VAT in Sweden - value added tax and how it should be reported
VAT in Sweden (value added tax) is like in other countries a tax that we pay when we buy goods and services. As a private person, VAT is part of the price you pay, but as a business owner you need to regularly declare both the VAT you add on the goods and services you sell and deduct the VAT you have paid on your purchases. The difference you either must pay into your Swedish tax account or get back.
In Sweden you need to declare VAT according to a certain interval. There are three possible periods it can be done in - annually, quarterly, or monthly. It is declared in the interval that you as a company have stated to the Swedish Tax Agency. However, not all companies can choose to do so in whatever interval they wish, as the choice depends on the company's estimated turnover. For the companies that can choose, it is possible to change the VAT period, but if you want to report less frequently than you have chosen to do, you can only do so after 24 months. Anyone who does not submit their VAT return on time will have to pay a late fee. It is possible to get a deferral if you are ill or have a serious data error, but then you need to make a written application no later than the day you must declare the VAT.
Annual VAT declaration
If your company has estimated sales in Sweden of no more than SEK 1 million per year, the Tax Agency recommends that you report your VAT once per tax year. You can also report your VAT quarterly or monthly if you would rather do so. Annual VAT is generally used by small or micro businesses that have a low turnover each month.
The advantage of reporting VAT once a year is, of course, that you do not have to submit a VAT report so often. The downside is that it can be hard to keep track of what happened at the beginning of the year. It gets a little trickier to remember what happened at the beginning of the VAT period quite simply.
For small close companies and limited companies, annual VAT is clearly the easiest way to go. At least if you have a small turnover or run your business as a side-line.
Quarterly VAT declaration
If you have estimated sales of between SEK 1-40 million for a year, the Swedish Tax Agency recommends that you report the company's VAT on a quarterly basis. You can also choose to report monthly, but you may not report your VAT annually when your estimated turnover exceeds SEK 1 million.
When you report VAT on a quarterly basis, you always do so according to the quarters January-March, April-June, July-September and October-December, regardless of whether you have a broken financial year or not.
Monthly VAT declaration
If your estimated sales exceed SEK 40 million for the year, you must report VAT monthly. You may not report it quarterly or annually. For this reason, all large companies and organizations report their VAT monthly.
When you report VAT on a monthly basis, the date to report the VAT is usually falls around one and a half months after the VAT period ends, often around the 12th, but the exact date varies.
The advantage of handling the VAT monthly is that you must go through your numbers every month. Having control over your business and what the finances actually look like, are in many cases an A and O in order to steer your company in the right financial direction. This is especially important if you do all the bookkeeping yourself.
Sales for virtually all goods and services are subject to VAT in Sweden. However, there are some exceptions.
Examples of services with VAT-free sales according to the Swedish Tax Agency:
- healthcare, dental care and social care
- primary school, high school, college and university
- banking and financing services
- insurance services
- salary for artists
- study associations' study circles
- services relating to the production of membership magazines and staff magazines and more
- lottery, betting and gambling
- rental of property (here there are several exceptions such as hotel rooms, parking lots and land and buildings for animals).
Examples of goods where sales are VAT-free according to the Swedish Tax Agency:
- medicines that are dispensed with a prescription or sold to a hospital
- ships for commercial shipping
- Real estate
- works of art that the artist or his estate sells himself/itself if the sale is a maximum of SEK 300,000 during a tax year.*
* In violation of EU directives
In a judgment, EUD has considered that Finland's exemption from VAT for artists' sales of their own works of art is contrary to EU directives (case C-169/00 - nb -in Swedish).
According to the directive, there may not be a general exemption for the sale of works of art. EUD's ruling may mean that the Swedish exception must be reviewed. Until change occurs, however, Swedish legislation should be able to be applied in cases where it entails an advantage for the artists.
At Accountor, we can help you with your company’s Swedish VAT declaration and the accounting that forms the basis for the VAT returns. Feel free to contact us and we will tell you more.