VAT in Sweden guide

How much is VAT in Sweden? 

The Standard VAT Rate (”Mervärdesskatt” (MOMS)) in Sweden is 25%. 

Some supplies are exempt from VAT. This applies to business activities like health care, insurance, banking, and financial services.

The exact list of taxable transactions and allocated Sweden VAT rate can be found in VAT Sweden regulations. 

VAT thresholds in Sweden 

The VAT legislation contains valuable information about the VAT threshold in Sweden and its applicable provisions. Interpreting the appropriate information shared by Tax Authority officials is also a helpful source of information. 

VAT registration threshold for resident businesses: A taxable person could benefit from VAT exemption if the taxable turnover in a tax year is less than SEK 80,000 and the turnover in the two previous calendar years has also been less than the threshold amount.

VAT registration threshold for non-resident businesses: No registration threshold.

VAT registration threshold for intra-EU distance sales of goods and B2C supplies of services: EU-wide harmonized threshold of EUR 10,000.

VAT registration threshold for non-EU established suppliers of Electronically Supplied Services: No registration threshold.

VAT Taxable Activities in Sweden

A taxable person by Sweden VAT Law is a legal person or individual who carries out economic activity independently, whatever the purpose or results. 

Types of taxable activities that trigger the imposition of Sweden VAT: 

• The supply of goods and rendering of services in Sweden for consideration;
• Receipt of reverse-charge services by a taxable person in Sweden;
• Export of goods;
• Import of goods. 

Other case scenarios exist where domestic or foreign businesses should impose Sweden VAT on their transactions. 

Tax Representative in Sweden 

For non-EU-established businesses, having a tax representative for all VAT compliance-related activities is often mandatory. Tax persons with tax residence in third countries or territories with mutual assistance agreements signed with Sweden can fulfill their tax obligations without the compulsory requirement to contract a tax representative. 

Having a tax intermediary isn’t compulsory for EU-established companies. Still, the economic operator could acquire the professionals to ease and streamline compliance challenges for its operations in the country. 

VAT on Electronically Supplied Services in Sweden 

Electronically Supplied Services 

Under the EU VAT Directive 2006/112/EC, Electronically Supplied Services (ESS) are identified as services rendered via the Internet or comparable digital networks. This category of services is automated and requires minimal or no human intervention. Without technology participating in their provision, these services will lose their treatment and characterization as digital services.

In alignment with the EU VAT Directive and its Implementing Regulation, Sweden has embraced this unified definition of ESS. This move ensures a consistent framework for taxing and regulating digital services across the EU, aiming to equalize the tax treatment across the EU.

However, the frequent use of terms such as “digital services,” “digital products,” and “electronic services” can lead to confusion and inconsistencies in tax and legal interpretations. 

This situation underlines the need for the tax authorities to clarify their understanding of these types of services and those closely similar to or ancillary to them. 

Taxability Rules for ESS

The adoption of E-commerce reform within the lines of the EU VAT framework delineated a significant move guided by the necessity of the EU to develop a transparent, consistent, and less challenging approach to tax rules surrounding the field of digital commerce. From the implementation date, new simplified reporting tools have become available for various users.  

Important changes introduced with the E-commerce Package from 2021:

• B2B Electronically Supplied Services: Determining the place of supply for these transactions follows the general place of supply rules.
• B2C Electronically Supplied Services: Taxable entities established outside the EU should apply VAT rates in alignment with EU-standardized rules, setting the VAT rate based on the consumer’s domicile. 
• Distance sales of goods and ESS supply: For EU-based suppliers engaging in these operations, the annual turnover threshold of EUR 10,000 is pivotal in determining applicable VAT rules. Suppliers not exceeding this threshold can apply either their home country’s VAT regulations or choose to report all of their transactions via OSS schemes. 
• Distance sales of goods and ESS supply: Once the revenue threshold exceeds EUR 10,000, businesses should adhere to the consumer’s country of residence tax rules.

