Sweden: Proposed expansion of chemical tax regarding clothes and shoes

Sweden: Proposed expansion of chemical tax

A proposal would aim to reduce the use of ”dangerous chemicals” in the production of clothes and shoes by expanding application of the chemical tax, according to a report presented to the government.

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The measures are proposed to have a 1 April 2020 effective date but would not be imposed until 1 July 2021.

  • The report proposes that the chemical tax measures be used to reduce the use of dangerous chemicals during the production of clothes and shoes, and the tax would apply for all clothes and shoes that are produced or imported into Sweden from abroad, with the exception of certain protective clothing and toys.
  • The tax rate generally would be 40 SEK/kg but with a possible reduction of up to 95% of the tax depending on the chemical content. There could be an additional tax at a rate of 19 SEK/kg if the product includes rubber material, polyvinyl chloride or polyurethane, and another additional tax at a rate of 19 SEK/kg if the product is made ”weatherproof.”
  • The chemical tax liability would be due when the clothes or shoes are produced, imported or brought into Sweden from another EU country. In some sitautions, intermediary companies could be liable for the tax if the total value of intermediates sales to Sweden is above 100,000 SEK during the present or previous tax year.
  • According to report, it would be possible to register as a warehouser (lagerhållare) in the same manner regarding the chemical tax imposed on electronic and ”white goods.”


KPMG observation

Clothes and shoes that do not contain dangerous chemicals might be within the scope of the chemical tax, but with a possible dedution being made available. Still, taxpayers would want to consider what would be the compliance cost if the chemcial tax were to be expanded. There is also a risk for double taxation. For instance, a newly introduced tax on waste incineration could be due on clothes and shoes that were already subject to the chemical tax.
 

For more information, contact a KPMG tax professional in Sweden:

Joachim Broberg | +46 8 723 97 82 | joachim.broberg@kpmg.se

Josefin Knutsson | +46 8 723 94 96 | josefin.knutsson@kpmg.se
 

Read an April 2020 report prepared by the KPMG member firm in Sweden

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