HFD changed the legal situation – but will there really be a change in practice?

The advantage for affected companies is that, through HFD’s decision, there is an increased possibility to avoid the so-called locking effect of import VAT, i.e., that the party charged with import VAT does not have the right to deduct it, and thus the tax becomes a pure – and often very high – cost. With that said, however, HFD’s decision does not completely eliminate the risk of this locking effect in our opinion.

Customs clearly also prefers the legal situation as it was before this decision, i.e., that Swedish Customs should always be the tax authority for value-added tax in case of non-compliance. In an attempt to avoid HFD’s decision becoming applicable, Swedish Customs now regularly makes decisions to reject customs declarations that arrive in cases of non-compliance before Swedish Customs charges customs duties and value-added tax. This is because Swedish Customs believes that the declaration does not ‘exist’ and therefore does not need to be considered in accordance with HFD’s decision.

However, what is interesting in this context is that Swedish Customs still appears to rely on the information in the customs declaration for its decision on customs duties and value-added tax, i.e., Swedish Customs takes into account the content of the declaration in this regard but considers that it does not ‘exist’ when it comes to the assessment of whether the authority has the right to make a decision on value-added tax.

In our opinion, Swedish Customs has no grounds to reject incoming customs declarations in the manner currently done. We therefore have a very large number of cases where we challenge the Customs’ rejection decisions in order to have the issue adjudicated and decided in court, but as far as we know, no administrative court has yet decided the issue. This uncertainty also means that there is a very large number of decisions on charged value-added tax that it is unclear whether they will stand or not.

So, the short answer to the initial question is that we will have to wait and see. We are actively following the issue and are happy to answer your questions or concerns regarding the Customs’ rejection decisions.

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