Handling value-added tax (VAT) is a common challenge for business owners, especially sole proprietors who do everything themselves. The rules can seem counterintuitive, and getting them wrong has real consequences. But once you understand how VAT works, it becomes just another part of running a financially sound business.

Below, we’ll explain how to handle VAT as a sole proprietor in Sweden, including when to register, how to charge VAT, what can be deducted, and how to file correctly.

What’s in this article?

• What is VAT and how does it apply to sole proprietors in Sweden?
  
• What are the VAT registration thresholds for sole proprietors in Sweden?
  
• How do VAT collection and reporting work for sole proprietors?
  
• What VAT rates apply to different goods and services in Sweden?
  
• How do input VAT deductions work for sole proprietors?
  
• How does Stripe handle VAT for sole proprietors selling online?
  

What is VAT and how does it apply to sole proprietors in Sweden?

VAT is an indirect tax on most goods and services in Sweden and the EU. If you’re a sole proprietor, that means you usually need to charge VAT on your sales, collect it from customers, and pass it on to Skatteverket (the Swedish Tax Agency). You also get to reclaim VAT on business-related purchases so the tax doesn’t become a cost to your business.

In Sweden, VAT is called Mervärdesskatt or “moms,” but the rules are the same as in most EU countries. If your business is registered for VAT, here’s what you must do:

• Charge VAT: Add the correct VAT rate to your prices and collect it from customers.

• Deduct VAT: Claim back VAT on business expenses such as equipment, materials, and services.

• Report and pay: File VAT returns and pay the difference between what you collected and what you spent. If you paid more than you collected, you get a refund.

If you don’t register when required or fail to charge VAT properly, you could face penalties, interest charges, or audits.

What are the VAT registration thresholds for sole proprietors in Sweden?

Sweden has a VAT registration threshold of 120,000 Swedish kronor (SEK) in annual turnover as of January 2025. Here’s how it works:

• If you’re below the 120,000 SEK threshold: You’re exempt from VAT by default. There’s no need to register for or charge VAT. You cannot reclaim VAT on business expenses. Any VAT you pay on equipment, services, or supplies is an added cost.

• If you exceed the 120,000 SEK threshold: VAT registration is mandatory. You must charge VAT on sales, file periodic VAT returns, and comply with reporting rules.

If you initially qualify for the small business exemption but later realise you’ll exceed 120,000 SEK, register as soon as possible. Delaying VAT registration can lead to compliance issues and unexpected tax liabilities.

If you make sales to other EU countries that exceed €10,000 (99,680 SEK) in turnover, you’re required to charge the customer with the VAT from their country of residence. This is true even if your overall turnover is below 120,000 SEK. Swedish businesses do this by either registering for VAT in the customer’s country or using the EU’s VAT One Stop Shop (VAT OSS) system.

If you do business only within Sweden and stay under the threshold, VAT registration is optional. Businesses might choose not to register for VAT if they sell primarily to customers (rather than businesses) and don’t need to reclaim VAT. In this scenario, being exempt from VAT can be a competitive advantage, since it allows you to keep prices lower than those of businesses that have to add 25% VAT. But if your business has substantial costs such as equipment, software, and professional services, you might choose to register for VAT even if you’re not required to so you can deduct the VAT paid on your expenses.

How to register for VAT in Sweden

VAT registration is a simple process handled by Skatteverket. Here’s how it works:

• Apply online through Skatteverket’s website (often done alongside F-tax registration for self-employed tax).

• Provide details about your business and expected turnover.

Once approved, you’ll receive a VAT number that consists of the prefix “SE” and 12 digits (e.g., SE123456789999) and must begin charging, collecting, and reporting VAT.

How do VAT collection and reporting work for sole proprietors?

Once you’re registered for VAT, you need to charge VAT on taxable sales and maintain records, track VAT paid on business expenses, and file returns on time to Skatteverket. Then, you’ll pay or reclaim the VAT difference based on what was collected versus spent. Here’s how it works.

