Kapatens backs claim against Swedish state

Kapatens, a Stockholm-based litigation funder focused on the Nordic region, is backing a claim against the Swedish state for collecting VAT on postal services from Swedish organisations, in alleged violation of EU law.

Under the VAT Directive, all Member States shall ensure that universal postal services are exempt from VAT. In 2006, the European Commission notified Sweden that it was in breach of the EU Treaty and the VAT Directive by charging VAT on such postal services. Although the state was informed by the European Commission that it was not entitled to charge such VAT, the state did not make any changes to the Swedish tax legislation in this regard and buyers of Swedish postal services were thus still forced to pay VAT for services which are to be exempt from VAT. A 2015 judgment by the European Court of Justice established that Sweden acted in violation of EU law. Thereafter, Sweden did change the tax legislation so that some, but not all, postal services were exempt from VAT. Several experts consider the legislative changes to be insufficient.

The judgment of the European Court of Justice thus made it clear that, since the entry into the EU, Sweden had charged VAT on postal services in violation of EU law. Kapatens’ opinion is therefore that all companies and organisations that do not have the right, or only partial right, to deduct VAT and which have purchased such postal services are entitled to a refund or reimbursement for the loss caused to them as a result of the breach of the Treaty.

The claim size is estimated to exceed 1.000.000.000 SEK (USD $116.5 million). Law firm Time Danowsky is leading the dispute.

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