If you’re running a sole proprietorship in Sweden, you might have received conflicting advice regarding value-added tax (VAT) exemptions. The rules are clear—if you know where to look—but applying them correctly means understanding how exemptions work across industries, income levels, and borders.

Below, we’ll explain what qualifies as VAT-exempt, when the small business exemption applies, how to document it properly, and how to avoid mistakes that can affect even well-organized business owners.

What’s in this article?

• What are VAT-exempt sales and when do they apply in Sweden?
  
• What documentation is required for VAT-exempt sales in Sweden?
  
• How should exempt sales be reported in a VAT return?
  

What are VAT-exempt sales and when do they apply in Sweden?

In Sweden, some businesses don’t have to charge VAT on certain sales. This occurs when the type of product or service you sell is exempt from VAT under Swedish law or when your annual revenue is low enough that you’re not required to register for VAT.

Types of sales that are VAT-exempt

Some services are exempt from VAT by default based on their industry. Skatteverket (the Swedish Tax Agency) outlines specific categories that are exempt.

If you’re a sole proprietor who works in one of these fields, your goods or services will be exempt regardless of how much revenue you make:

• Healthcare and medical: If you’re a licensed healthcare professional who provides services related to medical prevention, treatment of disease, physical injuries, or childbirth care, your treatments are exempt from VAT. This category includes most dental and social care services.

• Education: If you’re an educational provider recognized by the state, region, or municipality, your services are VAT-exempt. Commercial training courses typically fall outside this scope and would still be taxable.

• Financial and insurance services: Banking, loans, and insurance services are broadly VAT-exempt. They include currency exchange, payment mediation, and insurance premiums. Certain other financial services, such as renting safety deposit boxes, are still taxable.

• Cultural activities: Performing artists and other cultural workers are also exempt from VAT. If you’re a solo musician or actor who performs live for a paying audience, your fee isn’t subject to VAT. Skatteverket also exempts related costs such as travel and equipment.

• Exports: VAT is not charged on exports to countries outside the EU. These sales are considered “VAT-free” rather than “VAT-exempt.”

If your business falls into one of these categories, you still need to keep good records and be prepared to demonstrate why VAT wasn’t charged.

Exemption based on turnover

Sweden also exempts small businesses from VAT. If your business is based in Sweden and your total taxable turnover is less than 120,000 Swedish kronor (SEK) per year, VAT registration is usually not required. There are a few situations in which businesses under this threshold must still register, such as:

• Paying for construction services that require a reverse VAT charge

• Selling services to other EU countries

• Purchasing non-excise goods from other EU countries for more than 90,000 SEK in a year

But in general, low turnover means you don’t have to register for VAT, charge VAT on invoices, or file VAT returns. It also means you can’t reclaim the VAT you pay on your business purchases.

What documentation is required for VAT-exempt sales in Sweden?

Even when you don’t charge VAT, the burden is still on you to show why. For Swedish sole proprietors, that means keeping detailed, well-organized documentation that proves your sales are legitimately VAT-exempt.

If you’re registered for VAT, you must issue an invoice when you work with other VAT-registered businesses, even when VAT isn’t being charged. The invoice should explicitly state that no VAT is applied because the sale is exempt. If you’re running an online business (e.g., selling digital courses), your checkout process should tell the customer that the price is VAT-free. This conveys to your customer (and any auditors) that the lack of VAT is deliberate and legally grounded, rather than an error.

You’ll also need to prepare evidence for why the sale qualifies for exemption. The type of proof needed depends on your industry:

• Healthcare services: Keep a copy of your license or certification to confirm you’re a qualified provider.

• Education: Hold on to course documentation that shows the program qualifies.

• Financial services: These are often self-evident (e.g., loan agreements, insurance policies), but ensure your descriptions of the services in contracts or invoices clearly state how they qualify as exempt.

• Small business exemption: If you’re using the turnover rule (120,000 SEK or less in sales), your books should demonstrate that your total turnover stayed under this limit. A simple annual summary or worksheet can help show when, or if, you crossed the threshold.

• VAT-exempt international sales: If you’re making international sales that qualify as VAT-free, you’ll need additional proof. Keep shipping documentation such as customs declarations and delivery confirmations that prove the goods left the EU.

Keeping these documents is mandatory. If you’re audited, they’ll be among the first things Skatteverket asks to see. Even if you’re not registered for VAT, your systems need to show that you’re treating sales appropriately. Your receipts, contracts, order confirmations, and checkout pages should all reflect a 0% VAT rate.

Software tools can help you stay organized. Stripe Tax, for example, allows you to tag certain products as VAT-exempt and includes the proper notes on receipts. This automation helps prevent mistakes and keeps your records consistent.

Skatteverket requires businesses to retain VAT and accounting documentation for at least seven years. This includes all invoices, even if VAT wasn’t charged, and bookkeeping records that document turnover totals. In the event of an audit, Skatteverket expects your business’s records to be complete, clear, and easily accessible.

How should exempt sales be reported in a VAT return?

Even when your sales are exempt from VAT, they’re still part of your business activity and Skatteverket expects them to be reported accordingly. How you handle these sales depends on whether you’re registered for VAT and what kind of exemption applies:

• If you’re not registered for VAT (using the small business exemption), then you don’t file a VAT return at all.

• If you’re registered, you need to report all of your business income, both taxable and exempt, in your VAT return. This ensures your revenue totals match on your VAT and income tax filings.

Exempt sales are reported in a few different boxes on your VAT return, including the following:

• Box 36: Sales of goods outside the EU

• Box 40: Sales of services outside the EU

• Box 42: Other VAT-exempt sales

VAT-exempt sales are not the same as reverse charge VAT sales, and they’re documented differently in VAT returns:

• VAT-exempt sales include healthcare sales, certain education sales, and most financial services sales.

• Reverse charge VAT sales include B2B intra-EU sales and domestic construction service sales.

Confusing these categories in the return is a common mistake and can lead to corrections or queries from Skatteverket.