All organizations in Sweden which have no, or only partial, right to deduct VAT may be entitled to repayment of VAT charged on postal services by the Swedish state in violation of EU law. The state, however, disputes such claims. Kapatens therefore organizes, through the law firm Time Danowsky, a large claim to be brought before Swedish courts against the state by purchasing individual claims from the organizations which have suffered loss. You may thus receive compensation, without cost or risk. Kapatens acts as sole plaintiff in the dispute and pays all legal costs regardless of the outcome of the case.
Under the VAT Directive, all Member States shall ensure that universal postal services are exempt from VAT. In 2006, the European Commission notified Sweden that it was in breach of the EU Treaty and the VAT Directive by charging VAT on such postal services. Although the state was informed by the European Commission that it was not entitled to charge such VAT, the state did not make any changes to the Swedish tax legislation in this regard and buyers of Swedish postal services were thus still forced to pay VAT for services which are to be exempt from VAT. A 2015 judgment by the European Court of Justice established that Sweden acted in violation of EU law. Thereafter, Sweden did change the tax legislation so that some, but not all, postal services were exempt from VAT. Several experts consider the legislative changes to be insufficient.
The judgment of the European Court of Justice thus made it clear that, since the entry into the EU, Sweden had charged VAT on postal services in violation of EU law. This means, in our opinion, that all companies and organizations that do not have the right, or only partial right, to deduct VAT and which have purchased such postal services are entitled to a refund or reimbursement for the loss caused to them as a result of the breach of the Treaty.
In an ongoing case before the Stockholm District Court between Nordea and the state, in which Nordea has sought compensation amounting to approximately SEK 500 million on the above-mentioned grounds, the state has denied any obligation to pay. The state will therefore contest any claims made for compensation due to wrongfully charged postal-VAT, including the claim that your organization may have.
The ongoing case is very complex and raises difficult legal issues. Regardless of the outcome in the District Court, any judgment can be expected to be appealed to the Court of Appeal. It may be assumed that the case is of such a nature that leave to appeal also to the Swedish Supreme Court may be granted. Your organization’s claims, as brought by Kapatens against the state, will not be finally tried until the case between Nordea and the state is settled, which will take several years.
Kapatens is an investment company that specializes in dispute financing and which, through external law firms, helps companies and organizations to protect their legal rights. Kapatens now offers to organize and finance legal actions against the state to seek compensation for the wrongfully charged VAT. This project will be carried out by Kapatens purchasing the claims from the affected organizations and then pursue the claims in Kapatens’ own name against the state. The dispute on Kapatens’ side will be led and handled by the law firm Time Danowsky, under the supervision of Peter Danowsky, one of Sweden’s most experienced dispute lawyers. Time Danowsky is also representing Nordea in the ongoing proceedings (see above). The claim will be pursued without your organization being a party to the proceeding and at no cost or risk for you.
Kapatens bears all external costs associated with determining the amount of compensation payable and the pursuing of the claim, i.e. all lawyers’ fees and fees to other experts who will be engaged.
Kapatens buys your organization’s claim against the state for a price amounting to 70 percent of the amount that the state is ordered by the court to pay (or which the state agrees to pay through settlement). Kapaten’s compensation thus amounts to 30 percent of the amount paid by the state to Kapatens. This means that if the court finds that your organization paid incorrect postal VAT of e.g. SEK 10 million, Kapatens pays you SEK 7 million. Thus, Kapatens will first receive payment from the state and deduct the compensation it is entitled to (30 percent), before paying the remaining part (70 percent) to your organization. You will be paid no later than 30 days after Kapatens has received payment from the state.
Yes, if the organization has purchased postal services during the last ten-year period and has no or only partial right to deduct VAT.
Kapatens is a Swedish company that organizes and/or finances group claims and other types of legal proceedings. We help a wide variety of companies and organizations to exercise their legal rights, often against financially strong opposite parties.
We believe in the importance of access-to-justice and that any person or organization that has suffered loss shall be able to seek remedy. This applies both if the party who has caused damage is a large company that has acted in breach of commercial agreements or if damage has been caused by a state acting in violation of EU law. We help organizations seek and get compensation to which they are, in our opinion, entitled to under law. Most of the amount paid by the state in the case of a successful claim will be transferred to the original claim holding organizations. Kapatens retains a part to cover, among other things, legal fees and administrative costs, and to provide our investors with a return on their invested capital.
Kapatens is owned by the company’s management and a few so-called family offices. In our fund we also have a Swiss investor. All investors are strong advocates of access-to-justice and that anyone who has suffered loss should be able to have their case heard in court, which Kapatens makes possible. Since Kapatens’ activities mainly concern large legal disputes, which are not infrequently marked by conflicts and strong disagreements, we do not, in order to avoid attempts of undue influence, specify who the investors in Kapatens are.
Kapatens’ compensation amounts to 30 percent of the outcome of a successful judgment or settlement. That compensation shall cover all fees for lawyers and other experts, as well as other costs of the process, such as insurance for adverse costs in the event of loss and the cost of administrative measures. We have already had significant costs in preparing this comprehensive project. The amount of these costs does not affect the organizations that sell their claims to Kapatens – they receive 70 percent of the amount paid out by the state. The excess amount (30 percent) is allocated to Kapatens to provide returns to the company’s investors.
No. If Kapatens claim is successful, we will keep part of the outcome (30 percent) and pay the rest (70 percent) to the organization. Thus, your organization does not have to pay us anything directly, irrespective of the outcome of the dispute.
Kapatens pays your organization 70 percent of what Kapatens receives in case of a favorable outcome in court or through settlement. We thus retain 30 percent of the outcome to cover our costs and get a return on our investment. Our costs do not affect the organization’s compensation.
The organization is paid if and when we have succeeded on the claim. Kapatens is obliged to make payment to the organization no later than 30 days after Kapatens has received payment from the state and received account details for payment from your organization.
Yes, your organization can pursue the claim itself instead, in which case it should not enter into an agreement with us. Our claim does not prevent anyone from pursuing and paying for their own legal action. However, in order to avoid misunderstandings, we would like to point out that if the organization itself files an action directly against the state, the organization bears the costs of such a claim and is exposed to the risk of paying all the state’s legal costs in the event of a loss of such case .
Yes, assignment of disputed claims in return for conditional compensation depending on the outcome of proceedings is allowed in Sweden and occurs abroad as well. Law firms are prevented from acting in this way, but we are not a law firm.
As soon as possible. Since the claims are likely to be time-barred after 10 years from the date of payment of the wrongfully charged VAT, compensation may mainly be collected for payments made no later than 10 years ago, i.e. from 2011 (unless your organization has already filed a notice with the sate, as some organizations have done).
There is reason to assume that interest may run on the claim only after the amount of wrongfully charged VAT on your organization’s behalf has been fully accounted for (i.e. that the organization indicates how much incorrect VAT it has paid and how the organization has calculated such amount) or that a formal complaint has been filed with the courts. Kapatens has engaged a special VAT expert to assist the organizations with such calculations.
For the above mentioned reasons, it is important that a well-founded claim can be made as soon as possible, so that the right to compensation is not time-barred to a greater extent than it has already been and to ensure that interest can start to accrue on the claim as soon as possible.