Purchasing goods and services for your business
When you purchase goods or services for your business, you are generally entitled to claim a VAT deduction. In some cases, you can only claim a deduction for part of the VAT, and in others you cannot claim any deduction.
You may deduct VAT on goods and services that you purchase for your business. This applies both to purchases for business use and to purchases for resale to customers.
Claiming a VAT deduction on purchases
You are normally entitled to claim a deduction for the full amount of VAT on purchases for VAT-liable business activities. In certain circumstances, you can claim a deduction even if you are not required to charge VAT on your sales.
Purchases for which you cannot claim a VAT deduction
You cannot claim a VAT deduction on goods or services that you’ve purchased for private use. And you cannot claim a deduction on purchases intended for a VAT-exempt business activity either. This rule even applies if you make a purchase in your business’s name. There are a few exceptions to this rule, which you can find out about below under “The right to claim a deduction if you do not charge VAT”.
The right to claim a deduction if you do not charge VAT
Generally, you cannot claim a VAT deduction on the goods or services that you purchase if you sell goods or services on a VAT-exempt basis. However, for certain sales, you can still claim a VAT deduction for your purchases. This applies to VAT-exempt sales of the following, for example:
- production and other services closely associated with the production of member newsletters, staff magazines or organisational journals
- vessels and aircraft, and the services and equipment used for these
- aviation petrol and aviation kerosene
- medicinal products dispensed on prescription or sold to hospitals
- banknotes, coins and gold supplied to the Riksbank (the central bank of Sweden)
- goods and services that are subject to VAT in another EU country
- goods and services supplied to countries outside the EU (i.e., export of goods and service provision)
- goods and services supplied to certain armed forces
Certain exempt transactions (legal guidance in Swedish) External link.
Purchases made for a business that makes both VAT-liable and VAT-exempt sales (partly exempt business)
If you sell both VAT-liable and VAT-exempt goods or services, you’re running a partly exempt business. You must therefore assess your business use of the purchases made and determine the portion of the VAT for which you can claim a deduction.
Purchases made for your VAT-liable business activities
If you buy goods or services for your VAT-liable business activities, you can normally claim a deduction for the full amount of VAT on your purchase.
Purchases made for your VAT-exempt business activities
If you buy goods or services for your VAT-exempt business activities, you cannot claim a VAT deduction.
Purchases made for both your VAT-liable and VAT-exempt business activities
If you make a purchase for both your VAT-liable and VAT-exempt business activities, you can only claim a deduction for the portion of VAT relating to your VAT-liable activities. You must determine your right to a VAT deduction every time you purchase goods or services.
As a general rule, you can claim a VAT deduction for purchases connected with your VAT-liable business activities. If you cannot make a precise proportional assessment to determine your entitlement, you must make an allocation corresponding to the way in which you use the goods or service for business purposes. You can make this allocation based on annual turnover, time or floor area, for example.
- Annual turnover: If your VAT-exempt business activities account for 10% of annual turnover, and your VAT-liable business activities account for 90%, it could be reasonable to claim a deduction for 90% of the VAT on your purchases.
- Time: If your purchase will be used in your VAT-exempt business activities 40% of the time, and in your VAT-liable activities 60% of the time, it could be reasonable to claim a deduction for 60% of the VAT on the purchase.
- Floor area: If you carry out your VAT-liable and VAT-exempt business activities in separate parts of your premises, you claim a VAT deduction based on the floor area dedicated to your VAT-liable activities.
It is your responsibility to make a reasonable assessment of the proportion of VAT for which you can claim a deduction. You must be able to provide supporting documentation showing how you made your proportional allocation.
Purchases used predominantly in VAT-liable business activities
If more than 95% of usage of goods or services you have purchased will be accounted for by your VAT-liable business activities, you can claim a deduction for the full amount of VAT on the purchase. You can also claim a deduction for the full amount of VAT on a purchase if your business activities are at least 95% VAT liable, provided that the input VAT on the purchase does not exceed SEK 1,000.
Purchases used for private purposes or in special circumstances
Your right to claim a VAT deduction is limited in certain circumstances – such as when you use a purchase for private purposes. In some cases, you can claim a deduction for part of the VAT, and in other cases you cannot claim any deduction.
Purchases used for both private and business purposes
If you purchase goods or services for both private and business use, you can only claim a deduction for the proportion of the VAT that relates to your business activities. It is your responsibility to make a reasonable allocation of your deductible VAT based on your proportional use of goods or services for private and business purposes.
You must be able to provide supporting documentation showing how you determined this allocation. You can provide notes, calculations or other documentation, for example.
Example: A computer used for both private and business purposes
Kari buys a computer and uses it for both private (50%) and business purposes (50%). He therefore claims a deduction for 50% of the VAT on the purchase.
Example: A drill used mostly for business purposes
Jonna buys a drill that she uses almost exclusively for business purposes, but she does use it at home occasionally. Jonna estimates that she uses the drill 90% of the time for business purposes, and 10% for private purposes. She therefore claims a deduction for 90% of the VAT on the purchase.
