Supreme Administrative Court Rulings: Registration Does Not Create Legitimate Expectations

Case law: a registration based on conditions that are not fulfilled does not give rise to legitimate expectations
A parent company was registered because it was supposed to provide services to a subsidiary company. The company had for about three years purchased services that were either used by the subsidiary or by the company in its capacity as a managing parent company. The company had not invoiced the subsidiary or invoiced for any management. The company had thus not conducted any economic activity. The Supreme Administrative Court found that the registration was based on conditions that were not fulfilled and could therefore not in itself have given the company reason to expect that the Swedish Tax Agency, upon closer examination, would consider the company to be a taxable person conducting an economic activity. The court found that the circumstances were different from those in HFD 2021 ref. 52 (see above). In that case, it was a matter of a company that conducted its business in accordance with what had been described in connection with the registration for VAT, but where the Swedish Tax Agency later changed its assessment of the business (HFD 2024 ref 34 II). See also the summary of the judgment regarding the significance of registration for the right to deduction.

Case law: changed case law means that there are no longer legitimate expectations due to the registration
The decision to register a company for VAT was based on the fact that the Swedish Tax Agency at the time understood the legal situation in such a way that prize money was remuneration for the provision of services and that a company that competed with horses and received prize money could be considered to be conducting an economic activity. The Supreme Administrative Court found that the legal situation regarding prize money was clarified through later case law (C-432/15, Bastová and HFD 2019 ref. 68) and that the Swedish Tax Agency through a statement had clarified the conclusions the authority drew from these judgments. The company could thereafter not reasonably expect that the Swedish Tax Agency would still consider it to be a taxable person conducting an economic activity (HFD 2024 ref 34 I). See also the summary of the judgment regarding the significance of registration for the right to deduction.

Source: www4.skatteverket.se

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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