Sweden clarifies its position in regards to fixed establishments in Sweden

In its publication dated 19th June 2023, the Swedish VAT Authority (Skatteverket) has clarified its position in relation to the 2020 quick fix relating to the call-off stock simplification within the EU.

The quick fix determines that where certain conditions are met, the supplier, who dispatches goods from one Member State to the warehouse of its customer in a second EU Member State, need not VAT register in that second Member State. This would otherwise be necessary in order to account for an intra-Community acquisition at the time the goods arrive in the warehouse in the second EU Member State, as well as to report a subsequent domestic sale in that same state (depended on whether the reverse charge applies or not).

Instead, where the conditions are met, the customer (recipient of the goods) will account for the intra-Community acquisition of same at the time these are withdrawn from the warehouse.

One of the aforementioned conditions (as stipulated in Article 17a section 2b of the EU VAT Directive 2006/112) is that the supplier of the goods may not have established its business in the Member State of arrival of the goods, nor may he have a fixed establishment there.

In line with the explanatory notes released by the VAT Committee and the European Commission (meeting 113), which aim to support a uniform interpretation of the rules within the EU, Sweden has now updated its legislation to reflect the view of the VAT Committee.

Position of the VAT committee:
Where a supplier delivers goods into a warehouse in a second Member State (to be withdrawn by its customer), which is owned and operated by one or more persons other than the supplier, the warehouse shall not be considered as a fixed place of establishment in that country by the supplier.

However, where the supplier either owns or rents the warehouse in the second EU Member State, and has its own resources to run the warehouse (for example, staff who are hired either directly or indirectly by the supplier), then the warehouse shall be considered to be a fixed place of establishment by the supplier in that country.

Consequences:
This means in practice, that where the supplier has a fixed establishment, the conditions in Article 17a of the EU VAT Directive 2006/112 are not fulfilled, and the call-off stock simplification may not be applied.
As of 1st July 2023, any supplier deemed to have a fixed establishment in Sweden due to the running of an own warehouse in Sweden shall no longer be allowed to apply the call-off stock simplification in Sweden, and shall be required to VAT register there, when acquiring and selling goods to its customer within Sweden.

Potential call-off stock regulation changes as of 2025:
It is worth considering that in line with the “single VAT registration” element of ViDA, it has been proposed that with the possible expansion of the OSS, Article 17a of the EU VAT Directive 2006/112 shall cease to exist, since reporting of the movement of own goods would be possible in a monthly OSS to cover B2B movements of own goods. This, along with the proposed mandatory expansion of the extended reverse charge on domestic sales made by foreign suppliers, would remove the requirement for the simplification for call-off stock to remain.

This expansion was proposed for implementation on 1st January 2025, but due to concerns about implementation, may be postponed by one year to 1st January 2026.