GLOBAL INDIRECT TAX Sweden Country VAT/GST Essentials kpmg.com TAX
b Sweden: Country VAT/GST Essentials
Sweden: Country VAT/GST Essentials Contents Scope and Rates 2 What supplies are liable to VAT? 2 What is the standard rate of VAT? 2 Are there any reduced rates, zero rates, or exemptions? 2 Registration 3 Who is required to register for Swedish VAT? 3 Are there penalties for not registering or late registration? 4 Are there any simplifications that could avoid the need for an overseas company to register for VAT? 4 VAT Grouping 5 Is VAT grouping possible? 5 Can an overseas company be included in a VAT group? 5 Returns 5 How frequently are VAT returns submitted? 5 Are there any other returns that need to be submitted? 6 VAT Recovery 6 Can I recover VAT if I am not registered? 6 Does your country apply reciprocity rules for reclaims submitted by non-established businesses? 6 Are there any items that you cannot recover VAT on? 7 Invoices 10 What do I have to show on a tax invoice? 10 Can I issue invoices electronically? 10 Is it possible to operate self-billing? 10 Transfers of Business 11 Is there a relief from VAT for the sale of a business as a going concern? 11 Options to Tax 11 Are there any options to tax transactions? 11 Head Office and Branch Transactions 12 How are transactions between head office and branch treated? 12 Bad Debt 12 Am I able to claim relief for bad debts? 12 Anti-Avoidance 13 Is there a general anti-avoidance provision under the VAT law? 13 Penalty Regime 13 What is the penalty and interest regime like? 13 International Supplies of Goods and Services 7 How are exports of goods and services treated? 7 How are goods dealt with on importation? 9 How are services which are brought in from abroad treated for VAT purposes? 9 All information reflected in this document was obtained/summarized from KPMG in Sweden as of October 2011.
2 Sweden: Country VAT/GST Essentials Scope and Rates What supplies are liable to VAT? 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 such as private use of business assets. What is the standard rate of VAT? The standard rate of VAT is 25 percent. Are there any reduced rates, zero rates, or exemptions? Yes. There is a reduced rate of 12 percent for certain goods and services, including: food hotel accommodation. In addition, there is a reduced rate of six 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: exports international supplies of services intra-community 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.
Sweden: Country VAT/GST Essentials 3 Registration The list of exemptions (without credit) includes: health and welfare education 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 gold 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. Who is required to register for Swedish VAT? Swedish Entities If your business makes taxable supplies in Sweden you will be required to register and account for Swedish VAT. No VAT registration threshold exists in Sweden. Non-Swedish Entities The registration rules that apply to Swedish entities also apply to non-swedish entities which are making taxable supplies in Sweden. If your 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 SEK320,000, your business is required to register and account for VAT in Sweden. Foreign entities making intra community 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. Access the VAT registration form 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 can be used. The form is available in Swedish and English. The identification number of the form is SKV 4632a.
4 Sweden: Country VAT/GST Essentials Are there penalties for not registering or late registration? 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. Are there any simplifications that could avoid the need for an overseas company to register for VAT? If your business makes supplies of goods or services in Sweden, then you are 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 your customer provided that your customer is registered for Swedish VAT. Other situations also exist when registration can be avoided if the customer is registered for VAT in Sweden. Triangulation If your business is an intermediate supplier to a Swedish buyer of goods which you purchase from a business in a EU Member State other than your own and are delivered from there to Sweden, VAT due can be accounted for by the Swedish customer (see section Invoices). Supply and Install If your business supplies goods and installs or assembles them in Sweden, your 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) Bear in mind that these provisions are subject to particular requirements, so you should check carefully whether you comply with them. Construction Services The reverse charge is mandatory for certain construction services provided to another construction company. This applies both to Swedish and overseas companies. Call-Off Stock 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.
