The Swedish Tax Agency doesn't change its mind - double VAT on apps still applies
The Swedish Tax Agency has clarified how it considers app companies should charge Swedish VAT. The announcement is not new and does not solve the companies' problems, according to the industry.
Despite the Government's exemption, which meant that Stardoll did not have to pay double VAT, the app VAT saga continues. In a statement, the Swedish Tax Agency has now presented how it believes the law should be interpreted and in what situations app companies should charge Swedish VAT. The announcement is not new and does not solve the companies' problems. They may continue to be subject to double VAT on apps and other electronic services.
The only news is a delayed application. An Application Note states that the Swedish Tax Agency's interpretation will normally only be applied to turnover from October 1, 2011. What applies until then is an open question. There is no answer to how all the thousands of transactions currently in progress will be taxed. It is possible that the Swedish Tax Agency will choose to turn a blind eye until October 1. Or should the Stardoll ruling be considered indicative until October 1 but not thereafter? Or is the Tax Agency hoping for an intervention from elsewhere? Perhaps an initiative from the Tax Committee or that the issue is resolved in the EU VAT Committee. But the uncertainty for businesses remains.
The Swedish Tax Agency's position gives no answer to the central question - that companies must be able to rely on no double taxation arising.
This uncertainty is devastating for businesses. In order for Sweden not to lose an important industry of the future, all good forces must work together to reach a quick solution. We call for cooperation so that the issue can be resolved between countries and authorities and without hitting businesses with double VAT requirements. Other countries have managed to avoid this problem. If Sweden does not succeed in dealing with this issue, everyone will lose out as companies either close down or move out of the country. It does not matter if the solution comes from the Swedish Tax Agency, a committee initiative or other form - the important thing is to find a solution quickly so that Sweden does not lose a future industry!
Link to the Swedish Tax Agency's position.
This is a letter addressed to Anders Borg, with a copy to:
Minister for Trade Ewa Björling
Minister for IT Anna-Karin Hatt
Minister for Enterprise and Innovation Maud Olofsson
Chairman of the Tax Committee Henrik von Sydow
Director General of the Swedish Tax Agency Ingemar Hansson
The letter is signed:
IT & Telecom Industries, Director Anne-Marie Fransson
Computer Games Industry, spokesperson Per Strömbäck
Swedish Software Industry Association, CEO Peter Bergh
Företagarna, tax expert Annika Fritsch
PROMISE, CEO Mikael Svelch
Confederation of Swedish Enterprise, tax expert Anna Sandberg Nilsson