VATupdate

Position: Remuneration for certain services provided within the denomination The Church of Sweden does not constitute business activities

In order for it to be a business activity, it is required that a supply is made to another natural or legal person. The Supreme Administrative Court has ruled that a certain supply from the Church of Sweden to the organizational parts of the church has taken place within the denomination of the Church of Sweden. The organizational parts of the Church of Sweden constitute individual legal entities with their own legal capacity, but their independence is limited. With regard to the services in question in the case, the denomination of the Church of Sweden can at a central level decide on the conditions for the performance and reception of the services and regulate the distribution of resources due to this. The Supreme Administrative Court therefore held that the services had not been provided to the organizational parts in their capacity as their own legal entities. The services have instead been provided within the denomination of the Church of Sweden. The remuneration for the services should therefore not be taxed as income from business activities (HFD 2021 ref. 2 ).

The Swedish Tax Agency considers that HFD 2021 ref. 2 is only applicable to supplies within the Church of Sweden where the church at the central level can decide on the conditions for the performance and reception of the services and can distribute the resources due to this. The Supreme Administrative Court has made its assessment based on the Church of Sweden’s special character and special legal regulations. The Swedish Tax Agency therefore considers that the decision cannot be applied to organizations other than the Church of Sweden (The Swedish Tax Agency’s position Services within the Church of Sweden, income tax ).

Source: skatteverket.se

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