For business owners in Sweden, it’s important to know that registering for value-added tax (VAT) is a vital part of issuing correct invoices to customers and reclaiming any excess input VAT deductions. Fortunately, you only need one tax identification number to take care of this.
This format is SE + 10 digits + 01, for example, SE999999999901. This is applicable for both interactions with the tax office and transactions within the community.
The whole European Union is subject to new rules as of July 2021. EU member states have agreed to a distance selling barrier of EUR 10,000 (or SEK 66,980) per transaction, doing away with individual country limitations for VAT. There will still be VAT levied on any proceeds from remote sales that fall short of the new level. Taxes on the aforementioned transactions are due at the locations to which delivery is made.
When Do You Register for Swedish VAT?
The VAT registration threshold is zero for international enterprises dealing in Sweden that are VAT-, GST-, or tax-registered in their home country.
The annual VAT registration threshold for EU VAT-registered businesses selling items over the internet to Swedish customers (distance selling) is SEK 320,000 (about EUR34,000).
In accordance with the Swedish VAT Act, taxable persons founded in Sweden are required to register for VAT if their annual turnover reaches SEK 30,000 in the two prior tax years. In addition, mandatory registration will be introduced whenever the threshold is anticipated to be exceeded within the current year. However, there is also the possibility for enterprises that have not yet crossed the barrier to register voluntarily. This registration imposes a minimum two-year registration term on the company.
The Swedish VAT Act sets a registration threshold of zero for unincorporated firms. They are often required to register if they participate in supplies subject to Swedish VAT rates. However, a non-established firm is immune from Swedish VAT registration if its sales are subject to the reverse-charge process.
A non-established firm must register for VAT in Sweden if the following conditions are met:
- Distance sales.
- Other items and services that are exempt from the reverse charge
- Sweden’s intracommunity purchases
The Swedish VAT Act exempts the following individuals from required registration:
- Existing taxable people who did not surpass the threshold for registration
- Persons, whether natural or legal, who engage in out-of-scope and VAT-exempt sales
- any individual who is not independently engaged in economic activity.
These individuals who are excluded from required registration may nonetheless voluntarily register.
Under Chapter 6a of the Swedish VAT Act, entities engaged in financial services (subject to the supervision of the Swedish Financial Supervisory Authority) and businesses in a commissionaire arrangement (as per the Swedish Income Tax Act) have the choice of registering for VAT purposes as a group.
To be enrolled in a group, the following requirements must be met:
Only taxable individuals may join a VAT group.
Only the portion of a taxable person that has a permanent establishment in Sweden may be included in the VAT group.
The group’s members must be financially, economically, and organizationally interdependent.
As a result, the supplies carried by group members are discarded during group registration. In addition, the head representative will file a single VAT return, and both input and output VAT will be “net-reported.” Aside from this, each member of the group will be jointly and severally responsible for the VAT duties of the others.
The Swedish Tax Agency did not give any information on divisional registration, rendering it inapplicable in Sweden.
What are the Swedish VAT Rates?
Different types of products and services are taxed at varying rates under Sweden’s VAT system. In accordance with the Swedish VAT Act, the ordinary VAT rate of 25% and the reduced VAT rates of 6% and 12% must be applied. It also incorporated in the VAT Act the categorization of zero-rated and VAT-exempt products and services. In Sweden, VAT-exempt supplies imply that no VAT is imposed on the supply and that input VAT cannot be reclaimed.
Swedish VAT Rates by Goods and Services
The standard rate of VAT is 25%. In general, the ordinary VAT rate applies to all products and services for which no exemption, zero percent, or one of the lower VAT rates is anticipated.
The initial rate of reduced VAT is 12%. This discount applies to, among other things, some food items, hotel stays, restaurant and catering services, shoe repair, leather goods, apparel, and bicycles.
Additionally, there is a 6% lower VAT rate. This lower fee applies, among other things, to passenger transportation, intellectual property, cultural services (with the exception of cinema), books, and newspapers.
The 0% rate applies to normal goods and services, such as exports and intracommunity supply.
Lastly, many commodities, including health care, medications, and financial services, are excluded from VAT.
When to File for VAT Returns
In Sweden, periodic reports are based on the overall turnover of taxable people.
If the annual tax base is less than SEK 1 million, the reporting period is annually. But the alternative reporting period is quarterly or monthly. If the tax base is between SEK 1 million and 40 million, the reporting period is quarterly, or alternatively, monthly. If the tax base is more than SEK 40 million, the company’s reporting period is monthly, without an alternative reporting period. The tax base is the annual turnover amount before deducting the VAT-exempt intra-community purchases and imports made in Sweden.
The annual tax base is the annual turnover amount excluding intra-community acquisitions and imports, which are subject to VAT in Sweden.
Deadlines for Filing
Due to variances in the reporting frequency that result from differences in the business’s yearly tax base, various deadlines apply.
It is required that VAT payments be made on the same day that the returns are filed. Swedish kronor (abbreviated as SEK) are required as the currency of payment. Payment should be sent to “Bankgiro” at 5050-1055 in Sweden. The payment reference, or OCR number, is required for identification. The taxpayer must also provide the right business name, address, and tax identification number.
How to Register for Swedish VAT
There are a number of options for Swedish VAT registration, if you are not sure if you need to register or would like to register for VAT, please contact us.
In order to register for Swedish VAT, we require the following documents:
- Company registration certificate and Articles of Association
- Company bank statement or letter
- Directors passport copy
- For Amazon sellers, we also require a screenshot of you Amazon store showing your business address
It may take up to 15 weeks to complete the registration procedure.
Do You Need a Fiscal Representative?
Under the EU VAT Directives, a corporation based in another EU member state need not appoint a local Swedish fiscal representative or agent. However, businesses from outside the European Union must appoint a fiscal representative who will share responsibility for paying Swedish VAT.
If you need help with registration, please contact us for free advice and consultation.