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Swedish VAT ruling on cost-sharing affects non-profits across the EU
The Swedish Supreme Administrative Court (HFD) has ruled that non-profit organisations may apply cost-sharing arrangements for services such as accounting, payroll, HR and IT without VAT. The judgment provides long‑awaited clarity on a matter that has caused uncertainty for many organisations across Europe.
In its decision of 11 May 2026, the Court confirms that the VAT exemption for cost‑sharing arrangements may also apply to general administrative services, provided they directly support activities carried out in the public interest. The services do not need to be specifically tailored to the VAT‑exempt activity in order to fall within the exemption.
The ruling follows recent case law from the Court of Justice of the European Union, which emphasises that Member States must not interpret the exemption in a way that deprives it of its intended effect. As such, the Swedish court’s assessment is of broader relevance and offers important guidance for organisations throughout the EU that rely on shared internal functions.
The case was brought by a Swedish non‑profit umbrella organisation and has been pursued for many years, with support from advisors at Grant Thornton and PwC. For the non‑profit sector, the judgment marks a significant step forward, opening the door to more efficient cooperation, reduced administrative burden and lower costs.
While some questions remain – including how the exemption should be applied where organisations also carry out taxable activities – the ruling provides a clear legal basis for reviewing existing structures and exploring new ways of cost-sharing without VAT.
For organisations seeking to understand how the ruling affects their own structures, or how to apply the VAT exemption in practice, please contact Lena Westfahl, VAT expert at Grant Thornton Sweden, for tailored advice.
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