount, the recovery percentage can be rounded up to the nearest whole number.

Capital goods. Capital goods are items of capital expenditure that are used in a business over several years. Input tax is deducted in the VAT year in which the goods are acquired. The amount of input tax recovered depends on the taxable person’s partial exemp­tion recovery position in the VAT year of acquisition. However, the amount of input tax recovered for capital goods must be adjusted over time if the taxable person’s partial exemption recovery percentage changes in any year during the adjustment period or if goods are taken from a taxable sector or activity for use in an exempt sector or activity, or vice versa.

The capital goods adjustment applies to the following assets for the number of years indicated:

  • Investments made on immovable property after 1 January 2001 that cost more than SEK400,000 exclusive of VAT: adjusted for a period of 10 years
  • Machinery and equipment that cost more than SEK200,000 exclusive of VAT: adjusted for a period of five years

The adjustment is applied each year following the year of acqui­sition to a fraction of the total input tax (1/10 for immovable property and 1/5 for machinery and equipment). The adjustment may result in either an increase or a decrease of deductible input VAT, depending on whether the ratio of taxable supplies made by the business has increased or decreased compared with the year in which the capital goods were acquired.

Refunds. If the amount of input VAT recoverable in a month exceeds the amount of output VAT payable, the taxable person has an input tax credit. A refund of the credit is triggered auto­matically by the submission of the VAT return.

Preregistration costs. Input VAT on preregistration costs give a right to deduction if connected to a business taxable for VAT. However, the taxable person has the burden of proof showing that the costs are related to the taxable business.

Write-off of bad debts. You are entitled to adjust your output VAT when a bad debt occurs. The reduction should be adjusted in the same period as the bad debt loss is determined. The bad debt loss is determined when the customer is bankrupt or when a debt col­lector has been used engaged and established that the customer does not have any assets. From a VAT perspective, it is not enough to just send reminders to the customer.

Noneconomic activities. The input VAT needs to be connected and have a direct link to taxable business activities, to be deductible. The right to deduction is dependent on, and connected to, the meaning of “supplies.” Supplies mean providing services or goods in exchange for some sort of compensation. The compen­sation needs to have a direct connection to the supplied goods or services and be determined at the latest time for deliverance.

There are some court cases stating that you are not considered to perform taxable activities if you supply services or goods without issuing any invoices.

Recovery of VAT by non-established businesses

Sweden refunds VAT incurred by businesses that are neither established nor registered for VAT in Sweden. Non-established businesses may claim a refund of Swedish VAT to the same extent as VAT-registered businesses.

Effective 1 January 2010, a refund is made to businesses estab­lished in the EU under the terms of EU Directive 2008/9. For businesses established outside the EU, a refund is made under the terms of the EU 13th Directive. Sweden does not exclude claim­ants from any non-EU country.

For the general VAT refund rules under EU Directive 2008/9 and the EU 13th Directive, see the chapter on the EU.

For businesses established outside the EU, the deadline for refund claims is 30 June of the year following the calendar year in which the tax is incurred. For businesses established in the EU, the deadline is 30 September.

Claims may be submitted in Swedish, English, French or German. Applications for refund from businesses established outside the EU must be accompanied by the appropriate docu­mentation (see the chapter on the EU).

Businesses established in the EU may not make an application for a refund on paper to the Swedish tax authority. Instead, they must submit the application electronically to the tax authority where they are established.

The minimum claim period is three months, while the maximum period is one year. The minimum period of three months does not apply to a period ending at the end of a calendar year. The minimum claim for a period of less than a year but of at least three months is SEK4,000, and the minimum amount for an annual claim or for the remainder of a calendar year is SEK500.

The following is the address for applicants from Albania, Bosnia-Herzegovina, the Faroe Islands, Greenland, Iceland, Macedonia, Montenegro, Serbia and Turkey:

Skatteverket

Utlandsskattekontoret SE-205 31 Malmö Sweden

The following is the address for applicants from other countries:

Skatteverket

Utlandsskattekontoret SE-106 61 Stockholm Sweden

Applicants from EU Member States apply for refunds through their respective domestic tax authority.

Repayment interest. The average handling period in Sweden for refund claims under the EU 13th Directive is two to three months, and the time limit is six months. However, interest is not paid on late repayments. The time limit for the tax authority to deal with refund applications from businesses established within the EU is four months. If a claim for refund is granted, but repaid after this time limit, interest is paid. This rule applies if the applicant has complied with any requests for extra information from the tax authority within the time limit.

Invoicing

VAT invoices and credit notes. A Swedish business must generally issue VAT invoices for all supplies made to other businesses or legal persons. Invoices are not required for retail transactions with private persons.

A VAT invoice containing the information required by the VAT Act is necessary to support a claim for input tax deduction or a refund for foreign businesses (see the chapter on the EU).

Credit notes may be issued in the following circumstances:

  • They may be used to correct genuine errors or overcharges.
  • They may be issued following the cancellation of a supply.
  • They may give effect to a bonus or discount.
  • They may be issued as a result of the renegotiation of consider­ation for a supply.

