Import of services from non-EU countriesThe page was last modified:
If you buy a service from a country outside the EU’s VAT area, you do not need to file a customs declaration and you do not pay any import VAT. Under the main rule, a service that you buy from a country outside the EU’s VAT area is performed in Sweden, and then reverse tax liability applies. That means that it is you, as the buyer, who have to report and pay VAT. So the seller should not add any VAT on their invoice.
The international trade in services is limited in various ways by countries’ national legislation and regulatory frameworks. This can, for example, involve laws and regulations that limit the number of service companies in a particular country’s market or that set particularly high requirements for international services companies.
The EU’s free trade agreements and the GATS Agreement of the World Trade Organisation (WTO) are important regulatory frameworks for companies that want to buy services from service suppliers outside the EU.
Free trade agreements
Trade in services is included in most of the EU’s free trade agreements. They contain more, and more far-reaching, commitments on guaranteeing foreign competition than the GATS Agreement.
You can also contact the National Board of Trade’s free trade group if you have questions about the commitments of EU countries in various free trade agreements.
GATS (General Agreement on Trade in Services)
The WTO’s General Agreement on Trade in Services (GATS) recognises the right of WTO countries to regulate trade in services themselves and to decide by themselves what commitments they want to make under GATS.GATS contains two important principles, one about the most favoured nation (MFN) and one about transparency. The Agreement also contains national schedules of specific commitments stating the commitments of WTO countries and Sweden.
Most favoured nation (MFN)
In trade in services MFN means that if a country opens up a sector of services to suppliers from one member country, the same openness must apply to all member countries.
The transparency requirement means that WTO countries must be open and clear about what laws and regulations affect trade in services.
National schedules of specific commitments
Every country has a schedule of specific commitments in which they give guarantees of a specific level of openness in relation to suppliers of services from other member countries. These guarantees are called commitments.
Countries make their own choices of the services sectors in the GATS Agreement where they want to make commitments, how far-reaching their commitments will be and what modes of supply they will cover.
GATS specifies four ‘modes of supply’ for services, which are the following:
- the service is delivered from the territory of a country to another country, for example a phone call across a land border (cross-border supply)
- a person or a company consumes a service in another country, for example tourism (Consumption abroad)
- a company establishes operations in another country, through a subsidiary for instance (commercial presence)
- a person visits another country temporarily to supply a service such as consultancy work (presence of a natural person).
Cross-border supply and commercial presence are the most common modes of supply. Presence of a natural person encounters most barriers to trade and is also the least common mode of supply.
Web service about WTO members’ commitments under GATS
In the WTO’s web service for services you can, for example, search for the commitments that each WTO country has made under the GATS Agreement.
Responsible: Swedish Agency for Economic and Regional Growth