ARTICLE · 23 OCTOBER 2026

No VAT On Compensation Under Development Agreements

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A Swedish court has ruled on whether municipalities must charge VAT when developers reimburse costs for public infrastructure under development agreements. The case examines the legal relationship between...

SwedenTax

Ebba Perman Borg

Victor Elovsson

On 11 June 2026, the Swedish Supreme Administrative Court (“HFD”) ruled, in case HFD 2026 ref. 33, that compensation received by the municipality of Gothenburg under a development agreement (Sw: “exploateringsavtal”) did not constitute consideration for a service supplied by the municipality and is therefore not subject to VAT. The judgment can be read here.

Under the Swedish Planning and Building Act (2010:900), a municipality may enter into a development agreement with a developer concerning the implementation of a detailed development plan. Such an agreement may oblige the developer to undertake or finance measures necessary for the plan's implementation, such as streets, public places and water and sewerage installations.

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