SwedenManual

VAT registrations and simplifications in Sweden

When do I need a Swedish VAT number?

Generally, a foreign business must register for VAT in Sweden as soon as a taxable supply is made. The following are the typical examples of taxable transactions:

  • Domestic supply of goods not reverse charged: A supply of goods located in Sweden where the supply is not subject to reverse charge requires a VAT registration of the supplier.
  • Supply of services not reverse charged: Foreign businesses supplying services on which Swedish VAT is due must register for VAT. These services are exceptional, as the general B2B rule applies.
  • Export: Exporting goods to non-EU countries requires a VAT number before the export is made.
  • Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT. 
  • Intra-Community supply: Supplying goods from another Member State is also a taxable transaction that obliges the supplier to register for VAT. 
  • Distance sales: When applicable in case the Seller has not joined OSS. See the E-commerce manual for more information.

Voluntary registration is possible in Sweden. That is, foreign companies can register for VAT and opt to tax their domestic supplies made to established companies, even if they do not perform any other taxable transaction in the country. A typical scenario where this option is an advantage for businesses would be where a company performs domestic purchases followed by domestic sales to established companies. By opting to tax the domestic sale, instead of applying reverse charge, they will register voluntarily for Swedish VAT, hence being able to deduct domestic purchases VAT in the VAT returns. Domestic sales will charge VAT to a Swedish customer. Therefore, in principle, such businesses could deduct input VAT via VAT return. Find here more information about VAT registrations in Sweden. 

A backdated registration is also possible. Such backdated registration is required when a business applies for a Swedish VAT number late.  In this case, all missed VAT returns are due, and, if applicable, all corresponding VAT payments should be made.

There is no registration threshold for foreign non-established companies in Sweden. For these businesses, registration is required before the first taxable transaction is made in Sweden. However, small established companies can avoid a VAT registration if the annual turnover is below the exemption threshold of SEK 80,000 (this threshold increased from SEK 30,000 to SEK 80,000 on 1 July 2022). This link provides further information from Swedish authorities on the VAT exemption for SMEs.

A limited VAT registration does not exist in Sweden. Such registration refers to the obligation of obtaining identification purposes and obligations outside VAT returns (e.g. Submitting ESL and Intrastat returns). Swedish VAT registration always implies submitting VAT returns, irrespective of the transaction flow performed by the taxpayer.

Most non-EU businesses must appoint a fiscal representative when registering for VAT purposes in Sweden, except companies from Norway, the Åland Islands, Iceland, the Faroe Islands, and Greenland. The tax representative must be approved by the competent tax office and be a person or company established in Sweden. The fiscal representative is not jointly and severally liable to the taxpayer for its tax debts in Sweden.

EU businesses can register directly for VAT purposes. This means that the company’s legal representative can sign the registration form without any local Swedish involvement.

A fiscal representative or customs agent may also be required when performing certain customs-related transactions.

Swedish VAT groups

Where more than one taxable person established in Sweden, meeting the eligibility criteria, is closely bound by financial, economic, and organizational links, these companies may create a VAT group and be treated as a single taxable person for VAT purposes in Sweden.

The eligibility criteria for forming a VAT group are the following:

  • Companies that are under the supervision of the Swedish Financial Supervisory Board (Finansinspektionen) and supply exempt financial services or exempt insurance services;
  • Companies whose main activity is to supply goods or services to companies falling under the previous activity; and
  • Companies in “an agency relationship” – a commissionaire or a principal company in such a commissionaire structure for Income Tax purposes.

As regards the VAT group conditions, financial links exist when the same person or business directly or indirectly holds more than 50% of the shares of a member. Organizational links refer to the standard management of different members, either directly or indirectly. Economic links exist where the purpose and activity of the members have the same object and goal and benefit the group as a whole.

In addition, the following VAT grouping rules apply in Sweden:

  • Only companies established or with a permanent establishment in Sweden may form a VAT group.
  • VAT grouping is voluntary in Sweden.
  • The start and cease dates of the VAT group depend on the decision of the competent tax office, upon request of the applicant companies.
  • Intra-group transactions are disregarded for VAT purposes. Still, they must keep records of these transactions.   
  • Every group member is jointly and severally liable for the VAT debts and penalties of the entire group.
  • There is no minimum period for a VAT group in Sweden.
  • When the VAT group is formed, it is assigned a unique registration number (ten digits) and VAT registration number (twelve digits).

