Overruling earlier precedent, the Swedish Supreme Administrative Court decided, in a ruling from 4 February 2021, that the supply of connectivity, capacity and space in a data center should not be exempt from VAT liability as letting of immovable property. The ruling aligns Swedish law with the reasoning of the European Court of Justice.
Interxion Sverige AB applied for an advance ruling from the Swedish Board for Advance Tax Rulings to find out if the supply should be treated as the VAT exempt letting of immovable property as a previous ruling stated.
The Supreme Administrative Court referred to a recent ruling from the CJEU, C-215/19 (“A Oy”). In this case, the CJEU ruled that data center services, where the service provider places cabinets in a data center at the disposal of its customers for the purpose of installing their servers in them, do not constitute VAT-exempt letting of immovable property. In the A Oy case, the service provider also provided the customers with goods and ancillary services, such as electricity and various services to ensure that the servers were used in optimal conditions.
Based on the ruling in A Oy, the Supreme Administrative Court stated that Interxion supplies highly specialized co-location services and that its customers should be considered to mainly demand access to connectivity, while the exclusive right to dispose of a certain space in the data center should be considered to be of secondary importance. The court ruled that the entire supply should be subject to VAT liability.