Sweden: Proposal for modernized VAT law

The proposed law would revise the current law effective 1 July 2023.

The proposed law would revise the current law effective 1 July 2023.

The government has submitted proposals to the Riksdag for a modernized value added tax (VAT) law.

The proposed law would revise the current law—effective 1 July 2023—with the aim of making the regulations more easily understood and better adapted to the EU VAT directive.

One of the proposed changes concerns exemptions from VAT on internal services within, for example, associations and organizations. Under the current law, services provided within independent groups of legal or natural persons, which carry out activities of general interest, may be exempt from VAT provided:

  •  The activities carried out by the group or the legal or natural persons are not subject to VAT
  • The services are directly necessary for the performance of the business
  • The remuneration for the services corresponds exactly to the natural or legal person's share of the joint costs of the provision of the services
  • The exception applies only to such services that are not normally provided by anyone else outside the group

The proposed change in the new law would revise the fourth point, the so-called competition requirement, to more fully comply with the EU VAT directive. The current wording can be interpreted more narrowly than the parallel wording in the EU VAT directive. 

KPMG observation

Under the current wording, services cannot be provided VAT-free between associations and organizations within a group if the services are also provided on the open market. The proposed change would expand the availability of the VAT exemption and is thus a welcome change for associations and organizations that often have a limited right to deduct VAT.

Read a January 2023 report (Swedish) prepared by the KPMG member firm in Sweden


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