The Functionality of VAT: A Swedish Perspective

Abstract

The Swedish value added tax (VAT) is based on the VAT directives at EU level. Sweden became a Member State of the EU on 1 January 1995, but the VAT in Sweden was introduced in 1969. A new VAT Act came into force in 1994 and several changes have been made both since 1969 and 1994. The VAT at EU level is generally considered a consumption tax, based on Article 1.2 in the VAT directive from 2006. The similar point of departure in the Swedish implementation of the directive is not found in the VAT Act and vaguely found in the preparatory works to the Swedish VAT Act. It has been discussed whether or not the Swedish VAT is a consumption tax from a legal perspective. One conclusion drawn in the study described in this article is that the Swedish VAT is a hybrid tax, burdening both business and consumption.