29 May 2014
Sweden has announced that the VAT Grouping regime which applies mainly to financial services companies is to be abolished. There will no doubt be some opposition to this proposal from within the financial services industry, but it appears that there may have been some abuse of the system and the response is simply to get rid of it.
Perhaps Sweden is also reacting to the challenge from the European Commission about a year ago around its implementation of the rules for VAT grouping. Again, the easy solution is simply to withdraw it. VAT grouping is merely an option in the Principal VAT Directive and there are some Member States which have never exercised the option – notably France. However, in recent years more and more countries have been implementing it and Sweden appears to be the first to move in the opposite direction.