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Sweden VAT Non-Fungible Tokens digital artwork

Digital artwork and NFT a single VAT digital services supply

The Swedish Tax Agency, Skatteverket, has provided guidance at the end of last month on the Value Added Tax liabilities for digital artwork and linked Non-Fungible Token (NFT). In short, it concludes they represent a single digital services supply liable to standard rate VAT.

The Agency reviews the supply of artwork created exclusively online, and the support NFT held on blockchain technologies which provides a receipt of ownership of the digital artwork. The Agency concluded that both have no value as separate supplies; but rely on each other in the eyes of the parties and so should be considered as one supply for VAT purposes.

This follows the EU VAT Committee NFT review work.

VATCalc’s tax engine, VAT Calculator, can provide an instant live calculation tool for your NFT sales. And our VAT Auditor tool can help you validate the VAT you have been charged by your suppliers on their invoices.

NFT’s on blockchain create new digital supply for VAT

An NFT is a record on a blockchain of who owns a particular asset. The NFT thus represents a certain asset and at the same time indicates to which account on the blockchain the asset belongs. The owner of the asset is the person who disposes of that account.

A blockchain is a form of decentralized database that is stored on computers in a network. An example of such a network is Ethereum. The fact that NFTs are non-fungible means that they are not interchangeable, but each NFT is unique. An NFT is transferable. Even a transfer of an NFT is registered on the blockchain. An NFT can represent both tangible and intangible assets. Ownership of a digital work is an example of an intangible asset. The copyright of a digital work is another example.

An NFT with a digital work linked to the NFT consists of different parts

The Swedish Tax Agency considers that there are normally two different parts when an NFT with a digital work linked to the NFT is provided. The first part is the ownership of the digital work linked to the NFT. The second part is the NFT itself, i.e. the registration on the blockchain.

The Tax Agency considers that the combination of the ownership of the digital work and the possibility of being able to verify the ownership through the NFT creates a new service in the form of an electronic service.

What are Non-Fungible Tokens?

There are no EU legal definitions of NFT’s. They are digital tokens of ownership or rights to access for a digital asset. In this sense, they are unique – hence non-fungible or interchangeable for another token. This could include: digital version of artwork; access to live events.

NFT’s are held on distributed ledgers, internet-connected nodes (e.g. connected computers). They are similar to cryptocurrencies, which are exchangeable (‘fungible’).

NFT’s constitute two parts:

  1. Identification code related to the token
  2. Metadata relating to the digital or physical asset – a name, description and, if appropriate, URL

They are created, or ‘minted’, which typically attracts a fee (‘gas fee’) for computation and storage. They are then typically held on-chain, on a digital ledger.  A popular, cheaper version is off-chain.


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