On 1 July 2017 a tax on chemicals contained in selected electronical products was introduced in Sweden, the so-called Chemical Tax. In this TaxNews KPMG provide an update on recent and potential future developments in this area.
In December 2018, the Swedish Supreme administrative court passed two judgements clarifying how the term ”one good” should be interpreted when selling packages containing more than one part.
In the case HFD 2018 ref. 74, the court points out three key factors when making this assessment. The first is whether the parts in the package have the same CN-number, or different. The second is whether the parts are presented to the customer together, i.e. merchandised and sold in the retails as one unit. The third is whether the parts are packaged separately or as one product in the retail-package.
The court also points out that if an in-scope good is sent together with out of scope goods, the weight of the latter should not be included in the calculation of the Chemical Tax. The weight of the out of scope goods may not be included in the calculation of any potential tax reduction.
In the Supreme administrative court case number 2821-18, it was clarified that it is of great importance that companies provide clear information regarding descriptions of the products that are included in a bundled package, so it can be easily determined which products should be included in the calculation of the Chemical Tax.
Changes from 1 January 2019
As of 1 January 2019 the Chemical Tax was increased from 120 SEK to 122 SEK per kg for electronical products. The tax rate for white goods was left at 8 SEK per kg. The maximum tax per product was raised from 320 SEK to 327 SEK.
Normally, when a non-warehouser brings in-scope goods into Sweden from another EU-country the tax is due 5 days after the goods have been received. However, from 1 January 2019 there is an option to register as a registered recipient (“registrerad mottagare”). A registered recipient that brings in-scope goods into Sweden from another EU-country may report the Chemical Tax on a monthly basis.
Potential changes from 1 August 2019
On 8 February 2019 the Swedish government circulated a draft proposal for comments that proposed an increase in the Chemical Tax from 1 August 2019. According to the draft proposal, the white goods tax rate would be increased to 11 SEK per kg and the rate for other electronical products would be raised to 160 SEK per kg. The maximum tax per product would be raised to 440 SEK. The rules regarding the tax reduction are not proposed to be changed.
Chemical Tax on clothes and shoes in the future?
According to a committee directive, the Swedish Government wants an investigation on whether clothes and shoes should also be covered by the Chemical Tax. The special investigator should work closely with the Swedish Environmental Protection Agency, the Swedish Tax Agency and the Swedish Chemicals Agency when looking at the possibilities of extending the tax to also include dangerous chemicals in clothes and shoes.
The Chemical Tax was widely criticized when first implemented, with concerns surrounding the potential distortion of competition between Swedish and foreign suppliers and increased prices for consumers. Despite the critical voices, the Swedish Government appears committed to expanding the scope of the Chemical Tax as one of the means of shifting the overall tax burden towards “green taxes”. In our view, it is therefore highly unlikely that the Chemical Tax will disappear in the near future.
If the Chemical Tax is expanded to also include clothes and shoes it will impact a wide range of companies. If and when such an expansion would take place is unclear. The Swedish Minister of Finance, Magdalena Andersson, has signaled that the government will continue to use financial tools to address environmental concerns and that the government wants a tax on dangerous chemicals in clothes and shoes.
KPMG receive many questions from our clients on how and when the Chemical Tax should be reported, an area in which there have been recent developments with the new option to register as a registered receiver (“registrerad mottagare”). Other questions include how to utilize the associated tax reduction to reduce costs.
Please do not hesitate to contact KPMG if you are interested in receiving more information about the Swedish Chemical Tax.
+46 8 723 97 82
Josefin Fornander Bertlin
+46 8 723 94 96