The Swedish tax agency's proposal for extended voluntary vat liability

The Swedish Tax Agency has published a proposal to extend the possibilities to apply the voluntary VAT regime. The voluntary VAT regime is proposed to also apply to letting of premises where the premises are not used in a VAT‑liable business. In addition, it is proposed that a landlord may choose to be voluntarily liable to VAT when letting premises also to non‑profit organisations and individuals. The Swedish Tax Agency also proposes to abolish the current requirement of permanent use (Sw. stadigvarande användning) of the premises in the VAT‑liable business.

The purpose of the voluntary VAT regime is to give landlords a possibility to deduct input VAT. The Swedish Tax Agency states that the conditions for the letting of premises have become more flexible and shorter‑term since the current rules were introduced. This means that VAT often turns into a cost for the landlord. This, as well as the permanent use requirement, leads to difficulties in finding a lease for tenants conducting VAT‑exempt business and tenants that require short‑term leases.

The Swedish Tax Agency proposes that the voluntary VAT liability is determined for a certain area rather than the tenant's business activities. Further, it is proposed that there should be no requirement of the leasing time, and that the landlord should have the possibility to let the area to more than one tenant during the same time period, e.g., during day‑time and night‑time.

Schjødt's tax lawyers in Sweden are following the development closely.