VATupdate

Significance of the registration for the right to deduct input tax

The Court of Appeal has tried a question about the significance of registration for the right to deduct input tax. The issue concerned a company’s right to a deduction for the purchase of services relating to planning and development work concerning a property owned by another group company. The company has not received any compensation for the services from the other Group company. The Court of Appeal considered, in the light of the Supreme Administrative Court’s judgment HFD 2021 ref. 52, that the Swedish Tax Agency cannot with retroactive effect refuse a deduction for input tax for the purchases made because the Swedish Tax Agency has registered the company for VAT.

In the opinion of the Swedish Tax Agency, however, a registration cannot have such legal force that it means that someone is entitled to a deduction when the right to deduct is not linked to a taxable outgoing transaction, e.g. if the transaction as such is subject to an exemption from tax liability or does not constitute a turnover. The judgment of the Supreme Administrative Court (HFD) can thus not be extended to refer to a right to deduct that is contrary to both the ML and the VAT Directive.

The Swedish Tax Agency has appealed the Court of Appeal’s ruling to HFD and also intends to develop its view in a position.

The Supreme Administrative Court has decided not to grant leave to appeal in the case. However, the Swedish Tax Agency maintains its view, which appears from the legal comment below and from  legal guidance .

Source: skatteverket.se

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