You will find here the official information about VAT groups in Sweden.

Consignment and call-off stock in Sweden

The EU introduced an EU wide simplification for call-off stock scenarios that all EU Member States must implement. This simplification allows businesses to operate under a consignment stock structure without having to VAT register in the destination country. Sweden has implemented this simplification.

Have a look at our dedicated article about EU call-off stock simplifications.

Bad Debt Relief in Sweden

Bad debt relief is available in Sweden.

When you have accounted for VAT and paid that VAT to Swedish tax authorities on invoices unpaid by your clients, the process to recover that VAT in Sweden is simple.

When a customer has not paid an invoice on which VAT has been accounted by the supplier in its VAT return, bad debt relief is available. The condition is that the supplier has sufficient evidence that the relevant bad debt is irrecoverable and that the customer has no financial resources to pay the debt. This may be the case if the client is insolvent, bankrupted, under insolvency procedures, when the Swedish Enforcement Authorities have recently made attempts at debt recovery, or generally if the payment is irrecoverable based on facts and actions made by the claimant. The supplier must be able to prove these circumstances.

The process to recover this VAT is simple. There are no time limits, thresholds, or specific applications to be made. The adjustment is made by reducing the output VAT in the VAT return of the reporting period when the bad debt is confirmed. In the VAT return, you report the reduction of sales subject to VAT in box 05 and the reduction of outgoing VAT in any of boxes 10-12, depending on which VAT rate applies in your case.

It is important to note that the initial VAT return should not be corrected.  Bad debt must be recovered using the same VAT rate as stated on the unpaid invoice. Have a look at the official information here.

Have a look at our article about How to recover VAT from unpaid invoices

Customs and VAT warehouses in Sweden

Customs or bonded warehouses are available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due. Sales within the customs warehouse are zero-rated.

VAT warehouses are available for cleared goods (T2). These goods have already paid customs duties. The conditions are similar to those of Customs warehouses. The goods allowed are those included in Appendix V of the VAT Directive. In addition, the following goods may also be subject to this suspension regime: certain wood items, gold, iron and steel product and non-ferrous metal.

You can find additional information about tax on imports and special regimes of VAT and Customs warehouses

VAT Special Schemes

Cash Accounting Scheme in Sweden

Cash accounting regime is available in Sweden.

  • Only small businesses with an annual turnover below EUR 350,000 (approximately SEK3.7 million) can apply to account for this scheme
  • Under this scheme, businesses can account for VAT on all supplies when part or all the payment is received, but, in any event, not later than 180 days from the time the goods or services were supplied.
  • Similarly, input VAT is only claimed on an invoice-paid basis rather than invoice-received.
  • The company loses the right to apply this scheme from the month following the end of the calendar quarter when the thresholds for small taxable persons are exceeded.

Have a look at our dedicated article about Cash Accounting Scheme.

Travel Agents Margin Scheme or TOMS 

Country specifics: if conditions are met, travel companies may have to charge VAT on their profit margin taxation concerning journeys within the European Union. The taxable margin is the difference between the total amount paid by the traveler or customer (VAT excluded) and the actual costs for goods and services that benefit the traveler directly, and that were purchased from other taxable persons by the travel company. The margin is subject to VAT at the standard rate.

This regime is also known as profit margin taxation (VMB).  The following general rules apply to the margin scheme:

  • This is a mandatory tax scheme when conditions are met.
  • Travel services scheme must not be used when the travel company produces part of the services or goods.
  • The tax base here is the same as the profit margin excluding VAT.
  • The customers must be private individuals or other entities not VAT registered.
  • If the customer is another taxable person, the VMB on travel services is optional. The general VAT rules might also be applied.
  • These rules may only be applied to trips within the European Union countries. When the trip is made both within the EU and outside EU countries, the VMB can only be used for the part of the travel service that refers to supplies in the EU.

Have a look here at the official information of this scheme in Sweden.

Learn more about Travel agents margin scheme in our dedicated article.

 

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