Sweden’s tax authorities are pressing ahead with efforts to recover input VAT from data center operators in the country’s north, arguing that part of the activity carried out at some sites was crypto mining rather than taxable computing services. The distinction matters because, under Swedish tax guidance, proof-of-work mining and certain related fees fall outside the VAT system, which can block deductions for tax paid on equipment, power, and other costs.
The dispute has already resulted in appellate court losses for two Swedish units of HIVE Digital and proposed decisions against subsidiaries of Northern Data AG. Both companies have said their facilities delivered computing capacity, infrastructure, or related services to identifiable customers, while Swedish authorities have maintained that at least some of the underlying workloads should be treated as mining.
Why the VAT classification matters
At the center of the cases is a narrow but financially significant tax question: whether the facilities were supplying taxable services to customers or carrying out activity outside the scope of VAT. Swedish Tax Agency guidance says crypto mining does not amount to a service performed for payment because there is no identifiable counterparty to proof-of-work rewards. Similar reasoning can apply to some transaction-verification fees.
That classification affects more than revenue treatment. Businesses can generally recover input VAT on purchases used to make taxable supplies. If hardware, electricity, and other services are instead tied to activity outside the VAT system, deductions may be denied and previously refunded VAT may be reclaimed.
Northern Data faces proposals and a criminal probe
Northern Data’s Swedish tax exposure became public in 2025, when authorities searched related premises and arrested four people in a VAT fraud investigation. The company said its Swedish activities involved supplying infrastructure and services to third parties rather than conducting mining on its own account.
The Swedish Tax Agency proposed denying substantial input VAT claims at several Northern Data subsidiaries. Northern Data said it would challenge the proposals. According to disclosures cited in a prospectus tied to Rumble Inc.’s acquisition, the agency had not yet issued final assessments, and the company noted a provision for potential liabilities without recognizing an outflow as probable.
HIVE loses in appellate courts
HIVE Digital’s Swedish Bikupa Datacenter subsidiaries were issued decisions denying input-VAT recovery and requiring repayment of refunds. HIVE appealed, arguing that the decisions misapplied the law and failed to reflect the technical structure of its hashrate-services business.
Those arguments did not succeed in the lower stages of the process. Both the Administrative Court and the Court of Appeal ruled against HIVE. In July 2026, the company sought permission to appeal to the Supreme Administrative Court, though it described the odds of review being granted as low.
HIVE recorded a substantial provision covering disputed periods through June 2026. The company said the charge affected reported losses but did not trigger immediate cash payments. It has continued to contest the assessments and said it is also exploring EU-level and possible civil-law routes.
Tax pressure intersects with the move from mining to AI
The tax cases are unfolding as former crypto-heavy facilities in northern Sweden are being repositioned for AI, high-performance computing, and cloud services. HIVE tied its decision to phase down crypto mining computing in Sweden to the disputes and the surrounding enforcement environment. It has begun reducing ASIC-based computing at its Boden site while converting other locations for AI and HPC, with further conversions planned.
Northern Data’s shift in Sweden formed part of a wider strategic move from cryptocurrency mining toward AI cloud and data-center operations. In its case, the VAT investigation has been one factor shaping that transformation. The transition is awkward for the region, which had attracted data center investment with hydropower and favorable operating conditions, only to see earlier mining activity continue to generate appeals, assessments, and investigative scrutiny.
Broader tax backdrop and next steps
The VAT fight is separate from another tax dispute now drawing attention to Sweden’s enforcement approach. A case before the Court of Justice of the European Union challenges a Swedish rule requiring clients to withhold 30% of payments to certain foreign contractors. That matter does not involve crypto mining or input VAT, but it has highlighted how tax rules can create financing and administrative pressure before liability is finally settled.
For now, the next confirmed steps differ by company. HIVE is seeking leave to appeal to Sweden’s Supreme Administrative Court after its appellate losses. Northern Data, by contrast, was still facing proposed VAT decisions rather than finalized assessments in the latest cited disclosure, and has said it intends to contest them. Meanwhile, Sweden’s 2023 removal of a reduced electricity tax for data centers has added a broader policy shift affecting the economics of such facilities beyond crypto alone.
Source: news.bitcoin.com