Purchasing services from other EU countries
Special rules apply when you purchase a service for your business from a VAT-registered seller in another EU country. Normally, the seller should not charge you VAT on the sale. You should report Swedish VAT on the purchase in your VAT return instead.
Here are some examples of the most common scenarios – and the most important things to consider – when buying services for your business from other EU countries.
Here’s how to determine whether you need to report Swedish VAT on a purchase
To determine whether or not you need to calculate and report Swedish VAT on a purchase, you must consider the following:
- whether you are making the purchase as a taxable person (such as a business) or as a non-taxable person (a private individual, for example)
- the type of service in question.
Different rules apply depending on whether you purchase a service for business or private use
When you buy a service from another EU country, different rules apply depending on whether you make the purchase as a taxable person (such as a business or association) or as a non-taxable person (for example, an individual who will use the service privately).
Taxable persons
In most cases, the term “taxable person” refers to a business. When it comes to services, the term "taxable person" includes any party that carries out an economic activity on an independent basis, regardless of whether or not this activity is subject to VAT. (If you sell goods or services more often than on an occasional basis, you are carrying out an economic activity.)
Dental practices, for example, normally carry out VAT-exempt business activities, but they are still considered to be taxable persons. The same applies to businesses that are not required to pay VAT due to their country’s exemption rules for small businesses.
When purchasing services from other EU countries, all VAT-registered legal entities are also considered to be taxable persons – regardless of whether or not they carry out economic activities. Examples of legal entities include limited companies, associations, foundations, government agencies and municipalities.
As a general rule, when you purchase a service as a taxable person, VAT is payable in the country in which you conduct business. If you run a business in Sweden, and you purchase a service from a provider in another EU country, you are normally required to calculate the VAT payable on the service, and report this amount in your Swedish VAT return.
Non-taxable persons
In most cases, the term “non-taxable person” refers to a private individual. However, it can also be used for a taxable person, such a business, that purchases a service for private or non-business use.
Taxable person: determining country of taxation (Legal Guidance in Swedish) External link.
Here's what constitutes an economic activity (Legal Guidance in Swedish) External link.
The service type determines the country in which VAT is payable
The type of service you purchase determines the country of sale and taxation. The general rule applies to most services, but there are some exceptions to which special rules apply.
Exception – the seller must report the VAT on certain services (in Swedish)
General rule: as a buyer, you must report VAT on your business purchases
Most services purchased from another EU country by a taxable person such as a business, are subject to VAT in the country in which the sale is considered to have taken place. This is the general rule.
Purchasing services as a taxable person
As a taxable person purchasing services for your business, sales are considered to have been made in the country in which your business is established.
When making a purchase, you must provide details of your valid VAT number to the seller. The seller must then invoice you without charging VAT. As the buyer, you must calculate and report Swedish VAT on the purchase in your VAT return.
What is a VAT number?
VAT is short for Value Added Tax. If you are registered for VAT in Sweden, you have a valid VAT number. Your VAT number is the international version of your Swedish VAT registration number.
All international Swedish VAT numbers start with the letters SE (the country code) and end with the digits 01. If you are a sole trader, the country code is followed by your 10-digit personal identity number with no hyphen (-). If you have a company or an association, the country code is followed by your 10-digit corporate identity number with no hyphen (-).
Example of a VAT number
Anna’s company is VAT registered in Sweden, and its corporate identity number is 999999-9999. Her company’s international VAT number is therefore SE999999999901.
Purchasing services for private use
If you buy a service for private use only, you make the purchase as a private individual (i.e. a non-taxable person). The seller must charge and report the VAT applicable in the country of sale.
Here’s how to report purchases of services within the EU
As the buyer, you must report the VAT on a purchase if the following requirements are met:
- you buy the service from a taxable person (such as a business) in another EU country
- you make the purchase as a taxable person – for example, as a business owner buying services for your business
- the general applies to the service in question, and it is subject to VAT in Sweden.
You enter the taxation basis (the VAT-inclusive amount you paid for the service) in box 21. If you paid for the service in another currency, you must convert the amount to Swedish kronor.
