How VAT works – text version of filmThe page was last modified:
When you sell something, you must add VAT to the price. When you buy something, the seller has already added VAT. VAT is a type of tax on goods and services that, as an entrepreneur, you are involved in managing for the Swedish Tax Agency. Self-employed persons keep track of VAT in their accounts, and VAT must be reported in a VAT declaration to the Swedish Tax Agency.
The difference between VAT on what you sell and on what you buy determines whether you will have to pay or get VAT money back. The VAT should always be indicated on the receipt or invoice in SEK and as a percentage.
In order to report data to the Swedish Tax Agency, you must keep track of the sales, VAT on sales – so-called output VAT – and VAT on purchases – input VAT. This information must be provided in the VAT declaration.
By way of example, imagine that you are a web designer who sold four websites for a total of SEK 40,000, excluding VAT. The output VAT is 25 percent, which is SEK 10,000. You have purchased a computer program, fonts and images from an image bank at SEK 4,000, excluding VAT. The input VAT is 25 percent, i.e. SEK 1,000. When the company's VAT is reported to the Swedish Tax Agency, the data regarding sales, output VAT and input VAT are retrieved from the accounting records and inserted in the VAT declaration. The difference between the output and the input VAT is SEK 9,000, which must be paid to the Swedish Tax Agency.
The VAT declaration is submitted periodically. You register with the Swedish Tax Agency whether you want to file your VAT declaration monthly, quarterly or yearly. The VAT declaration can be submitted via the Swedish Tax Agency's e-service or on a form sent by the Swedish Tax Agency, according to the selected reporting frequency. Keep in mind that the VAT is payable at the same time as you submit the VAT declaration.
On most goods and services, VAT is 25%. But there are exceptions. The sale of food in stores or serving of food in a restaurant is subject to 12 percent VAT. The sale of books, as well as newspapers, taxis and some cultural and sporting events have a VAT rate of 6%. Healthcare and dental care are subject to zero percent VAT.
It is a good idea to plan VAT management in the company right from the start. At skatteverket.se, you can get help with declaring VAT.
Responsible: Swedish Agency for Economic and Regional Growth