Sweden: Voluntary tax liability for VAT purposes appliable in context of jointly managed rental properties

A Supreme Administrative Court case concerning voluntary tax liability for VAT purposes.

A Supreme Administrative Court case concerning voluntary tax liability for VAT purposes.

The Supreme Administrative Court (HFD) held that the taxpayer could apply voluntary tax liability for value added tax (VAT) purposes in the context of jointly managed rental properties. 


A joint-stock company owned property that it leased to a financial association, which sublet the property to two additional tenants, with all parties agreeing to manage the property together. Under the Swedish VAT Act, landlords can choose to impose VAT on rent in commercial situations, a practice known as voluntary tax liability. This allows landlords to deduct input VAT on certain property-related acquisition and maintenance costs. Both the joint-stock company and the financial association opted to charge VAT on the rent to their respective tenants, citing the rules on voluntary tax liability.

The Swedish tax authority denied the property owner the right to deduct the input VAT invoiced during the property's construction, arguing argued that the conditions for applying voluntary tax liability were not met due to the property's joint management. However, the HFD ruled that joint tenancy does not preclude "permanent use," a key concept under the voluntary tax liability rules. The court found that the lack of exclusive rights to a specific area does not necessarily prevent the application of voluntary tax liability.

Read a January 2024 report (Swedish) prepared by the KPMG member firm in Sweden


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