Swedish VAT rate on electronic services
VAT in Sweden. What is the Swedish VAT rate? Which reduced VAT-rates are there in Sweden? When I sell a digital product (electronic service) to a consumer in Sweden (B2C) - which VAT rate should I apply?
Since EU imposed a new VAT regime, which entered into force as of 1st January 2015, all companies selling "electronic services" to a consumer in Sweden now has to calculate, account and report Swedish VAT for the Swedish customer based on the VAT rate applicable according to Swedish rules for that particular digital service. Normally this site publish VAT, Tax and accounting info in Swedish for Swedish sole proprietors, but since this topic is higly relevant and urgently needed by companies all around the globe, this post is in English to facilitate the need that has arisen due to the new EU-VAT regim for electronic services. Many people are now trying to learn and understand which VAT rates are applicable for electronic services for their Swedish customers. Hence I produced this blog post to enable everyone selling to Swedish customers to easily gain this knowledge of the Swedish VAT rates.
"Supplies of telecoms/broadcasting/electronic services to consumers will be taxed in the country where the customer is established (the 'member state of consumption' or MSC)."
If you choose to not register for VAT and not gain a SE-VAT number in Sweden -you need to use Mini One stop shop (MOSS) and report and deliver the VAT to your local Tax Authority which in turn transfer this to the Swedish Tax Authorities (Skatteverket). They have information available in many major languages as you can see by clicking on the previous link. There is a simple yet brilliant solution which will enable you to AVOID USING MOSS COMPLETELY -find the answer further down in this article.
VAT rates for electronic services in ALL EU countries:
VAT rate for electronic services in Sweden
As a general rule, all electronic services have 25% VAT rate in Sweden. And any product that has been transformed, digitised or converted into a digital form (a physical book that has been scanned into a pdf on the computer, or a CD that has been ripped and saved as a mp3-file) will get 25% VAT when sold in a digital form.
There are no rules without exceptions in the Swedish tax system, but as of yet no exception has been found for electronic services - they all have 25% VAT RATE.
What is an electronic service?
From a tax perspective the electronic services includes, but are not limited to, these: Applications (mobile apps), Computer games (any digital game), Online games, online Casinos, Gambling sites, Distance education (e-learning), Webhosting services, Online data warehousing, Driver download services, Webstats services, Provision of advertising space including banners, Movies, Digital books (e-books), Digital newspapers and magazines, Software programs, Distance maintenance of software and equipment, Image files and pictures, ringtones, sounds, samples and Music files.
The actual laws that enters into force in all the EU-countries as a result of this VAT regime change are often fuzzy and seem to include almost anything digital. How about translations? Article writing? What if you sell translations to customers based on a web form - do you sell a digital service then? The confusion appears almost total and nobody wants to discuss detailed examples and sign it with their name - because nobody really knows today! But to clarify the subject further we can narrow down the possibilities of potentially included services with this:
"Electronically supplied services (hereinafter ‘electronic services’) shall include services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology (see more under point 2.3.3)."
(P. 13, Explanatory notes on the EU VAT changes to the place of supply of telecommunications, broadcasting and electronic services that enter into force in 2015 (Council Implementing Regulation (EU) No 1042/2013), Explanatory notes on the EU VAT changes 2015)
If one takes this analysis, my assessment is that it is less likely that article writing and translations and related services, in which a human must do part of the work to finalize the content of the service delivered, will be included in the new regulatory framework for electronic services. The intention seems to be to include automatic services where you type something, the system processes the data and then delivers an answer, file or a document to the customer without any human interaction invloved in the production of the electronic document and its contents at the time of purchase. Thus we can also rule out that any physical product that is sold in a webshop will be subject to the new VAT regulation.
Now the system has been in place for a while and more detailed definitions and explanations from official sources are published. This table could help you out when determining if Your service is MOSS related or standard:
|Covered by the new rules|
|Pdf document manually emailed by seller||Yes||No||No|
|Pdf document automatically emailed by seller’s system||Yes||Yes||Yes|
|Pdf document automatically downloaded from site||Yes||Yes||Yes|
|Stock photographs available for automatic download||Yes||Yes||Yes|
|Online course consisting of pre-recorded videos and downloadable pdfs||Yes||Yes||Yes|
|Online course consisting of pre-recorded videos and downloadable pdfs plus support from a live tutor||Yes||No||No|
|Individually commissioned content sent in digital form eg, photographs, reports, medical results||Yes||No||No|
|Link to online content or download sent by manual email||Yes||Yes||Yes|
How do you avoid MOSS? Is there a loophole you can use to completely by-pass the entire MOSS nightmare? Yes there is! It is called Momsens.se factoring service (MFS) or Momsens.se Invoice Recharge Service (MIRS). It will enable you do forget about MOSS and just continue selling electronic services to Swedish customers like nothing ever happend!
Standard VAT rate in Sweden
Standard VAT rate: 25 percent
Reduced VAT rates: 12% and 6%
Products and services with 12% VAT in Sweden:
- Food and drinks (not alcoholic content)
- Hotel accommodations
- Restaurant services (except alcoholic beverages)
Products and services with 6% VAT in Sweden:
- Printed Books and newspapers (but e-books have 25%)
- Passenger transports
- Some, but not all, sporting and cultural events
- Copyright related productions (cultural/art/writing)
- Article writing and translation of books and novels (not copywriting which is 25%)
What is the turnover threshold (Distance Selling) for VAT registration in Sweden?
If you sell physical products that are distributed into Sweden to a Swedish customer and your total sales exceeds 320000 SEK (approx. 36000 EUR) you will need to apply and register for VAT in Sweden.
Which areas are part of the European VAT-region?
Not all parts of Europe or EU-countries are part of the EU-VAT area. You may think you are selling to a EU-customer but in fact you are exporting a service or product outside EU, because that region or area is not part of the EU VAT-area. Finland has one typical example of this exception with the Island "Åland" between Sweden and Finland. That Island is considered to be outside the European Union Value Added Tax Area. Which means that if you sell a product or service to a consumer situated on Åland you are exporting outside EU! Yes it's strange, but there are many more exceptions, read about them here:
Where and how to I register for VAT in Sweden?
There is an informative text available in English here:
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