In certain cases, you do not need to register your business for VAT

VAT exemption for businesses with low annual turnover

If your business’s annual turnover in Sweden does not exceed SEK 120,000, and your business is based in this country, you generally do not need to register it for VAT. Your business will not be liable for VAT, which can reduce the administration involved in running it.

You must fulfil the following requirements:

• Your business’s annual turnover does not exceed SEK 120,000 for the calendar year (January to December) in question.
• Your business’s annual turnover did not exceed SEK 120,000 for each of the previous two calendar years.
• Your business is based in Sweden.

If your business fulfils the above requirements, you will automatically be exempt from VAT liability. This means you do not need to register your business for VAT when you start carrying out business activities in Sweden. In exceptional cases, you might still need to register your business for VAT – for example, if you purchase construction services with reverse-charge liability.

This is when you need to register your business for VAT

No VAT deduction entitlement for businesses exempt from VAT liability

As a general rule, you are not entitled to claim a deduction for input VAT if your business has been exempt from VAT liability. In exceptional circumstances, this rule may not apply – for example, in the case of one-off delivery of a new means of transport from Sweden to another EU country.

New means of transport (Legal guidance, in Swedish) External link.

Invoicing for businesses exempt from VAT liability

If your business has been exempt from VAT liability, you are still required to issue invoices in accordance with the general rules on invoicing. Your business must not charge Swedish VAT on its sales, and you must state on each invoice that your sales are exempt from VAT liability.

Swedish VAT legislation: rules on invoicing (in Swedish)

You can also issue simplified invoices for sales to other businesses.

Simplified invoices (in Swedish)

If your business is exempt from VAT liability, and you add VAT to an invoice by mistake, you are obliged to report and pay the incorrectly charged VAT amount to the Swedish Tax Agency. You report incorrectly charged VAT in a special VAT return. If you send your customer a corrective invoice (credit invoice) at a later date, you can then report the incorrectly charged VAT in a special VAT return and receive a VAT refund.

However, if you send your customer a credit invoice straight after issuing an incorrect invoice, you do not need to pay the amount in question or submit a special VAT return to Swedish Tax Agency.

If you have charged VAT incorrectly (in Swedish)

Corrective invoices (in Swedish)

Special VAT return – Reporting incorrectly charged VAT (SKV 4702), in Swedish

Here is when your VAT exemption ends

Your VAT exemption ends when your business’s sales revenue for a particular calendar year exceeds SEK 120,000 (which is the annual turnover limit). Your business must then charge VAT on its sales – starting with the sale that caused it to exceed the annual turnover limit. You must also register the business for VAT with the Swedish Tax Agency.

The VAT exemption also ends if your business does any of the following:

• applies for and is granted VAT registration
• requests to apply the rules on voluntary VAT registration – for example, on renting out property or selling your own works of art
• transfers its base to a location abroad.

Businesses based in other EU countries

If your business is based in another EU country, you must apply to the competent authority (tax authority) in that country to obtain an identification decision. Your business’s annual turnover in Sweden must not exceed SEK 120,000, and its annual turnover within the EU must not exceed EUR 100,000.

Businesses based in non-EU countries

If your business is based in a non-EU country, it cannot be granted a VAT exemption under the VAT exemption scheme for SMEs with low annual turnover.

How to calculate your business's annual turnover

If your business’s annual turnover is SEK 120,000 or less, you generally do not need to register it for VAT. Your business’s annual turnover is the value of its total sales of goods and services in Sweden during a particular calendar year (from January to December). Do not include VAT when calculating your annual turnover.

Calculating your VAT basis and sales price

The annual turnover limit of SEK 120,000 applies to your taxable basis. Your taxable basis is the amount on which you calculate VAT, in other words the price you set for your goods or services (excluding VAT).

In order for your business to be exempt from VAT liability, its taxable basis must not exceed the SEK 120,000 limit. This means that your business can make sales totalling SEK 150,000 without charging VAT – provided that it has charged VAT at 25% on the goods or services it has sold (120,000 × 1.25 = 150,000).

If your business charges 12% VAT on its sales, its total sales revenue can amount to SEK 134,400. If it charges 6% VAT, its total sales revenue can amount to SEK 127,200.

Transactions included in annual turnover

A business’s annual turnover includes the following, for example:

• the value of sales of goods and services in Sweden
• sales with reverse-charge liability, such as sales of scrap metal or construction services
• withdrawals of goods or services for private use.

Certain VAT-exempt transactions must also be included, such as:

• exports
• annual fees and rental costs associated with property transactions.

A comprehensive list of the transactions that must be included in a business’s annual turnover is available in our legal guidance.

VAT exemption in Sweden for businesses based in Sweden (Legal guidance, in Swedish) External link.

Annual turnover: transactions that are not included

Do not include the sale of fixed assets in your annual turnover. A fixed asset is an asset that you plan to use for business purposes over several years, and which your business does not normally sell. This could be a combine harvester used in agricultural operations, a taxi used in a taxi business, or shop fittings used for retail activities, for example.

If your business is registered for VAT but wants to be granted a VAT exemption

You can apply for a VAT exemption even if your business is already registered for VAT. Your business’s annual turnover in Sweden must not exceed SEK 120,000 in either the current calendar year or the two preceding calendar years.

If your business is already registered for VAT but wants to be granted a VAT exemption, you can apply via the e-service on verksamt.se. Your business’s VAT exemption applies from the date on which the Swedish Tax Agency reaches a decision.

Register and change F-tax, VAT, employer and SNI (Verksamt.se) External link.

If you cannot use the e-service, you can fill in and submit a “Ändringsanmälan” form (SKV 4639).

Notification of changes (SKV 4639)

If your business has been registered for VAT, and is then granted a VAT exemption later on, special rules apply to VAT for which your business has previously claimed a deduction. This means that your business might be obliged to repay VAT on capital goods, such as high-value machinery, for which it has been granted a deduction. After your business has been granted a VAT exemption, you must not charge output VAT on sales. Your business has no deduction entitlement for input VAT paid on its purchases either.

If you want your business to be granted a VAT exemption in other EU countries

A business that sells goods or services to customers in another EU country can be granted a VAT exemption in the other EU country in certain circumstances.

VAT exemption for sales to other EU countries (in Swedish)