Short answer: in Sweden there are three VAT rates – 25 percent (standard), 12 percent (including food) and 6 percent (including books and newspapers). If you sell goods to private individuals in Sweden, you pay Swedish VAT. If you sell to private individuals in other EU countries, you may have to charge the buyer's country's VAT and report it via the OSS system. This article is an overview - always check your own situation with the Swedish Tax Agency.

What is VAT, anyway?

VAT (value added tax) is a tax that is levied on almost everything that is sold. As an entrepreneur, you act as an intermediary: you collect VAT from the customer and pay it to the state. At the same time, you can deduct the VAT on what you buy yourself for the business. This is why VAT is basically not a cost for you as a company, but something you administer.

In practice, this means that the price you show to a private customer already includes VAT, while for other companies you often indicate the price without VAT (excluding VAT).

What VAT rates apply in Sweden?

There are three tiers, and which one applies depends on what you're selling:

  • 25 percent– the standard rate. Applies to most goods and services, such as clothing, electronics and furniture.
  • 12 percent- applies to food, restaurant and catering services and hotels, among other things.
  • 6 percent- applies, among other things, to books, newspapers, passenger transport and certain cultural and sporting events.

If you sell several types of goods, you can therefore have different VAT rates in the same store. It is important that each product receives the correct rate already in your e-commerce system, so that receipts and accounting are correct.

How does VAT work when I sell within the EU?

Here there is a bit more to keep track of, and it depends on who you are selling to:

  • To individuals in other EU countries:As a general rule, you must charge the buyer's country's VAT when your total sales to private individuals in other EU countries exceed EUR 10,000 per year. Below that limit, you can usually add Swedish VAT.
  • To companies in other EU countries:Often you do not add VAT at all, but the buyer reports the VAT in his own country (so-called reverse tax liability). It assumes that the buyer has a valid sales tax registration number (VAT number) which you check.

These are simplified main rules. As amount limits and details can change, always check your situation against current information from the Swedish Tax Agency.

What is OSS and do I need it?

OSS stands for "One Stop Shop" and is a simplified way of reporting VAT on sales to private individuals in other EU countries. Instead of registering for VAT in each country you sell to, you report and pay all that VAT collected via the Swedish Tax Agency. If you regularly sell to private customers in several EU countries, OSS is usually the easiest route. You apply for it at the Tax Agency.

What applies to sales outside the EU?

If you sell goods to customers outside the EU, it is usually counted as export, and then you normally do not charge Swedish VAT. In return, customs and import VAT may be added in the recipient country, which the customer needs to be aware of. The rules differ between countries, so it's wise to be clear in store about what applies to international purchases.

Practical things to put in place in your e-commerce

  1. Correct VAT rate per product.Make sure the system can handle 25, 12 and 6 percent and that each product gets the right rate.
  2. Clear prices.For private individuals, the price must be shown including VAT.
  3. Correct receipts and invoices.The VAT must be clearly stated.
  4. Management of EU sales.The system should be able to calculate the buyer's country's VAT if you sell across the EU border.
  5. Good basis for accounting.Everything must be reconciled against your VAT return.

Where can I find what applies to me?

This article will give you the basics, but VAT is an area where the details matter. The most reliable sources are the Tax Agency, which has updated information on rates and rules, and Verksamt.se, which gathers the authorities' information for entrepreneurs. If your situation is the least bit complicated - for example a lot of EU trade or mixed types of goods - it is money well invested to talk to an accountant or accounting consultant.

Do you want an e-commerce that counts right from the start?

Incorrect VAT handling creates hassle in the bookkeeping and can be expensive to correct afterwards. At ZORC, we build e-commerce solutions where VAT is set correctly from the start - per product, for Swedish sales and for EU trade - so you can focus on selling instead of troubleshooting receipts.Are you thinking about starting or rebuilding your e-commerce? Get in touch with ZORC, and we will go through your needs together.