Reverse charge

A recent case in the European Court of Justice asked whether a taxable person in one EU Member State had to operate the reverse charge i.e. charge itself Swedish VAT on certain services received from overseas but which were used by the Swedish recipient for non-business purposes.

The facts in brief were that a foundation in Sweden carried out mainly non-economic activities such as the provision of advice.

It also supplied services to businesses wanting to outsource; this accounted for 5% of its income and it was VAT registered in this respect.

It wanted to buy consultancy services from a Danish provider to be used solely for its non-economic activities. The foundation said it was not a trader when buying activities falling outside the scope of VAT.

A question was referred to the European Court of Justice as to whether for the purposes of article...