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All entrepreneurs dealing in goods or services in a professional business activity in Sweden are liable to pay VAT (Value Added Tax).
The term 'dealing' refers to sale of goods, provision of services, exchanges, and your own withdrawals from the business. VAT 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".
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).
Registration of VAT
If you are planning to run a business that is liable to pay VAT or has the right to a refund of VAT, you should register for VAT with the Swedish Tax Agency (Skatteverket) no later than two weeks before the business is started.
VAT relief for small business
The threshold for VAT-registration for a small business established in Sweden is less than SEK 30 000.
If the turnover for a fiscal year (12 months) is less than SEK 30 000, you are not obliged to register for VAT. Please note that if you are a foreign company without a fixed establishment in Sweden, you must register for VAT in any case from the first SEK.
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.
- 6 per cent VAT rate applies to newspapers, magazines, books, passenger transport (taxis, buses, flights and trains) in Sweden and concerts.
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.
How do I report VAT?
You report VAT in your VAT return monthly, every three months, or annually, depending on the size of your business.
How often do I report VAT?
When you send in your application for F-tax to the Swedish Tax Agency when starting your business, you specify how often you want to report VAT.
Small companies with a turnover of less than SEK 1 million per year may choose to report VAT once a year, quarterly or monthly.
Medium sized companies with a turnover of between SEK 1 million and SEK 40 million per year may choose to report VAT once a quarter or once a month.
Larger companies with a turnover of more than SEK 40 million are to report VAT once a month.
The transcript that the Swedish Tax Agency sends when you register for VAT tells you how often you should report your VAT.
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 should add VAT to the invoice. If the purchaser of the service is a construction company, the vendor should not add VAT to the invoice. Instead, the purchaser is 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 EU 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 (selling to a country outside EU), regardless of who the purchaser is.
Responsible: Swedish Agency for Economic and Regional Growth