Reverse VAT return for Integrated Circuit Devices

The new rules mean that transactions must be reported with so-called reverse charge VAT if the value of the sale exceeds SEK 100,000. Reverse charge VAT means that the seller invoices without VAT and that the buyer must report and pay the output VAT. If the buyer has full right to deduct input VAT, only a report is made in the VAT return, since in these cases there is no VAT to pay. The rules apply to sales/purchases that take place in Sweden between two taxable persons who are registered for VAT here.

What is meant by an integrated circuit device?

Exactly what is meant by an integrated circuit device is not entirely clear. The EU regulation on which the legislative amendment is based states that, for example, microprocessors and central processing units in the stage before integration into end-use products shall be covered. Central processing units are CPUs. The draft law states that management is also found in the customs classification for these goods, called CN 8542 31 90.

Excerpt from the customs definition: ”…; Electronic integrated circuits; Processors and control units, whether or not combined with memories, converters, logic circuits, amplifiers, clock and timing circuits or other circuits…;”
If these are integrated into, for example, motherboards, network cards or memory cards, they are exempt from the rule.

Are there any risks?

If a supplier invoices with VAT even though the sale should be invoiced without VAT, this VAT is considered to have been incorrectly invoiced under the new rules. The buyer cannot deduct the incorrectly invoiced VAT, while the buyer must still report the output VAT on the acquisition. If the Tax Agency discovers the error, a tax surcharge of 20 percent of the incorrectly deducted VAT can be imposed.

It is also important to remember that a transaction may be covered by these new rules even if your supplier is a foreign company. The prerequisite for the rules to apply is that the seller and buyer are, or should be, registered for VAT in Sweden. Sales and purchases to/from a foreign company that has a Swedish VAT registration may therefore be covered.

The Swedish Tax Agency has published guidelines that can provide further guidance.

For questions regarding this particular legislation or other issues regarding VAT, you can contact Grant Thornton's VAT experts for advice, Erik Nyström (erik.nystrom@se.gt.com) and Annika Nordqvist (annika.nordqvist@se.gt.com) who contributed to most of this text and offer their services to Svensk Elektronik's members.

Svensk Elektronik, through the Swedish Technology Association and the Confederation of Swedish Enterprise, has criticized this new regulation, as it increases the administrative burden on Swedish companies with unclear benefits for Sweden and has pointed to other possible methods to combat this type of fraud.

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