Purchasing assets for private use
If you buy goods intended as assets belonging to your VAT‑registered business, for both business and private use, you have a certain degree of flexibility in terms of claiming a VAT deduction on your purchase. You have three options.
- You can treat the goods as an asset belonging to your VAT-liable business and claim a deduction for the full amount of VAT. You can claim a deduction for the full VAT amount even if you will use the goods partly for private purposes. Your private use is then subject to withdrawal taxation.
- You can treat the goods as a private asset. In this case, you cannot claim any VAT deduction on the purchase, and you are not required to charge VAT on the goods if you sell them later.
- You can treat the goods as a business asset to the extent that you use them for business purposes. You then claim a proportional VAT deduction based on the extent of your business use of the asset during the year of purchase. In this case, you do not treat the private use as a withdrawal and pay tax on it.
Special rules apply to property purchases.
Purchases relating to property (legal guidance in Swedish) External link.
Purchases made before you started your business
In some cases, you can claim a VAT deduction for goods or services that you purchased before you started your business. A requirement is that you must have purchased the goods or services with the intention of using them solely in VAT-liable business activities. When registering your business, you then state the date of your first purchase as the VAT registration date.
You cannot claim a VAT deduction if you purchase goods or services intended for private use but use them for business purposes later.
Example: Purchasing goods before starting a business
Jan’s hobby is photography. He buys a system camera with several lenses to use in his spare time. Seven months later, he starts a sole trader business as a photographer and uses the camera to take pictures for business purposes. Since the camera is required for business use, Jan can acquire it for his business as an owner’s contribution at market value. Jan cannot claim a VAT deduction on the purchase of the camera since he bought it for private use.
Dinner, lunch and other business entertainment expenses
You can claim a VAT deduction for those expenses that are directly related to the business, if business entertainment is integral to business negotiations. You can only claim a VAT deduction up to a certain amount.
Purchasing or hiring a car or other vehicle
When you buy or hire a car or other vehicle, your right to claim a VAT deduction is often limited. The amount you can claim depends on the business activity, the vehicle type and how the vehicle is used.
Purchasing a car
You are generally not entitled to a VAT deduction when you buy a car or light goods vehicle for your business. This rule applies even if you use the vehicle for business purposes.
However, there are certain exceptions. You can claim a VAT deduction on the purchase if you use the vehicle for any of the following purposes:
- vehicle hire through a vehicle hire business
- resale through a car dealership
- passenger transport under the Swedish Taxi Traffic Act
- driving instruction
- transport of deceased persons
Further information in Swedish is available on the “Bilar och moms” (“Cars and VAT”) webpage.
Hiring a car
If you hire a car or a light goods vehicle, you’re normally entitled to claim a deduction for 50% of the VAT. This is on the condition that usage of the car in your VAT-liable business activities amounts to at least 1,000 km per year. If you hire a car for less than a year, you recalculate the usage requirement in proportion to the hire period. For example, the minimum usage requirement is 500 km if you hire a car for six months.
If you hire a car for passenger transport under the Taxi Traffic Act, driving instruction or the transport of deceased persons, you can claim a deduction for the full VAT amount.
If you decide to buy the car you have hired, you cannot claim a VAT deduction on this purchase.
Further information in Swedish is available on the “Bilar och moms” (“Cars and VAT”) webpage.
Motorcycles, quad bikes and snowmobiles
If you buy or rent a motorcycle for business purposes, the rules are almost the same as for cars. The only difference is that you cannot claim a VAT deduction on the purchase of a motorcycle to be used for any type of passenger transport.
If you rent a motorcycle for passenger transport, the general VAT deduction limitation rule applies. This means that if the annual usage of the motorcycle for VAT-liable business purposes exceeds 1,000 km, you can claim a deduction for 50% of the VAT on the rental cost.
Mopeds and snowmobiles are not covered by the VAT deduction prohibition that applies to motorcycles. Certain types of quad bike may be regarded as motorcycles for VAT purposes and are therefore covered by the VAT deduction prohibition.
VAT deduction entitlement: cars used in VAT-liable business activities
Cost | Taxi | Motor trade | Vehicle rental companies, funeral directors, driving schools | Other |
|---|---|---|---|---|
Purchase | Full deduction* | Full deduction | Full deduction | No deduction |
Rental | Full deduction* | 50% deduction | Full deduction | 50% deduction |
Running costs | Full deduction* | Full deduction | Full deduction | Full deduction |
Withdrawal taxation for cars
Withdrawal taxation*
Withdrawal taxation if you have been entitled to a deduction for the full amount of VAT on the rental cost.
Form of ownership | Taxi | Motor trade | Vehicle rental companies, funeral directors, driving schools | Other |
|---|---|---|---|---|
Owned car | Withdrawal taxation | Withdrawal taxation | Withdrawal taxation | No withdrawal taxation |
Rental car | Withdrawal taxation* | No withdrawal taxation | Withdrawal taxation* | No withdrawal taxation |
Buying or renting a home
Special VAT deduction rules apply if you carry out business activities from your home. You are not normally entitled to a VAT deduction. However, in some cases you can claim a deduction if you have a clearly distinct and specially adapted workspace in your home.