Currency conversion (in Swedish)
Currency conversion (Legal guidance in Swedish) External link.
You must calculate Swedish output VAT on the taxation basis and enter this amount in box 21. You then report the VAT in box 30, 31 or 32, depending on which VAT rate applies to the service you purchased. The standard rate of VAT (25%) is charged on most services.
If you make a purchase for your VAT-liable business, you are normally entitled to claim a deduction for the output VAT amount that you reported in box 30, 31 or 32. You claim this deduction by entering this amount as input VAT in box 48. However, if you are only registered for VAT so that you can report output VAT on purchases you make from other EU countries, you are not permitted to deduct the amount as input VAT.
Example: reporting a service purchased from another EU country
Erik’s company in Sweden buys a programming service from Anna’s company in Finland. Their companies are registered for VAT in their respective countries. Since Erik will to use the service in his VAT-liable business, he provides his valid VAT number when making the purchase.
Anna does not therefore charge VAT on the sale. Erik must calculate and report the VAT on the purchase in his Swedish VAT return.
First, Erik converts the amount in euros stated on the invoice into Swedish kronor. The corresponding amount is SEK 100,000. He then calculates output VAT on the purchase. The Swedish VAT rate for programming services is 25%. The output VAT therefore amounts to SEK 25,000 (25% of SEK 100,000). Since Erik will use the service in his VAT-liable business, he is also entitled to claim a deduction for input VAT, having made the calculation himself.
Here's how Erik reports the purchase in his VAT return:
- The purchase amount (SEK 100,000): in box 21.
- Output VAT at 25% (SEK 25,000): in box 30.
- Input VAT (SEK 25,000): box 48.
If you are not registered for VAT
A taxable person, such as a business, must be registered for VAT if it purchases services for business use from another EU country. This is because a taxable person must be able to report Swedish VAT on these purchases in a VAT return – regardless of whether or not its business activities are VAT liable. However, VAT registration is not necessary if you only purchase services listed under the heading “Exception – the seller must report the VAT on certain services”.
Example: purchasing services from other EU countries without being registered for VAT
Peter runs a dental practice in Sweden and purchases a consulting service from a VAT-registered seller in another EU country. Peter only sells dental services, which are VAT-exempt. His business is not therefore registered for VAT. Since the consulting service is not VAT-exempt, the general rule outlined above applies to it. Since Peter’s business is a taxable person based in Sweden, the sale of the service is considered to have been made in Sweden, so VAT must be charged and paid on it here. Peter must therefore:
- register his business for VAT
- report the purchase in Sweden by calculating and entering the output VAT amount in his business's VAT return
He is not permitted to claim a deduction for input VAT, since the purchase is not made for a VAT-liable business.
Exception – the seller must report VAT on certain services
The general rule does not apply to certain services. Special rules apply to them instead. If a taxable person purchases such a service from another EU country, the sale is considered to have been made in Sweden. The seller must register for VAT in Sweden in order to charge VAT on the sale and report it here.
Passenger transport services
For domestic passenger transport services carried out exclusively in Sweden, service sales are made here. VAT must therefore be charged and paid in Sweden.
Sales of passenger transport services between Sweden and another country, are made in the other country. VAT must therefore be charged and paid in that country. The same rules apply to luggage handling services associated with passenger transport, and to the ferrying of buses carrying passengers, for example.
Admission to events (such as concerts, sporting events and trade fairs)
Every sale of admission to an event (entry fee) is made in the country in which the event takes place. VAT must therefore be charged and paid in that country.
This applies to entry fees for events of the following character types:
- cultural
- artistic
- sporting
- scientific
- educational
- entertainment or similar
Examples of similar events include:
- trade fairs and exhibitions
- theatre productions
- circuses
- amusement parks
- concerts
- sports matches and competitions
- educational and scientific events such as conferences and seminars
The same rules apply to additional admission-related service fees, such as those charged for cloakroom and toilet facilities.
Restaurant and catering services
The sale of a restaurant or catering service are made in the country in which the service is actually carried out.
