If you drive passengers in your private car for payment you are required to declare the income as an earning in your income tax return. If you have made more than just a few individual trips you are also required to declare and pay VAT.
You are required to declare income and VAT even if you do not have a taxi licence.
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If you have a carpool for travelling to work with a neighbour or friend the “petrol money” you give to each other is not taxable.
If you drive passengers on behalf of someone else, this client shall normally deduct the tax. If the client is based abroad, you must pay your tax instead.
It is a good idea to pay tax continuously throughout the year as this will help you avoid residual tax. Begin by filling out a preliminary income tax form and send it to the Swedish Tax Agency. You will be notified about the monthly amount that you need to pay.
If the client is based abroad, it is not certain that they will send a statement of earnings (kontrolluppgifter) to the Swedish Tax Agency. This means we are unable to pre-print your income on your tax return form, You will have to fill in your income.
How to fill in your income on your tax return form:
If you have driven passengers regularly in your private car for payment, you are required to declare the VAT separately. This means you must declare VAT on your trips, regardless of whether or not you have a license to operate a taxi service. If you only make a limited number of trips you not need to declare VAT.
The tax rate for passenger transports is 6 percent. The VAT is included in the price that the customer pays.
If you use your car for passenger transports that are subject to VAT in accordance with the Swedish Taxi Traffic Act (2012:211), other rules apply. You are also required to have a taxi service permit and taxi driver ID, and the car must be registered with the Swedish Transport Agency.
You should save all the receipts that specify how much you have received in payment and the expenses you have had. Keep a regular record, in a driver’s log, for instance, of how many kilometres you have driven for payment.
How Emma should declare her income and VAT from trips in her private car for payment
In 2022, Emma drove passengers in her private car for payment on behalf of the Company. Emma’s driver’s log shows that she has driven 6,000 km for payment, including the mileage to pick up the customer. She has obtained her customers via the Company’s app in the mobile phone.
Customers from Emma’s service have paid the Company the gross sum of SEK 30,000. The Company 20 keeps per cent in commission. Emma gets the remaining 80 per cent, i.e., SEK 24,000. The Company is based abroad and does therefore not deduct any tax on the amount.
Emma has incurred expenses on her trips, mainly for her car and petrol and also SEK 1,000 in congestion tax. The car consumes 0.8 liters of petrol every 10 km.
In her income tax return, Emma shall under “inkomst av tjänst” (“earned income”) declare SEK 24,000 minus VAT of 5.66 percent, i.e. SEK 1,698. (Read more about VAT below.). This means that she enters 24,000 - 1,698 = SEK 22,302 as taxable pay in her income tax return (item1.1).
From this amount, Emma deducts
Emma may not make individual deductions for her mobile phone, as the trips and the Company’s app have not entailed any additional expenses for her.
As the Company does not deduct any tax, Emma is required to send a preliminary tax return to the Swedish Tax Agency to enable her to spread her tax evenly throughout the year.
In 2022, Emma regularly drove passengers in her private car for payment. Therefore, she must declare VAT on the trips, regardless of whether or not she has a license to drive a taxi. The tax rate for passenger transports is 6 per cent. The VAT is included in the price that the customer pays. Emma shall therefore put 5,66 percent of 30,000 = SEK 1,698 in the VAT return (box 12).
The Company charges 20 per cent in commission on the amount that the customer pays, as payment for its service. In this case, this means SEK 6,000 (20 per cent of 30,000). The Company’s service is provided within the country. Emma has given her VAT registration number to the Company and must therefore declare output VAT on her expenses from the Company’s service. In this case the VAT is 25 per cent of 6,000 = SEK 1,500, which she must declare in box 30. She must also declare the equivalent amount in deductible input VAT in box 48.
Emma cannot deduct the VAT on the purchase price of her car as she does not use the car for passenger transports that are subject to VAT in accordance with the Swedish Taxi Traffic Act (2012:211).
Emma can deduct the VAT on fuel that she uses for trips that she adds VAT on. This is conditional on her corroborating the deduction with a receipt. She must calculate the deduction for each fuel receipt for trips that are subject to VAT. Emma has a fuel receipt of SEK 500 of which SEK 100 is VAT. If the price of fuel is according to the receipt in SEK per liter including VAT and Emma has driven 10 km on the trip that is subject to VAT, she may deduct the input VAT of SEK 1.92 for the trip (0.8 liters × SEK 12 × 0.2) in box 48.
Emma must be registered for VAT and send the VAT return to the Swedish Tax Agency. As her turnover is less than SEK 1 million per year, she is required to declare VAT on a yearly basis.