Collecting VAT from customers

For every taxable sale, you must add VAT to the price, display it clearly on the invoice, and collect the tax from your customer. VAT invoices must include:

• A description of the goods or services provided

• The net price (before VAT)

• The VAT rate and amount (e.g., 25% VAT on a 1,000 SEK service, 250 SEK VAT)

• The total price, including VAT

• Your VAT registration number

• Your address and the customer’s address

• A unique invoice number and the date issued

If you sell to customers, advertised prices should include VAT since customers expect to see the final amount. If you sell to businesses, invoices should show VAT separately so businesses can reclaim it. Any VAT you collect is tax money that you temporarily hold before passing it on to Skatteverket – it is not yours to keep.

Reporting and paying VAT

VAT returns are submitted through Skatteverket’s online system. Even if you had no sales or purchases during the period, you are still required to file a return. VAT returns summarise your VAT activity for a given period, including the following:

• Output VAT: This is the VAT you collected from customers.

• Input VAT: This is the VAT you paid on business-related expenses.

• The balance: If you collected more VAT than you paid, you owe the difference. If you paid more than you collected, you can claim a refund.

Your VAT reporting schedule depends on your expected annual turnover:

• Over 40 million SEK: Monthly VAT returns

• 1 million–40 million SEK: Quarterly or monthly VAT returns

• Under 1 million SEK: Monthly, quarterly, or annual VAT returns

Many sole proprietors choose to file quarterly in order to balance administrative workload and cash flow. Those who choose annual reporting should prepare for a larger lump-sum payment at the end of the year.

VAT filing deadlines

• Monthly filers: Returns are due by the 26th of the following month (except December, for which the return is due on the 27th).

• Quarterly filers: Returns are typically due by the 12th of the second month after the quarter ends. For example, the Q1 return is due by 12 May.

• Annual filers: Returns are due by the 26th of the second month after the tax period. For filers who work on a calendar year, they’re due on 26 February.

Deadlines can shift slightly depending on the calendar so it’s always a good idea to check Skatteverket’s tax calendar. Sweden enforces strict VAT compliance, and penalties apply if you miss deadlines:

• Late VAT return filing results in a fixed penalty of between 500 and 1,000 SEK per return.

• Late VAT payments incur interest charges. The interest rate is the Swedish National Bank’s base rate plus 15% per year. For example, if the base rate is 3%, this means an annual interest charge of 18%.

• Inaccurate returns can result in a penalty of 20% of the incorrectly reported VAT.

To avoid issues, many business owners set aside the VAT they collect in a separate account.

What VAT rates apply to different goods and services in Sweden?

VAT in Sweden varies depending on what you’re selling. If you get it wrong, you could overcharge customers, underpay tax, or face penalties. Skatteverket provides detailed VAT classifications to help businesses manage VAT. If you’re uncertain, double-check before invoicing or use automated tools that calculate the correct VAT rate for each sale.

Here’s how Sweden’s VAT rates apply to certain categories.

Standard VAT rate: 25%

The default VAT rate applies to most goods and services. If your business isn’t selling something that qualifies for a reduced rate or exemption, assume the default rate applies. Standard VAT rate purchases include:

• Professional services

• Consumer goods

• Digital products

If you’re unsure about a product or service, check Skatteverket’s official VAT classifications.

Reduced VAT rate: 12%

This lower rate applies mainly to food, hospitality, and some personal services. Here are some purchases that charge 12% VAT:

• Groceries and non-alcoholic beverages

• Restaurant and catering services

• Hotel accommodations

• Minor repair services

If you run a café, grocery store, or bed-and-breakfast, you’ll likely be charging 12% VAT on sales.

Reduced VAT rate: 6%

This rate applies to media, culture, and public transport – industries that Sweden actively supports with lower tax rates. Here are some purchases that charge 6% VAT:

• Books, newspapers, and digital publications

• Passenger transportation

• Event admission (e.g., concerts, musicals, sports)

• Rights for artistic works

If you’re a freelance artist who sells paintings or charges for admission to an event, you’ll use this VAT rate.

Zero rate (0%) or VAT exemption

Some industries and transactions are fully exempt from VAT, and some are taxed at 0%. There’s a big difference between the two:

• If you sell zero-rated (0% VAT) goods and services, you don’t charge VAT on sales. But you can still deduct VAT on business expenses.

• If you sell exempt goods and services, you don’t charge VAT and can’t reclaim VAT on related purchases.