A credit note must show an unambiguous reference to the original invoice and the reduction in value and VAT on the supply.

Electronic invoicing. Effective 1 January 2013, the VAT law has been amended to permit electronic invoicing in line with EU Directive 2010/45/EU.

Proof of exports and intra-Community supplies. VAT is not charge­able on exported goods or on intra-Community supplies of goods (see the chapter on the EU). However, to qualify as exports and intra-Community supplies, the export or supply must be sup­ported by evidence confirming that the goods have left Sweden. Acceptable proof includes the following documentation:

  • For an export, the stamped customs documentation and com­mercial documentation (such as bill of lading, copy of the invoice, delivery note and proof of payment)
  • For an intra-Community supply, a copy of the invoice indicating the customer’s valid VAT identification number (issued by another EU member state), plus a range of commercial docu­mentation (such as bill of lading, transport documentation, proof of payment and proof of receipt)

The Swedish courts have ruled that the supplier of goods has the burden to prove that the goods have actually left Sweden.

Foreign-currency invoices. Swedish taxable persons may maintain their accounts in either EUR or SEK. If a VAT invoice is issued in a different currency, the values for VAT purposes and the VAT amounts must be converted to EUR or SEK.

B2C invoices. Suppliers are not required to issue invoices to pri­vate consumers according to Swedish regulation regarding sup­ply of electronic services.

VAT returns and payment

VAT returns. Periodic VAT returns are submitted in Sweden for monthly, quarterly or yearly periods, depending on the taxable person’s turnover.

VAT liabilities are normally reported on the same tax return form as payroll taxes and employee income tax amounts withheld by employers. Monthly VAT returns must be filed if the taxable person’s turnover exceeds SEK40 million. Otherwise quarterly reporting may apply. However, a taxable person may opt to file monthly. A yearly reporting period applies for taxable persons whose turnover is less than SEK1 million per year.

VAT returns must be filed with full payment of VAT. Monthly VAT returns generally must be submitted by the 26th day of the month after the end of the reporting period. Quarterly VAT returns must be submitted by the 12th day of the second month after the end of the reporting period. The same rules apply to tax­able persons that have yearly turnover of less than SEK40 million and that apply for monthly VAT returns. Taxable persons whose turnover exceeds SEK40 million must file monthly returns by the 26th day of the month following the return period.

Returns must be completed and return liabilities must be paid in SEK.

Special schemes. Not applicable.

Electronic filing and archiving. Taxpayers are obliged to file invoices and other bookkeeping for seven years after the finan­cial year. This includes both invoices for input and output VAT. The invoices should be stored in the same format as they have been received or issued.

If the invoices are being filed electronically other tax authorities from other member states can demand access to them for control purposes. They are allowed access if the Swedish Tax Agency would have been allowed access.

Annual returns. If your turnover is less than SEK1 million, you can choose to submit VAT returns annually.

Penalties

A penalty of SEK625 is imposed for late filing of a VAT return. The penalty is increased to SEK1,250 if the Tax Agency has ordered the VAT return to be submitted. Late payment of VAT results in the imposition of an interest penalty. The interest con­sists of base interest plus 15%. The base interest is 1.25% as of 1 January 2013.

EU filings

Intrastat. A Swedish taxable person that trades with other EU countries must complete statistical reports, known as Intrastat, if the value of its annual sales or purchases of goods exceeds cer­tain thresholds. Separate reports are required for intra-Communi­ty acquisitions (Intrastat Arrivals) and for intra-Community supplies (Intrastat Dispatches).

The threshold for Intrastat Arrivals is SEK9 million. The thresh­old for dispatches is SEK4.5 million.

The Intrastat reporting period is monthly. The submission dead­line is normally between the 10th and 15th day following the reporting period for paper returns and between the 13th and 18th day for electronic returns.

Intrastat reports must be filed in SEK.

In principle, penalties may be imposed for late filing of Intrastat reports or for errors or omissions. However, penalties are rarely imposed. If a penalty is assessed, the courts take sev­eral factors into consideration (such as the size of the business and its turnover) in determining the amount owed.

EU Sales Lists. If a Swedish taxable person makes intra-Commu­nity supplies in any return period, it must submit an EU Sales List (ESL). An ESL is not required for any period in which the taxable person has not made any intra-Community supplies.

ESLs must be submitted monthly with respect to goods. An ESL regarding supplies of services must be submitted quarterly. However, if a business supplies both goods and services, the reporting must be in accordance with the rules regarding goods. Taxable persons may apply to make quarterly submissions if the total amount of supplies and transfers of goods does not exceed SEK1 million for the current quarter as well as for the preceding four quarters. The due date is the 20th day of the month following the end of the ESL return period for paper ESLs and the 25th day for electronic ESLs.

ESL reports must be filed using amounts expressed in SEK.

A penalty of SEK1,000 is imposed for late, missing or inaccurate ESLs.