This past summer, the European Commission opened an infringement proceeding against Sweden for its alleged failure of its national taxation law to comply with the freedom to provide and receive services.
National tax law in Sweden provides that companies paying for work carried out by contractors established in other EU Member States or EEA countries are obliged to withhold a preliminary income tax at a rate of 30% on the relevant remunerations unless the those contractors have been approved by the Swedish tax authority, Skatteverket, for preliminary income tax purposes (commonly termed as ‘F-tax approval’)
Given that many contractors established elsewhere in the EU (and the EEA) would not have done so, such an obligation imposed on them (receiving less remuneration at first), and on Swedish-domiciled firms paying them for their service (to withhold preliminary income tax) infringe the free movement of services.
In light of the Commission’s view, it has requested that Sweden amend its national taxation law to bring it into compliance with the freedom to provide and receive services under Article 56 TFEU and Article 36 EEA, by removing or amending such a withholding.
The stage of the Commission’s procedure is that it has sent a letter of normal notice to Sweden under Article 258 TFEU, upon which Sweden’s response, it will decide to take the next steps.
The case can be followed on the Commission’s infringement database under INFR(2023)4007, accessible here.