Update: 2023-06-01
The position statement “Crowdfunding, value-added tax (VAT)” will no longer be applied. The information previously provided in the position statement is now considered clarification as it is already covered by the guidelines of the Value Added Tax Committee from its 102nd meeting on March 30, 2015, document H, point 4.3. The information is now directly available in the Legal Guidance.
Crowdfunding involves raising money from the public for a specific project or purpose through small or large contributions. Crowdfunding is common among startup companies as an alternative way to raise capital. Funders can be both companies and individuals, and it often takes place through dedicated online platforms. There are several forms of crowdfunding.
The Value Added Tax Committee has provided guidance on crowdfunding in a guideline from its 102nd meeting on March 30, 2015, document H, point 4.3. The Tax Agency’s interpretation aligns with the guidelines.
From a VAT perspective, there are mainly four types of crowdfunding:
1. Funding of development projects: In this case, funders contribute a certain amount with the expectation of receiving a reward, such as one or more copies of the developed product or another conditional consideration that holds value for the funder (“reward-based crowdfunding”).
2. Provision of goods or services in return for payment: If the company seeking funding provides goods or services in return for the contributions, there may be a taxable supply if there is a direct link between the provision of the goods or services and the payment received. Additionally, the recipient of the funds should be a taxable person acting in that capacity.
3. Donation-based crowdfunding: Sometimes, crowdfunding involves collecting funds for a project in exchange for symbolic considerations or gifts. In such cases, the funds cannot be considered as consideration for the goods or services. The transactions should be assessed independently, considering the funds as a gift from the funder and the goods or services as thank-you gifts from the recipient.
4. Financial crowdfunding: This type involves compensating funders with securities such as shares, ownership stakes, or bonds, allowing them to participate in future profits of the company. The provision of securities may constitute a taxable supply, but it can be exempt from VAT depending on the type of security. The dividends received by the funders are usually exempt from VAT.
Lending-based crowdfunding: Funders can lend money to businesses or projects and receive interest in return. The granting of a loan by the funder is considered a supply, which can be exempt from VAT if the funder is a taxable person. The interest on the loan is also covered by the exemption.
Charitable crowdfunding: Many crowdfunding campaigns aim to finance projects for charitable purposes. In such cases, it is generally considered that the recipients of the funds do not supply any goods or services to the donors. Any gifts provided as a token of appreciation are usually symbolic and do not constitute a supply.
Crowdfunding platforms: Crowdfunding often takes place through dedicated online platforms. The platform provider is not a party to the transactions between funders and seekers of funding. The platform company does not supply the goods or services itself. Instead, it receives compensation in the form of a percentage-based commission on the funds raised from those seeking funding.
The operation of crowdfunding platforms is considered an electronic service, subject to specific rules on the country of taxation for electronic services. The electronic service provided by the platform constitutes an intermediary service, which is generally subject to VAT unless it qualifies for an exemption for the intermediation of financial services. The applicability of the exemption should be assessed on a case-by-case basis.
Source: skatteverket.se
