Sweden: Refunds of input VAT on acquisitions used in EU sales
Swedish tax agency position regarding refunds of input VAT on acquisitions used for sales in other EU countries
Regarding acquisitions used in EU sales
The Swedish tax agency announced its position regarding refunds of input value added tax (VAT) on acquisitions used for sales in other EU countries—in particular, with respect to branch structures.
The tax agency stated that the right to deduct input VAT on acquisitions used for sales in another EU Member State presupposes the application of the provisions of a right to a refund and this requires that the turnover be subject to VAT in the country where the turnover takes place and that it would have been subject to VAT if it had taken place in Sweden.
The right to a refund can also affect companies with establishments in different EU Member States, such as branches. The tax agency’s position describes that transactions between different establishments within the same taxable structure or group do not constitute turnover in terms of VAT. This means, among other things, that if the establishment in Sweden assists an establishment in another EU Member State with, for example, an administrative service, it is not a question of a turnover of an administrative service between the establishments. Instead, input VAT on costs for the administrative service is related to the sales that the establishment in the other EU Member State carries out. According to the Swedish tax agency, the right to a refund in Sweden then depends on the outgoing transactions that the establishment in the other EU Member State conducts.
In situations when an acquisition is used for both VAT-liable and VAT-exempt sales, a distribution of the input VAT may need to be made to determine the right to a refund. According to the Swedish tax agency, this determination primarily is made at the time of acquisition and is based on the actual use. If this determination is not possible, the distribution generally is deemed to take place on an annual sales basis (as a starting point). If the acquisition is also used by several establishments, the Swedish tax agency considers that a distribution may need to be made in steps—first, by distributing the input VAT to the various establishments and second, by determining the right to deduct and repay for each establishment. As far as the initial distribution is concerned, the Swedish tax agency considers that it can take place based on annual sales (for each establishment) but also by, for example, starting from internal invoicing between the establishments.
Read a January 2022 report (Swedish) prepared by the KPMG member firm in Sweden
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.