VAT on Software and Web Services: Reverse Charge Explained

The short version for buyers and sellers

The mechanism behind all of it is the place-of-supply rule. For services sold between businesses, the main rule is that the service is taxed where the buyer is established. For services sold to consumers, the main rule is that it is taxed where the seller is, with exceptions for electronically supplied services. Everything else in this guide follows from those two rules.

Swedish buyers: normal VAT

When a Swedish company buys a website, an app or a maintenance plan from a Swedish supplier, the invoice carries Swedish VAT, and the buyer deducts it as input VAT in the VAT return. Always check whether a quote is stated excluding or including VAT. Business suppliers normally quote excluding VAT, as our pricing does. For a buyer that is not VAT registered, such as a small association or a sole trader under the exemption threshold, the VAT is a real cost, so compare quotes including VAT.

The reverse situation catches many Swedish companies: buying from abroad. Software licences, ad platforms, hosting or a freelance developer in another EU country invoice you without VAT, and you account for it yourself: report the purchase (box 21 for EU services, box 22 for services from outside the EU), calculate output VAT in box 30 and deduct the same amount in box 48. For a fully VAT-registered company the net effect is zero, but a missing entry is still an error.

EU business buyers: reverse charge

When a Swedish supplier sells web development or software services to a business in another EU country, the service is taxed in the buyer's country and the buyer accounts for the VAT. The Swedish law calls this omvänd betalningsskyldighet; the older term omvänd skattskyldighet is still widely used. For it to apply, the seller needs to be sure of three things:

1. The buyer is a business acting as a business, not a private person.
2. The buyer has a valid VAT number, checked in the EU's VIES service and saved with the order.
3. The service falls under the main rule. Website design, development, SaaS, consulting and hosting normally do. Services connected to property or events can follow other rules.

The seller reports the sale in box 39 of the VAT return and in the EC sales list (periodisk sammanställning) to Skatteverket. The consumer side of EU sales, with the One Stop Shop, is covered in our guide to EU VAT and OSS for webshops.

Non-EU buyers

A business in Norway, the United Kingdom, Switzerland or the United States buying IT services from Sweden is also taxed outside Sweden, so the invoice carries no Swedish VAT. The seller reports the sale in box 40, services supplied outside Sweden. No EC sales list is needed, but keep evidence that the buyer is a business, such as a company registration number and the signed order.

What the invoice must say

For reverse charge, the wording can be Swedish or English, for example Omvänd betalningsskyldighet or Reverse charge. Without it and the buyer’s VAT number, the invoice is incomplete.

Consumers and digital services

Custom work sold to consumers, such as a website built for a private person, normally carries Swedish VAT. Electronically supplied services are different: services delivered automatically over the internet with minimal human involvement, such as SaaS subscriptions, downloads and online courses. Sold to consumers in other EU countries, they are taxed in the consumer's country once your total cross-border sales of this kind exceed the EU-wide threshold of 10,000 euro per year. The One Stop Shop (OSS) lets you report that VAT through Skatteverket instead of registering in every country.

When you do not need us for this: VAT is a question for your accountant or Skatteverket, not a web studio, and this guide is general information rather than tax advice. What we can do is quote clearly excluding VAT, invoice correctly for Swedish, EU and non-EU clients, and build shops and billing flows, like a business website with a quote form, that collect the VAT number and country your accountant needs. Questions about how we invoice your company? Book a short call.

Frequently asked questions