Trading in services with other countries

What counts as a service?

In order to do the right thing when it comes to VAT and customs, you must know whether you are trading in goods or services. Goods are usually things you can touch. Goods also include properties, gas, cooling, and electricity. Services are anything else that can be sold. The question of whether you are trading in goods or services has an impact on, among other things, the assessment of the country of taxation, tax liability and tax rate.

Buying and selling services inside the EU

EU countries can in some cases require companies to comply with national rules in order to sell their services. Government agencies must then be able to justify the requirement with references to social interests, such as the protection of life, health or the environment. EU countries also have a point of contact for services, where companies can see what rules apply in order to sell a service in a specific country.

As a service provider, you may need to apply for recognition of professional qualifications in order to sell certain kinds of services in the EU.

When you buy a service from a country within the EU, there are requirements for the information the service provider must provide you with. You will find information about the requirements demanded of companies that sell services at the contact points for services.

Contact points for services at the European Commission’s website

Sending employees to other EU countries

If your company sends an employee to work in another EU country for a certain period, the employee can be considered to be posted there, if the criteria for this is met in the receiving country. If this is the case, the employee is entitled to the same terms of employment as those that apply in the host country in a number of specified areas, in accordance with the EU’s rules on posting. These terms can relate to health and safety, working hours and salary.

Your company may need to report the posting to the national government agency responsible.

Posting staff abroad at the European Commission

How VAT works

VAT works in the same way, whether you are trading in services inside or outside the EU. The one responsible for VAT differs, depending on whether the trade takes place with business operators or private individuals. The rules also differ, depending on the type of service involved. You therefore need to know who your customer is and what kind of service is involved.

There are two main VAT rules:

• If you are selling services to a company in another country, you must not, as a rule, charge Swedish VAT, but the buyer must report the VAT in the country where the buyer is established. If you purchase services from another company in another country, you must, as a rule, report both the output and input VAT. The main rule therefore means that the services are considered to have been traded in the country where the buyer is established.
• If you are selling services to private individuals, you must as a rule charge Swedish VAT, because services to private individuals are considered to have been traded in the country where the seller is established.

There are exceptions to these main rules, primarily depending on the kind of service involved.

Buying goods and services at the Swedish Tax Agency (in Swedish)
Selling goods and services at the Swedish Tax Agency (in Swedish)

The Swedish Tax Agency’s brochure VAT on foreign trade provides you with more details and offers help to calculate the amount of VAT.

About VAT at the Swedish Tax Agency

Distance selling within the EU

Companies that sell goods and services to private individuals within the European Union may be required to register for VAT in the buyer's country. In order to simplify the administration for the companies covered by these rules, the possibilities of reporting and paying VAT are expanded through so-called special schemes OSS (One Stop Shop).

OSS (One Stop Shop) at the Swedish Tax Agency

Buying and selling services to non-EU countries

International trade is restricted in different ways by the laws and regulations in different countries. But there are also international rules and agreements designed to facilitate trade between countries.

When purchasing services from outside the EU, you need to know whether the service provider needs a permit to perform the service in Sweden.

If you are going to sell services, you need to check whether the country or countries has/have laws that discriminate against or in some other way prevent foreign service providers, and what you need to do to sell services there.

Invoicing rules

When exporting, you must observe the Swedish invoicing rules for VAT. This applies regardless of whether a product is sold in Sweden or in the buyer’s country, and regardless of who the buyer is.

Invoicing at the Swedish Tax Agency

When you send an invoice abroad, it makes things easier if you create it in a language that both you and the buyer understand. Some information must be included by law, and the invoice should also contain payment details, such as your IBAN number and BIC/SWIFT.

Download an invoice template on the Business Sweden website (in Swedish)