A restaurant or catering service must include the provision food and drink, and various services directly related to the sale. Examples of directly-related services include table setting, serving, clearing, washing-up and entitlement to use special premises as well as equipment such as tables and chairs.
Example
Emma’s company is organising a corporate event in Malmö. Emma hires a Danish catering company to deliver the food and tableware for the event. Since the catering company is providing the service in Sweden, this service has been sold in Sweden, . This means that Swedish VAT must be charged and paid on the service. The Danish company must register for VAT in Sweden and charge Swedish VAT on the invoice it issues to Emma.
The following do not count as restaurant or catering services:
- sales of prepared foods in grocery shops
- restaurant sales of takeaway foods
- food and drinks delivered to buyers exclusive of any related services such as table setting.
The examples outlined above are regarded as sales of goods, not services.
If a restaurant or catering service is carried out by the seller on board a ship or aircraft in international traffic, the sale is considered to have been made outside Sweden.
Short-term rental of means of transport (such as cars)
Sales of rental/leasing services are considered to have been made in the country in which the customer collects the means of transport in question. The VAT must also be charged and paid in that country.
Examples of means of transport:
- cars, buses and tractors
- trailers and semi-trailers
- motorcycles
- bicycles
- ships
- aircraft (such as aeroplanes or helicopters)
The maximum period for the short-term rental of a means of transport is 30 days. For ships, the maximum period is 90 days.
If the rental period exceeds 30 or 90 days respectively, it is long term. The general rule applies to long-term rental sales to businesses. This means that if you buy a service for your business as a taxable person, the service is considered to have been sold in your business’s country of establishment. As the buyer, you must calculate and report Swedish VAT on your purchase of this service.
Real estate services: VAT-registered buyers must report VAT on their purchases
Sales of real estate services are considered to be made in the country in which the property in question is located. VAT must also be charged in that country.
Examples of real estate services include:
- construction and building work
- cleaning of premises
- rental of rooms in hotel operations
- real-estate brokerage
If you are registered for VAT and buy services related to a property in Sweden, as the buyer, you must normally calculate and report the VAT on these services. The seller can also choose to register for VAT in Sweden, and ask to calculate and report the VAT on real estate service sales. If they do this, then you don’t need to.
Example: buying real estate services from another EU country if you are registered for VAT
David hires a construction company from another EU country to renovate his sports shop in Sweden. David’s company runs a VAT-liable business and is VAT registered.
The renovation services are considered to have been sold in Sweden, since the property in which the sports shop is located is in this country. The building company must not charge VAT on the sale. David must calculate and report the VAT instead.
Here’s how to report the real-estate services you purchase exclusive of VAT
If you are registered for VAT and purchase real-estate services that are subject to Swedish VAT, from another EU country, you must normally report the VAT in Sweden. If so, here's what you need to do:
- Enter the taxation basis (the amount of VAT you paid) in box 24
- Calculate Swedish output VAT on this amount in box 24, and enter the VAT amount in box 30, 31 or 32, depending on which VAT rate applies to the service you have purchased.
The standard rate of VAT (25%) is charged on most services.
If you have purchased a service for your VAT-liable business, you are normally entitled to claim a deduction for the output VAT amount that you reported in box 30, 31 or 32. You claim this deduction by entering the amount as input VAT in box 48.
However, if you are only registered for VAT so that you can report output VAT on your purchases from other EU countries, you are not permitted to deduct the amount as input VAT.
Purchasing real estate services if you are not registered for VAT
If you are not registered for VAT and purchase real estate services for your business, the seller must charge and report VAT on their services. This rule applies provided that the property in question is in Sweden.
Example: purchasing real-estate services if you are not VAT-registered
A construction company based in Spain renovates Erika’s dental clinic in Sweden. Erika’s business only sells VAT-exempt dental services, and is therefore not registered for VAT.
The renovation services are considered to have been sold in Sweden, since the dental clinic is situated in a property located here. The Spanish construction company must register for VAT in Sweden and charge Swedish VAT on its services.
Erika has purchased the services for her VAT-exempt business, and is therefore not entitled to deduct the VAT stated on her invoice from the construction company.