Until now, Swedish arbitrators have been obliged to charge a value added tax (VAT) on their services to foreign companies based in the EU which is not accounted for either in the fee schedule of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) or in the advance on costs paid by the parties. This, in turn, exposed Swedish arbitrators to a potential VAT liability.

Following an EC directive, the Swedish government has proposed certain changes to the VAT Act and the Tax Payment Act in a governmental Bill of 15 October 2009. The changes imply that the VAT on arbitrators' fees will be accounted for by the parties according to a so-called reverse charge principle. Thus, an arbitrator will not charge VAT on its services if parties in arbitration are legal entities established within the EU but will need to report the value of the services provided to the Swedish tax authorities. As a consequence of the new rules, arbitrators will also need to collect information concerning the VAT numbers of parties. Arbitrators' services to parties established outside the EU are, as before, exempt from VAT.

Swedish parliament is expected to adopt the proposal in early December. The rules shall enter into force on 1 January 2010.