Selling services to other EU countries
When you sell services you are normally required to charge VAT on your sales. When you sell a service to a taxable person (such as a business) in another EU country, there are some circumstances in which you must not charge VAT on the sale. The buyer is then required to report VAT in the EU country in question instead.
Here are some examples of the most common scenarios, and the most important things for you to consider when selling services to buyers in other EU countries.
Please follow the steps below to determine whether or not you should charge VAT on your services, and how to report your sales.
Here’s how to determine whether you’re required to charge Swedish VAT on a service
In order to determine whether the service you’re selling is subject to VAT in Sweden or in another country, you need to consider the following:
- Is the buyer a taxable person (such as a business) or a non-taxable person (such as a private individual)?
- What kind of service am I selling?
Find out who the buyer is
First, you must determine whether or not you are selling to a taxable person. A taxable person is normally a business. With regard to services, the term “taxable person” includes any party that carries out an economic activity independently, regardless of whether or not the activity is subject to VAT. If you sell goods or services on anything more than an occasional basis, you are carrying out an economic activity.
For example, dental practices normally carry out VAT-exempt business activities, but they are still taxable persons. The same applies to businesses that are not required to pay VAT because of their country’s exemption rules for small-business owners.
All legal entities (for example, limited companies, associations, foundations, government agencies and municipalities) that are registered for VAT also constitute taxable persons when they purchase services. This applies regardless of whether or not they carry out economic activities.
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 use.
- Taxable person: determining the place of taxation (Legal Guidance in Swedish) External link.
- Here's what constitutes an economic activity (Legal Guidance in Swedish) External link.
As a general rule, when you sell a service to a taxable person such as a business, VAT is payable in the country in which the buyer conducts business activities. As the seller, you must be able to provide proof that the buyer is a taxable person.
The buyer’s VAT number
If the buyer has a valid VAT number registered in another EU country, and they inform you of that number, you can normally assume that the buyer is a taxable person. In other words, the buyer’s VAT number is normally sufficient proof that they have purchased the service for their business.
If the VAT number is missing
In certain circumstances, a buyer may not be able to provide a VAT number. If you don’t have access to their VAT number, you can provide the necessary information required to prove that the buyer is a taxable person making the purchase for their business abroad. This information must include details of the buyer’s identity.
You must also have a document which proves that the buyer is a taxable person. This could be a certificate issued by the tax authority in the country in which the buyer’s business is based, for example, confirming that the buyer carries out an economic activity on an independent basis. If you sell the type of service that would normally be purchased by a non-taxable person, such as a private individual, you must ask the buyer to prove that they are making the purchase for their business.
The service type determines which rules apply
The requirement to follow any of the general rules, or take into account any of the applicable exemptions, is determined on the basis of the type of service you have sold. This determines where your service is provided, and the country in which VAT is payable.
There are two general rules that apply to where your service is provided, and where VAT is payable. One rule applies to service sales to taxable persons (such as businesses), and the other applies to non-taxable persons (private individuals, for example).
Some types of services are exempt from the general rules. There are also some types of services that are considered to be provided abroad, regardless of the general rules and exemptions. In some cases, as a seller, you may also become liable to charge VAT in another country on your service.
Before you read on, we recommend that you check whether your service is among those included on our Swedish webpage about the exemption regulations that apply to trade in services within the EU. If your service is not included, one of the general rules applies.
The general rule that applies when you sell services to taxable persons
As a general rule, when you sell a service to a taxable person such as a business, VAT is payable in the buyer’s country of establishment.
In order to decide on the country of taxation, you must determine:
- whether the buyer is making the purchase as a taxable person (buying the service for their business, for example)
- where the buyer is established: i.e., the country in which the buyer’s business is based or has a fixed establishment to which you are providing the service.
To be considered a taxable person, the buyer is required to make the purchase for their business. If you sell a service that is intended for private use only, you must treat this as a sale to a non-taxable person. You can find out about the rules that apply under “The general rule that applies when you sell services to non-taxable persons”.
If the buyer is making the purchase as a taxable person, you must determine their country of establishment. It is common for the buyer to be established in the country in which their business is based. The buyer may also have fixed establishments in other countries, in which case you must determine the fixed establishment for which the service in question is being purchased. If the buyer does not have a base such as an office or a fixed establishment, the service is provided to the buyer’s place of residence, or where they stay on a permanent basis.
If you conclude that you are providing the service to a buyer outside Sweden, according to the circumstances outlined above, you must not charge VAT on your sale.
Here’s how to report your sales
Under the general rule, when you sell a service to a taxable person, such as a business, in another EU country, you must not charge VAT on the sale. The buyer is then required to report VAT in the EU country in question instead. However, you still need to declare the sale in your VAT return. To do this, enter the sales amount in Swedish kronor in box 39.
When you sell a service to another EU country, you must also provide details of the buyer’s VAT number and the sales amount in an EC sales list (recapitulative statement).
- EC Sales List (recapitulative statement) regarding goods and services (in Swedish)
- If you don’t have access to the buyer's VAT number, but can prove that the buyer is a taxable person, you are not required to submit an EC sales list (recapitulative statement). However, you must enter the sales figure in Swedish kronor in box 39 in your VAT return. You can find out how to prove that the buyer is a taxable person under “The buyer’s VAT number” above.
The general rule that applies when you sell services to non-taxable persons
As a general rule, when you sell a service to a non-taxable person such as a private individual, the service is provided and subject to VAT in the country in which you conduct business as a seller. If your business is based in Sweden, or this is the business’s country of establishment, you must charge Swedish VAT on your service sales, regardless of the country in which your buyer is located.
Here’s how to report your sales
Under the general rule, when you sell a service to a non-taxable person, such as a business, in another EU country, you must charge Swedish VAT on the sale and report it in your VAT return. To do this, enter the sales amount in Swedish kronor in box 05, and the output VAT in box 10, 11 or 12, depending on the VAT rate that applies to the service you have sold.
- Special rules apply to certain types of services
Certain services are exempt from the general rules outlined on this page. Please see “The general rule that applies when you sell services to taxable persons” and “The general rule that applies when you sell services to non-taxable persons”. There are also some types of services that are considered to be provided abroad, regardless of the general rules and exemptions. In some cases, as a seller, you may also be required to charge VAT in another country on your service.
Exemption regulations that apply to sales of services within the EU