These rules determine the place of supply for intra-community distance sales of goods or B2C provision of services to be where the customer resides. This approach should ensure equitable distribution of tax revenue across the EU.

Unifying VAT regulations not only eases the compliance process for businesses within the European Union but also extends its advantages to foreign companies engaged in the EU Common Market.

How much is VAT in Sweden for Electronically Supplied Services?

VAT rate Sweden: A standard VAT rate of 25% is applied in most cases on sales of Electronically Supplied Services in Sweden.

E-Commerce VAT Rules in Sweden 

On July 1, 2021, EU authorities enacted significant updates to the VAT Directive, targeting the evolving complexities within the burgeoning digital economy. These changes aimed to alleviate the VAT compliance burden for businesses navigating cross-border operations.

Relevant Features of the 2021 E-Commerce VAT Reforms:

• Cross-Border Sales of Low-Value Goods: The introduction of the EU-wide threshold for imports of low-value goods from third countries or third territories and the related possibility to report tax liabilities under the simplified scheme. 
• Intra-Community Distance Sales: The reforms have eliminated the previously established threshold for intra-community distance sales of goods. These thresholds have been defined per national rules, further complicating the transfer of goods’ supply. 
• Domestic Sales by Deemed Suppliers: In certain cases, digital platform operators will be the responsible taxable persons for VAT. 
• Provision of B2C Services: The eligibility for services reported through the One-Stop Shop (OSS) schemes has been substantially widened. This enhancement eases the VAT reporting process for entities offering digital services within the EU.

These modifications emphasize the EU’s dedication to streamlining VAT processes, easing business operational challenges, and promoting a more transparent and equitable digital single market.

E-Commerce VAT Simplification:

Beyond the critical revisions introduced by the 2021 E-commerce reform, this legislative update thoroughly reassessed the OSS schemes. The regulators have expanded the scope of available schemes to reinforce the EU-wide simplified reporting systems. 

The Import One Stop Shop(IOSS) has been introduced as a long-expected move that will reduce the burden of import VAT and bureaucracy challenges for businesses operating cross-border. 

The E-Commerce VAT package made the following special schemes available:

• Union One-Stop-Shop Scheme;

• Non-Union One-Stop-Scheme;

• Import One-Stop-Shop Scheme.

Overview of EU VAT Special Schemes

The Non-Union One-Stop Shop (OSS) scheme is designated exclusively for businesses established outside the EU. Foreign taxable persons could adhere to this scheme and use it to report their B2C service delivery to EU customers. 

This approach facilitates ease of VAT reporting for non-EU vendors engaging in the European market.

Union Scheme can be used by:

• EU-based businesses: Taxable entities that are residents in one of the Member States can take advantage of this scheme if they provide B2C services or engage in intra-community distance sales of goods. An important fact to remember is that businesses looking to leverage this scheme have no possibility of reporting domestic transactions within this scheme. 
• Non-EU Based Businesses on Intra-Community Sales: Businesses not based in the EU are also eligible to use the Union Scheme specifically for intra-community distance sales of goods.
• Digital Marketplaces: Whether based in the EU or not, digital marketplaces facilitating intra-community distance sales of goods and for certain domestic supplies can leverage the Union Scheme. 

Import Scheme can be used by:

The IOSS scheme can be used by many taxable persons whose place of business is within the EU or outside the Union. In some situations, the scope of taxpayers who can benefit from this scheme also covers digital marketplaces. 

OSS Return and Payment 

Sweden’s VAT regulations do not offer a specialized registration and reporting framework specifically designed for taxable persons delivering digital services to Swedish customers. However, non-resident taxpayers could adhere to the OSS schemes, and due to the advantages of this reporting system, they would be exempt from registering for Sweden VAT. 

