Impact of Sweden-US Defense Cooperation Agreement on VAT and excise duty

The Defense Cooperation Agreement (DCA) between Sweden and the US entitles US armed forces and dependents to make duty-free purchases of goods and services.

The agreement – effective from 15 August this year – provides exemptions for VAT and all excise duties, including excise duty on fuel, alcohol, tobacco, nicotine and chemicals in certain electronic goods. The exemption provisions can be fulfilled through tax-free sales, by claiming deductions in a VAT or excise duty return, or by submitting a refund application.

The main principle of the agreement is that businesses can sell goods and services to US armed forces without charging VAT or excise duty. The buyer must be able to produce documentation confirming that the requirements for a tax-exempt purchase have been fulfilled. However, the seller is not obliged to offer a tax-free sale.

If a seller charges VAT or excise duty on goods or services, the buyer can apply for a refund. This applies to US armed forces and dependents. A refund application is made by filling in a form. There are different types of forms, depending on whether goods or services are for official or private use.

Within the area of excise duty on fuel, alcohol, tobacco, nicotine or chemicals in certain electronic goods, authorised warehouse keepers and approved stockists are entitled to claim deductions or apply for an exemption in their excise duty returns. This applies to goods delivered within Sweden, or to fuel consumed during delivery to US armed forces.

Related information

• Deliveries and supplies to armed forces (legal guidance in Swedish) External link.
• Aid organisations and foreign diplomatic missions, etc. (legal guidance in Swedish) External link.
• Application Refund of value-added tax (VAT) and certain excise duties
• Application Refund of value-added tax (VAT) and certain excise duties