Value-added tax (VAT) is a multi-stage sales tax, the final burden of which is borne by the private consumer. VAT at the appropriate rate will be included in the price you pay for the goods you purchase.
VAT In Sweden
Sweden comes under the EU VAT rules and is part of the EU single market economy. VAT Directives are issued by the EU which lay out the principles of the VAT regime to be adopted by the member states, including Sweden. These Directives take precedence over the local legislation.
Sweden introduced VAT, known as moms, in 1969. It is administered by Skatteverket, the Swedish Tax Administration. The standard VAT rate in Sweden is 25%. with reduced rates of 12% and 6% for food, accommodation rental, books, newspapers, and other goods and services. Examples of exempt supplies are healthcare, financial services, and education.
There are various scenarios that would trigger an obligation to register for VAT in Sweden. Some of the most common examples are:
Importing goods into Sweden from outside the European Union
Buying and selling goods in Sweden (excluding domestic reverse charge)
Selling goods from Sweden which are delivered to customers outside of Sweden (business or private customers)
Acquiring goods in Sweden from another EU country (Intra-community acquisitions)
Holding inventory in Sweden for sale, distribution or consignment
E-commerce sales of goods to consumers, subject to Distance Selling VAT registration thresholds
Organizing events in Sweden where attendees or delegates must pay admission
VAT ChangeIn Norway
From January 2020, Norway is to remove the VAT and duties exemption for imported packages below NOK 350 to its consumers.
As a result, the importer will have to pay 25% Norwegian VAT and any duties for each package. The importer can be either the non-resident e-commerce business, potentially requiring a local VAT registration or the Norwegian customer.
The import relief measure was initially introduced to limit the administrative burden on the customs and tax authorities having to collect small amounts of VAT and duties. However, the high growth of cross-border e-commerce has meant the exemption has given non-resident e-commerce sellers an unfair tax advantage compared to Norwegian online retailers. Domestic sellers suffered greatly compared to especially Swedish competitors. Swedish e-commerce suppliers could sell without VAT but Norwegian companies had to apply VAT to Norwegian customers.
Who Need To Pay VAT When Dropshipping
Technically, the Importer shall pay the VAT. When you dropship products, your customer is the Importer, which therefore must pay VAT. In addition, your customer may also need to submit documentation to the local customs authorities, to prove that the declared customs value is correct.
However, most customers don’t fancy dealing with the customs authorities, and they certainly don’t appreciate unexpected costs. Though in reality, the customs authorities don’t have resources to add import duties and VAT on the tens of millions of e-packets coming into the EU, from Aliexpress, CJDropshipping, Wish and other dropshippers each year. It is still necessary to think about ways to dropship to Sweden or Norway without the customer paying tax.
How To Avoid Customer Paying Tax When Dropshipping
When you dropship to Sweden, there are three ways for you to avoid your customer paying taxes.
1.Using CJ Packet Sweden
If you use CJ Packet Sweden, your customer doesn’t have to pay the 7.5 Euro customs clearance fee and tariff for the product under 22 Euro. Sweden is VAT free for all European Union countries. And this logistics will send the products to the Netherlands for customs clearance and then to Sweden. If a tariff is generated, it is paid by the sender.
2.Using Euro Post
Euro Post is another logistics method to avoid customer paying tax when dropshipping to Sweden. You can use Euro Post to reach millions of potential clients in Europe without the need to have your own address database. It is highly cost-effective thanks to direct delivery to the country of destination.
3.Shipment From European Warehouse
If you dropship to Sweden and after the customers in Sweden place orders, your suppliers ship from European warehouse, your customers don’t need to pay for the VAT. Sweden is VAT free for all European Union countries. CJDropshipping has already had a US warehouse and China warehouse and it has a plan for a European warehouse.