Supreme Court Rules VAT Payable on Business Transfers Between VAT-Exempt Companies, Changing Previous View

• The Supreme Administrative Court ruled that VAT is payable on the transfer of business between companies with VAT-exempt activities.
• Previously, it was believed that such transfers did not distort competition and were out of scope of VAT if the buyer had a higher or similar right to recover VAT.
• The court stated that transfers not subject to VAT could give buyers a competitive advantage over others in the same VAT-exempt business.
• The ruling aligns with the Swedish VAT Act and is not contrary to the VAT Directive.
• Sweden will apply the VAT Act strictly, affecting restructuring and transactions in VAT-exempt areas like health, real estate, and finance.
• The decision implies that transfers with partial right to recover input VAT may not be considered out of scope of VAT.
• This ruling is significant for restructurings and deviates from the previous view on competition and VAT deduction rights.

Source: insightplus.bakermckenzie.com

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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