All entrepreneurs dealing domestically in goods or services in a professional business activity are liable to pay VAT.
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The term 'dealing' refers to sale of goods, provision of services, exchanges and your own withdrawals from the business. VAT (Value Added Tax) is charged in every step of the production and distribution chain for products and services, up to and including sales to end consumers. In Sweden, VAT is referred to as "moms".
If you are planning to run a business that entails liability to pay VAT or gives the right to a refund of VAT, you must register for VAT with the Swedish Tax Agency no later than two weeks before the business is started.
VAT is not an expense for you as an entrepreneur. Although you pay VAT on your purchases, you are entitled to deduct the same VAT. You pay the difference between the VAT you charge on your sales (output VAT) and the VAT you pay on your purchases (input VAT).
VAT is rated at 25, 12 and 6 per cent
There are three tax rates for VAT.
- 25 per cent VAT is the general tax rate, which applies to most goods and services.
- 12 per cent VAT is charged on foodstuffs, hotels and artists' own sales of works of art, for example.
- 6 per cent VAT rate applies to newspapers, magazines, books, passenger transport (taxis, buses, flights and trains) in Sweden and concerts etc.
When you add VAT, you must add it to the total amount paid by the customer for goods or services, excluding any interest charged.
Deductions for input VAT
Deductions for input VAT are permitted if the purchases are necessary for the operations of the business.
VAT must appear on invoices and receipts
The company's invoices must show what percentage of the selling price is VAT. For input VAT to be deductible, the amount of VAT has to be shown on an invoice. You may not deduct VAT when you purchase certain items, such as passenger cars and motor cycles.
How do I report VAT?
If your annual turnover is less than SEK 1 million, you report VAT once a year in your income tax return. If your annual turnover exceeds SEK 1 million, you report VAT every three months in a VAT and PAYE return. You can also choose to report VAT every month.
Trading partnerships, limited partnerships and insolvent estates with a turnover of less than SEK 200,000 may be allowed to report VAT once a year in a VAT and PAYE return. The Swedish Tax Agency makes the relevant decision.
When do I report VAT?
If you are submitting your return in a VAT and PAYE return, this and your payment must be received by the Swedish Tax Agency no later than the 12th of the second month after the return period. VAT for the January-March return period must be reported and received no later than 12th May.
Reverse VAT liability in the construction industry
When reverse VAT liability is applied, it is the purchaser and not the vendor that is obliged to report and pay VAT. A company which performs and sells construction services, more than on a temporary basis, must pay VAT for its sub-contractors. If the purchaser of the service is not a construction company, the vendor shall add VAT to the invoice. If the purchaser of the service is a construction company, the vendor shall not add VAT to the invoice. Instead, the purchaser will be responsible for reporting the output VAT.
Reverse VAT liability does not apply to sales which consist solely of materials.
Trade with other countries
You do not charge VAT when you sell and send goods to a VAT-registered purchaser in another EC country who quotes a valid VAT registration number. Instead, the purchaser reports the VAT in his own country. If the purchaser is not VAT-registered, you charge Swedish VAT. You do not charge VAT when exporting goods, regardless of who the purchaser is.
Responsible: Swedish Agency for Economic and Regional Growth