Implementing the EU-wide One-Stop Shop (OSS) schemes has significantly eased the reporting obligations of cross-border operating merchants. Before the 2021 updates to the EU VAT regulations, numerous taxpayers operating across borders and supplying goods or services to customers in Sweden were compelled to register for local VAT.

Should a taxable entity be unable to utilize the OSS schemes for transactions where Sweden is the place of supply, it becomes imperative for them to familiarize themselves with Sweden’s national VAT laws and comply accordingly.

Electronic Platform and Deemed Supplier Rules 

Sweden has embraced the updates to the EU VAT Directive brought about by the 2021 E-commerce reform, integrating these changes into its national tax legislation. The adoption of harmonized EU VAT rules significantly alleviates both compliance and administrative burdens for businesses engaging with Swedish consumers.

Translating the EU VAT Directive provisions that cover e-commerce operations into the national legislative framework made Sweden align with the rest of the EU. According to the directive, a digital marketplace operator  becomes VAT liable for the underlying transaction in two distinct instances:

• When goods valued at EUR 150 or less are imported from outside the EU, and when the original suppliers sell directly to EU customers using the intermediary services of the digital marketplace or;
• When goods in free circulation within the EU are offered by vendors whose residence is outside the EU to customers based in the Member States through the usage of the facilitation service provided by the digital platform. 

This approach simplifies tax obligations for digital marketplace transactions, aligning Sweden’s VAT practices with EU standards and supporting a more unified digital market environment.

These provisions ensure a more straightforward VAT process for digital marketplaces and their transactions within the EU.

This adoption reflects Sweden’s dedication to adhering to EU VAT standards, aiming to improve the transparency and uniformity of tax regulations applicable to digital sales. Consequently, this adjustment introduces new obligations for deemed suppliers, significantly altering the VAT implications of this sales model.

This regulatory framework introduces additional responsibilities for deemed suppliers, vastly changing this sales model’s VAT obligations for taxable entities. In this multi-sided business model, we have two separate transactions: 

1. The initial supply from the original vendor to the digital platform is recognized as a business-to-business (B2B) transaction.
2. The subsequent supply from the platform to the final consumer is classified as a business-to-consumer (B2C) transaction.

This ensures compliance and facilitates smoother operations under the simplified tax framework provided by the EU.

Invoice Requirements in Sweden 

General invoice information:

• Date of invoice issuance;
• Date of the supply of goods or provision of services;
• Unique invoice numbers issued in sequence.

Seller information:

• Company name;
• Full address(head office);
• Billing address if different from company address;
•  VAT number.

Customer information:

• Name;
• Full address;
• VAT number;
• Delivery address;
• The billing address is different from the delivery address.

Fiscal Information:

• Description and breakdown of the goods or services – quantity, discounts, unit price excl. VAT;
• Total without VAT;
• VAT amount in SEK;
• The VAT rate(s) applied and the breakdown of VAT per rate;
• Invoice Total.

Additional information required in particular cases:

• Exemption reference – guaranteed by precise norm;
• Reverse charge – term if applicable;
• Self-billing – term if applicable;
• Tax Representative information for non-resident business.

Foreign Currency Invoice in Sweden  

In Sweden, it’s permissible to issue tax invoices in foreign currencies, but the VAT amount on the invoice must be shown in local currency.

VAT Return in Sweden 

Domestic returns

Domestic taxpayers and non-established foreign businesses who conduct business under the national VAT Sweden rules should submit monthly or quarterly declarations. 

Penalties for late reporting and omitted declarations 

Taxpayers should charge Sweden VAT on their transactions when the responsibility rises and submit the VAT return. If they do the return fillings after the deadline, they can expect to allocate more funds than they would if they had filled the return within the permitted time frame. 

In the case of the late filing of VAT returns and payments, the Swedish Tax Agency enforces the following penalties:

• If the taxable person submits the return after the deadline, it will get a notice from the Swedish Tax Agency and will most likely be fined with a late penalty fee of SEK 625.

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