Sweden: Country VAT/GST Essentials 5 VAT Grouping Is VAT grouping possible? 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. Returns How frequently are VAT returns submitted? Companies with annual turnover exceeding SEK40 million must report VAT on a monthly basis. VAT is reported on a special VAT return. Companies with annual turnover below SEK40 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 in their annual income tax return. Although, it is possible to apply for monthly or quarterly submissions, as above. Can an overseas company be included in a VAT group? 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.
6 Sweden: Country VAT/GST Essentials VAT Recovery Are there any other returns that need to be submitted? European Sales List (ESL) If your business supplies goods which are shipped from Sweden to VAT registered businesses in other EU Member States and you wish to zero rate the supply (see section International Supplies of Goods and Services), you are required to complete ESLs. ESLs are completed on a calendar quarter basis; although in certain circumstances the tax authorities may allow a business to submit ESLs on an annual basis. Can I recover VAT if I am not registered? Yes. If you are established in another EU Member State then you should make a claim under what is known as the EU refund Directive. If you are a non-eu business you should recover the VAT under the 13th Directive. You can access the claim form and relevant page on the Swedish tax authority s Web site. The form is called SKV 5801: www.skatteverket.se. Entities from Denmark, Faroe Islands, Iceland, Greenland, Poland, Slovakia, Slovenia, Czech Republic, and Germany shall use a form called SKV 5811. 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 (SEK2.2 for arrivals and SEK4.5 for dispatches per annum) must complete supplementary declarations each month. Does your country apply reciprocity rules for reclaims submitted by non-established businesses? No reciprocity requirements exist in Sweden. 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 that they are required to complete and submit Intrastat returns. If the Intrastat report is not completed and returned, 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.
Sweden: Country VAT/GST Essentials 7 International Supplies of Goods and Services Are there any items that you cannot recover VAT on? Yes. There are certain items that you cannot recover VAT on. For example: Exempt supplies: where VAT relates to both taxable and exempt supplies, you need to make an apportionment. Non-business (including private) activities: where VAT relates to both business and non-business activities, an apportionment is required. Motor cars (excluding commercial vehicles): with certain exceptions you cannot recover VAT on the purchase of a motor car, and a 50 percent restriction applies on the recovery of lease charges. Dwelling house: 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 SEK90 (VAT SEK22.50). 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 is not deductible on the purchase of the goods. How are exports of goods and services treated? Goods If you sell 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 you or your customer) to another Member State, then you do not need to charge VAT and may zero rate the supply as an intra-eu dispatch. You must obtain your customer s VAT number and quote it on your invoice. You should also obtain evidence of the goods removal from Sweden. If you sell goods, which are transported to another EU Member State, to a customer who is not registered for VAT in another EU Member State, you will have to charge Swedish VAT. If your sales exceed a certain threshold for that Member State you may have to register in the Member State under what is known as the Distance Selling Scheme. If you export goods to a customer (business or private) outside of the EU, you do not need to charge VAT. However, you should make sure that in all cases you keep proof of dispatch/delivery to support your zero rating.
8 Sweden: Country VAT/GST Essentials Services If you supply services to a business customer (B2B) in another EU Member State or a customer (business or private) outside of the EU, then you can zero rate your supply provided the service falls within one of the following categories. transfers and assignments of copyrights, patents, licenses, trademarks, and similar rights advertising services services of consultants, engineers, consultancy bureaus, lawyers, accountants, and other similar services, as well as data processing and the supplying of information obligations to refrain from pursuing or exercising, in whole or in part, a business activity or a right referred to above banking, financial, and insurance transactions including reinsurance the supply of staff the hiring out of movable tangible property with the exception of all forms of means of transport telecommunications radio and television broadcasting services electronically supplied services the services rendered by one person to another in procuring for the other any of the services described above services related to the distribution of natural gas and electricity. Furthermore, you can avoid charging Swedish VAT on the following types of services which, for VAT purposes, are treated as supplied where physically performed if they are not performed in Sweden: cultural, artistic, sporting, scientific, educational, entertainment, or similar activities, including the activities of the organizers of such activities and where appropriate, supply of ancillary services ancillary transport activities such as loading, handling, and similar activities valuations of movable tangible property work on movable tangible property. International transport of people is not subject to Swedish VAT. International transport of goods is subject to Swedish VAT if the transportation starts in Sweden and ends in another EU Member State and the acquisition is not made by a customer who is registered for VAT in another Member State. International transport of goods to a destination outside the EU is not subject to Swedish VAT.
