Understanding sales tax can be tricky for many, especially for freelancers who handle billing and administration themselves. On this page, we'll walk you through frequently asked questions about VAT and explain how it works when billing through Shoutly. You get an overview of what VAT is, how to calculate it, and what VAT rate should be indicated on invoices. Here is also information on how Shoutly helps you manage VAT so you can focus on your work.
VAT, or value added tax, is a consumption tax imposed on almost all goods and services in Sweden. This means that every time a good or service is sold, a certain percentage of the price must be paid to the state as tax. When you work as a freelancer and invoicing through Shoutly, Shoutly is responsible for VAT being reported and paid to the Swedish Tax Agency. You don't have to think about VAT reporting yourself, but Shoutly handles it for you.
It is important to understand the difference between “including VAT” and “excluding VAT”. When you enter a price “including VAT”, it means that the VAT is already included in the amount that the customer has to pay. As a freelancer via Shoutly, you bill your customer with the total price including VAT.
“Excluding VAT” means that VAT is not included in the stated price. When you set your fee as a freelancer through Shoutly, you always enter it excluding VAT. The VAT is then added to the invoice automatically, and the customer pays the total amount which includes both your fee and the VAT. This is easily done through Shoutly's billing service.
VAT can be confusing to figure out, but as a freelancer via Shoutly it becomes easy as the platform automatically adds the correct VAT rate to your invoices. The most common VAT rate in Sweden is 25%, which means that if you sell a service for 1000 SEK, you should add 25% VAT. In this case, the VAT will be 250 SEK and the total amount to be paid by the customer is 1250 SEK. The VAT, which is SEK 250, does not go to you as income, but is paid on to the Swedish Tax Agency.
Example of invoice:
When you make purchases or expenses in your business, such as material costs, travel expenses or equipment rental, you also pay VAT. This is called input VAT. As a freelancer via Shoutly, you don't have to worry about handling this VAT manually. You simply submit your receipts for the costs to Shoutly, which then handles and pays the correct amount of VAT to the Swedish Tax Agency. This way you can focus on your work without having to think about administration.
In most cases, 25% VAT applies to goods and services in Sweden. But there are exceptions where lower VAT rates are applied. For example, food and hotel/restaurant services have 12% VAT, while cultural events, sports activities and passenger transport such as buses and trains have a VAT of 6%. Some services and goods, such as medical care, dental care and insurance, are completely exempt from VAT.
As a freelancer, it is important that you know the VAT rate that applies to the goods and services you sell. If you are not sure what applies to your business, you can always double check The Tax Agency or contact Shoutly customer service for assistance.
Sometimes you need to figure out how much of a price consists of VAT, for example, if the price you see includes VAT. An easy way to do this is to use a VAT calculator Or counting manually. If the VAT is 25%, you can count 20% of the total amount to get the VAT share. If the VAT is 12%, you count 10.71% of the price, and if the VAT is 6%, you count 5.66%.
Almost all goods and services in Sweden are subject to VAT, which means that in most cases you cannot invoice without VAT. Some exceptions exist for activities that are exempt from VAT, but for most freelancers, VAT is applied to invoices. If you are unsure about what applies to your particular business, please contact Shoutly's customer service for more guidance.
With Shoutly as your billing and administration platform, VAT management becomes smooth and simple, so you can focus on driving your business forward.
