Wrong VAT on invoice is payable even with no taxable supply

Anyone who enters an amount as value added tax on an invoice or a similar document must pay that amount to the state, even when the amount is not value added tax under the Mervärdesskattelag. Both registered persons and persons who are not registered can incur the liability, and the liability also covers amounts shown for something that is not a supply of goods or services, for example a transfer of a multi-purpose voucher, or for supplies covered by the scheme for small enterprises.

The purpose of this liability is to eliminate the risk of loss of tax revenue that the right of deduction can createSkatteverket. That risk exists because the recipient of an invoice showing value added tax may use the invoice to claim a deductionSkatteverket. The liability therefore applies regardless of whether a taxable transaction was actually carried out or whether value added tax was due on a taxable transactionSkatteverket. The Court of Justice has stated the same rule: tax shown on an invoice is payable by the issuer even in the absence of an actual taxable transaction, as in Stroy transEuropa, and the obligation in Article 203 of the VAT Directive seeks to eliminate the revenue-loss risk that the deduction right entailsSkatteverket.

In practice this means an error on the invoice itself creates the payment obligationSkatteverket. It does not matter that the underlying supply was exempt, took place in another country, fell under reverse charge, or never happened at allSkatteverket. A Swedish seller who by mistake charges Swedish value added tax on a supply taxable in another country, a business that charges tax on an exempt intra-Union supply, and a person who invoices tax on a fictitious supply all become liable for the stated amount once the amount can be understood as Swedish value added taxSkatteverket.

The recipient gets no corresponding benefit. Incorrectly charged tax is not input tax under the Mervärdesskattelag and cannot give the buyer a right to deduct or to a refundSkatteverket. The payment obligation sits entirely with the issuer.

The way out is normally a credit note. A person liable for incorrectly charged tax must issue an adjusting invoice under 17 kap. 22 § ML to correct the errorSkatteverket. Skatteverket refrains from requiring an adjusting invoice only when there are special reasons under 7 kap. 50 § MLSkatteverket. Case law allows correction where the issuer acted in good faith or where the issuer has fully and in time eliminated the risk of loss of revenue, and Member States must provide the instruments to recover tax shown in error once that risk is gone. Waiting makes recovery harder, because once the recipient has been finally refused a deduction or national correction procedures can no longer be used, the issuer may be left with fewer routes to reclaim the amount.

Businesses that issue, review or pay invoices should therefore treat every value added tax amount on an invoice as a potential payment obligation in itselfSkatteverket. Check the tax treatment before invoicing, correct an overstated or misplaced amount promptly with an adjusting invoiceSkatteverket, and do not let a buyer claim a deduction on the basis of an invoice known to be wrongSkatteverket.

Legal basis: Mervärdesskattelag (2023:200) 16 kap. 23 §, Article 203 of Council Directive 2006/112/EC, and CJEU judgments C-138/12 Rusedespred, C-642/11 Stroy trans and C-712/17 EN.SA.