Sweden: Country VAT/GST Essentials 9 How are goods dealt with on importation? When goods are imported into Sweden from outside the EU, import VAT and customs duty may be due. This has to be paid or secured before the goods will be released from customs control. How are services which are brought in from abroad treated for VAT purposes? When purchasing services from an overseas company, you will often be required to apply the reverse charge scheme provided you are a Swedish entity. This is intended to take away any VAT advantage of buying those services from outside Sweden. 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. Provided that the purchase subject to reverse charge has been made for taxable business, the reverse charge has no cost effect and is a VAT compliance matter only. However, for companies not in full VAT recovery position there is likely to be a VAT cost depending on the level of recovery allowed under the partial exemption method. The reverse charge applies on a wide range of services, including: transfers and assignments of copyrights, patents, licenses, trademarks. and similar rights advertising services services of consultants, engineers, consultancy bureaus, lawyers, accountants, and other similar services, as well as data processing and the supplying of information obligations to refrain from pursuing or exercising, in whole or in part, a business activity or a right banking, financial, and insurance transactions including reinsurance the supply of staff the hiring out of movable tangible property with the exception of all forms of means of transportation telecommunications radio and television broadcasting services electronically supplied services the services rendered by one person to another in procuring for the other any of the services described above services related to immoveable property located in Sweden ancillary transport activities such as loading, handling and similar activities valuations of movable tangible property under certain conditions work on movable tangible property under certain conditions. It should be noted that Sweden has introduced mandatory reverse charge on certain construction services when rendered between construction companies. Reverse charge is not applicable on education and domestic transport of people or for cultural, artistic, sporting, scientific, entertainment, or similar activities, including the activities of the organizers of such activities and where appropriate, supply of ancillary services (when physically performed in Sweden). If the overseas trader has an establishment in Sweden such as a branch, the reverse charge is normally not applicable.
10 Sweden: Country VAT/GST Essentials Invoices What do I have to show on a tax invoice? If you have to issue a tax invoice it should contain the following data: Date of issue. A sequential invoice number. If the invoice adjusts an earlier invoice (such as a credit note), unambiguous reference should be made to the original invoice. Supplier VAT number. Customer VAT number (on intra-eu supplies). If the 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. 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). Can I issue invoices electronically? Yes, provided that you have the agreement of your customer (note that there are no specific requirements for electronic invoices compared to paper invoices). Is it possible to operate self-billing? Yes, provided you have the agreement of your customer before doing so.
Sweden: Country VAT/GST Essentials 11 Transfers of Business Is there a relief from VAT for the sale of a business as a going concern? Yes. If you sell your 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. Options to Tax Are there any options to tax transactions? There is an option to tax letting of immovable property under certain circumstances.
12 Sweden: Country VAT/GST Essentials Head Office and Branch Transactions How are transactions between head office and branch treated? If your head office makes a charge for services to its branch, or vice versa, that is not treated as a supply for Swedish VAT purposes. Bad Debt Am I able to claim relief for bad debts? You are able to claim VAT back on the unpaid element through your VAT return. If you subsequently receive payment for the supply then you will have to pay back the VAT element to the tax authorities.
Sweden: Country VAT/GST Essentials 13 Anti-Avoidance Is there a general anti-avoidance provision under the VAT law? No. Penalty Regime What is the penalty and interest regime like? There are a number of penalties that apply in Sweden for compliance failures. Late VAT return penalties have already been addressed previously. If you make an error on a VAT return which understates your liability or overstates your entitlement to a VAT credit, you may incur a surcharge of 20 percent of the amount of tax that is assessed over and above the amount declared.
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