Zero-rated purchases include medicine supplied on prescription or sold to hospitals. Exempt purchases include financial services, insurance, and healthcare.

VAT rates stay consistent for most sole proprietors within their industries so you probably won’t need to keep track of different rates. But knowing which rate applies to your business protects your margins and keeps your tax filings accurate.

How do input VAT deductions work for sole proprietors?

When you buy goods or services for your business, you usually pay VAT to the seller. If the seller is registered for VAT, that VAT – known as input VAT – can be deducted from the VAT you collect on sales. For example, if you buy a laptop for 10,000 SEK and pay 25% VAT (2,500 SEK) on top, you can deduct 2,500 SEK from the VAT you owe to Skatteverket for that period. This deduction is known as an input VAT deduction.

Reclaiming VAT is a direct way to reduce your business costs. As a sole proprietor, understanding how input VAT deductions work can save you money and keep your business tax-efficient. To deduct input VAT, always do the following:

• Track VAT on purchases. Check VAT rates carefully and confirm exactly what was charged.

• Match invoices to VAT claims and hold on to invoice copies. If you don’t have a proper invoice and you’re audited, Skatteverket can deny your VAT deduction.

• File on time. If you forget to include an expense, you might have to adjust a later return.

What expenses qualify for VAT deduction?

To qualify for VAT deduction, purchases must be business-related and tied to taxable activities. Some common examples include:

• Inventory, raw materials, and supplies

• Office equipment and software

• Marketing and advertising costs

• Professional services (e.g., accountants, consultants, IT services)

If a purchase is meant partly for business use and partly for personal use, you can deduct only the business portion. For instance, if you use your personal car 50% for business, you can deduct only 50% of the VAT on fuel and maintenance. Personal expenses (e.g., groceries, home purchases, personal travel) are never eligible for VAT deduction.

When you log an input VAT deduction, always ensure your supplier charged you VAT. Some small suppliers don’t charge VAT because they’re below the VAT threshold. If there’s no VAT on the invoice, there’s nothing for you to deduct.

How does Stripe handle VAT for sole proprietors selling online?

Managing VAT can get complicated fast, especially if you sell online and have international customers. VAT rates change based on where your buyers are, what you’re selling, and whether you’ve passed registration thresholds in various jurisdictions. Stripe automates much of this process so businesses don’t have to handle it manually. For example, if you sell digital downloads, Stripe Tax can determine:

• Where your customer is located

• Whether you need to charge VAT

• What rate applies

This keeps compliance simple, even for sole proprietors with cross-border sales. If you’re a sole proprietor who uses Stripe to sell online, here’s how Stripe Tax and Stripe Invoicing can simplify VAT compliance.

Automatic VAT calculation on sales

Stripe Tax calculates and applies the correct VAT rate in real time based on:

• Where your customer is located

• What type of product or service you’re selling

• Whether you’ve exceeded VAT registration thresholds in that country

For example, if you sell digital services to a customer in Sweden, Stripe Tax will automatically apply 25% VAT. If your next customer is in France, Stripe Tax will adjust to the French VAT rate, assuming you’ve met the EU-wide VAT obligations. This eliminates both manual tax calculations and the risk of charging the wrong rate.

Automated VAT collection and invoicing

Stripe ensures that VAT is collected properly and transparently. When a payment is processed, Stripe automatically separates the VAT amount so it’s clear how much tax you’ve collected.

Stripe Invoicing allows you to send VAT-compliant invoices that include:

• The net price (before VAT)

• The VAT amount and rate

• The total price, including VAT

• Your VAT registration number

• A unique invoice number

This means you don’t have to format invoices manually or double-check tax calculations. It can also reduce the risk of errors.

VAT registration threshold tracking

Stripe Tax monitors your sales against VAT registration thresholds in different countries and alerts you when you approach these limits. This helps you stay ahead of compliance requirements and register on time rather than face penalties.

VAT reporting and recordkeeping

Stripe tracks every VAT transaction it processes and generates detailed reports automatically. These reports summarise:

• Total VAT collected

• The jurisdictions where VAT was applied

• Each product type VAT was collected on

When it’s time to file your VAT return with Skatteverket, you can export a Stripe VAT report instead of compiling tax data manually. This feature is particularly useful if you sell in multiple regions or use the VAT OSS system.