Sweden Tax Court Issues Advance Notice on VAT Deduction Methods for Mixed Activities

The Swedish Tax Court Nov. 15 issued Advance Notice No. 35-24/I, clarifying the application of the VAT Directive’s turnover-based calculation method for determining the proportion of deductible input tax for joint costs in businesses engaged in housing or premises leasing. The taxpayer, a housing association, leases both condominiums (exempt from tax) and premises (subject to voluntary taxation). The taxpayer sought clarification on whether it could use the turnover-based method specified in Article 174 of the VAT Directive to allocate input VAT for joint costs. The Swedish Tax Agency held that it couldn’t directly apply the VAT Directive Articles when input ...