Tradera, Sweden's largest online auction site (owned by eBay).
The couple argued that they were not obliged to pay VAT on the sale counterfeit goods in Sweden since it was illegal to sell them. After all, it was wrong for the Swedish state to profit from illegal transactions [There's a problem here: either the State profits from the transactions by taxing them or the infringers profit from them by entering into VAT-free transactions]. The Administrative Court disagreed: under Swedish case law, income derived from criminal activity must be taxable if it is part of a legal activity. Apart from their illegal activities, the couple also generated a profit from the trade of legal goods. VAT was thus payable on all income derived from the sales. This decision has since been affirmed on appeal.
Source: article, "Online sales of counterfeit goods held to be subject to VAT", by Tom Kronhöffer and Linda Petersson (MAQS Law Firm, Stockholm) for World Trademark Review.
So is it true my understanding that in sweden you could keep your illegal earnings minus the VAT ? The couple are lucky the government didn't took away all of the sales figure.
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