Supreme Administrative Court Rules on VAT in Business Transfers Without Deductible Input Tax Rights

• The Supreme Administrative Court upheld the Tax Law Board’s advance ruling.
• The condition in Chapter 5, Section 38 of the VAT Act is not met if the recipient lacks the right to deduct input tax.
• This applies even if both the transferor and recipient lack deduction rights.
• The court’s decision will prompt the Tax Agency to review its stance on business transfers when input tax is non-deductible for the recipient.
• The case involved the transfer of assets in a business, which is not taxable if the recipient could deduct or be reimbursed for the tax.
• The applicant and subsidiary both operated tax-exempt activities without deduction rights.
• The court ruled the transfer did not meet the condition for deduction rights, potentially giving the recipient a competitive advantage.
• The Tax Agency’s previous stance allowed the provision’s application even if both parties lacked deduction rights.
• The court’s decision means the provision cannot apply if the recipient lacks deduction rights, prompting a review by the Tax Agency.

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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