- KPMG represented a case in the Supreme Administrative Court regarding Swedish VAT pro-rata rules.
- The court found that the rules were in violation of EU law.
- The case revolved around how to calculate the deductible proportion of residual input tax in a company with both taxable and tax exempt transactions.
- The Swedish Tax Agency had decided to calculate the deductible proportion based on the usage of acquired goods and services, but the company appealed for the turnover based method.
- The SAC granted leave to appeal and concluded that the reasonable grounds provision in Swedish law did not meet the requirements for clarity, precision, and transparency set by the Court of Justice of the European Union.
- The SAC also concluded that the directive’s provisions on apportionment based on turnover have direct effect and a taxpayer can rely on these provisions to calculate the deductible input tax using the turnover based method.
- The ruling provides clear guidance for individual taxpayers and will lead to changes in the Swedish VAT Act.
- Taxpayers engaged in mixed activities should assess whether there are reasons to reconsider previous deductions of residual input VAT.
Source: kpmg.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
