Swedish VAT rules are dependent on the EU VAT Directive, but this does not mean that simplifications and improvements of the VAT rules are impossible. All too often, politicians and officials tell us that VAT rules cannot be changed because of the EU – but this is not entirely accurate.
A recently published international newsletter contains a guide to the directive’s various articles, including sections that say that member states’ VAT rules “shall” or “may” be formulated in certain ways. A “may condition” means that member states may choose to introduce a certain provision or that a certain provision may be introduced within certain limits. Opportunities exist for the introduction of stricter requirements, and equally the simplification of taxes on businesses that are acting as unpaid VAT collectors. VAT is a consumption tax that should be borne by end consumers and is not a corporation tax.
The VAT Directive contains at least 150 “may” articles that offer opportunities for member states. For example, there is flexibility regarding tax rates, exemptions, taxable amount, deductions, invoicing, reporting and payment of VAT.
For several years, Sweden has topped EU measurements of how much theoretical VAT actually arrives in state coffers. Despite this, it is not as though the Swedish business community has been rewarded with simplifications or improvements. VAT rules top measures of regulatory burden, and in recent years the regulatory burden has continued to increase.
It is now time to stop blaming the EU, seize the opportunities contained in the VAT Directive and bring all proposed simplifications and improvements submitted to the government to fruition. Take control of the option to tax real estate, import VAT, option to tax financial services, cost sharing, the concept of mediation, the cash accounting method and, not least, review all the exemptions to map the harmful effects of blocked input VAT on society, businesses and the end consumers.MomsVAT