Buying, renting or renovating a home that you also use for business purposes
Special VAT deduction rules apply if you buy, rent or renovate a home that you use for both private and business purposes.
You are not normally entitled to a VAT deduction on purchases connected with a home that you also use for business purposes. This rule would apply to a home office or a farmhouse, for example. You’re not entitled to claim a VAT deduction on furniture, repairs, rent, water and drainage installations, and other such costs.
VAT deduction entitlement for a specially adapted distinct workspace in your home
You can claim a VAT deduction if you have a workspace that is clearly distinct from the rest of your home and is specially adapted for your business: a basement that has been converted into a hairdressing salon, for example. You can then claim a VAT deduction on costs such as repairs, equipment and installations that are typical for the type of business activities you carry out in the workspace.
Example: A basement hairdressing salon
Björn has converted the basement of his house into a hairdressing salon. He has adapted it for his business, and it is clearly distinct from the residential part of the house (it has a separate entrance, for example). The basement premises have been specially fitted out for Björn’s hairdressing business. The salon has a separate ventilation system and dedicated water and drainage installations for the shampoo stations. Björn can claim a VAT deduction on the costs he incurs for these premises.
VAT reporting and business closure
You must report VAT accurately and have the right supporting documentation in order to claim a deduction. Special rules apply to deductions when you close a VAT-liable business.
Here’s how to report VAT on purchases
If you are entitled to claim a VAT deduction on your purchases of goods or services, you report the VAT as input VAT. You report input VAT in box 48 of your VAT return.
You must have supporting documentation relating to all VAT deductions
In order to claim a VAT deduction, you must have documentation showing that you are entitled to the deduction. In most cases, this documentation will be a purchase invoice or receipt specifying the VAT charged. So make sure that you save purchase invoices, receipts and similar documentation in your bookkeeping records.
In order for you to claim a VAT deduction, your invoices must contain all the required details for a valid invoice. If the total sum stated on the invoice or receipt is up to a maximum of SEK 4,000 including VAT, special rules apply.
Here's what an invoice must include (in Swedish)
Always make sure that you get an accurate invoice or similar documentation from the seller. If you don’t, you might not be able to claim a VAT deduction.
If you’re due to receive a VAT refund
If your input VAT exceeds your output VAT, you can claim a refund for the difference. This might be the case, for example, if your total purchase costs exceed your sales revenue for the reporting period.
If you’re due to receive a VAT refund, before making the payment, we check whether the refund amount should be reduced to cover other taxes you are due to pay. After we have established that, it normally takes a few days for your refund to be credited to your tax account. Sometimes it can take longer – if, for example, we need to investigate anything. We will contact you if we need any additional information.
The rules that apply if you close your business
Your VAT-liable business operations cease when you close or transfer your business. When closing a business, it’s normal for costs to arise in connection with the business operation you have run. You are entitled to claim VAT deductions until business operations are fully discontinued. There must then be a direct and immediate connection between your costs and the discontinuation of your VAT-liable business operations.
Incorrect invoices and adjustments
You might need to correct or adjust a VAT deduction – for example, if an invoice is incorrect or if you start using a purchased asset in a different way.
If no VAT or the wrong VAT amount is included on the invoice
You are not allowed to estimate a notional VAT amount if VAT is not included on the invoice. Some of the goods or services you buy might be VAT-exempt, or the seller might not be required to charge VAT on them (for example, due to a VAT exemption in the case of low annual turnover).
If an invoice includes incorrectly charged VAT, you cannot claim a deduction for this amount in your VAT return. You need to contact the seller and ask them to issue a new invoice or a corrective invoice such as a credit note. If you have already claimed an input VAT deduction for this amount, you must make the necessary correction when you receive a new invoice or corrective invoice from the seller.
Incorrectly charged VAT (in Swedish)
In some cases, you do not need to register your business for VAT (in Swedish)
Adjusting your VAT deduction on significant capital investments
If you make significant capital investments and change the way these assets are used later on, you might need to adjust your VAT deduction on a purchase in certain circumstances. This means that the VAT deduction for an asset is determined not only by the circumstances at the time of acquisition, but also by the subsequent use of the asset for VAT‑liable and VAT‑exempt business purposes respectively.
The circumstances at the end of the financial year determine whether the use of an asset has changed.
For assets such as machinery and equipment, the rules on change of use apply if the VAT on a capital investment is at least SEK 50,000. This threshold amount applies to each individual asset. You are not allowed to combine all capital investments of this type for a particular year. You must make an adjustment if the use of an asset changes within five years of purchase.
Special adjustment rules apply to investments in property – provided that the VAT amounts to a minimum of SEK 100,000 per property per year. You must make an adjustment if the use of a property changes within 10 years of purchase.