Accounting for leasehold – VAT, costs, and examples 2026
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Facts checked October 2, 2026.
How a lease is accounted for depends on the business, the agreement, and the type of tenure. A standard lease fee is normally recognized as an expense over the period to which it relates, but VAT treatment must not be generalized.
The basic principle of accounting
If the company pays a lease fee for the use of land, the fee is normally an operating expense. If a larger amount is paid in advance, accruals may be necessary so that the expense is allocated to the correct accounting period.
VAT – general rule and important exceptions
The granting of a lease and other rights to real property is, as a general rule, exempt from VAT. However, the VAT Act contains important exceptions. For example, rights to agricultural leases, hunting, fishing, and grazing are explicitly taxable supplies.
| Example | VAT assessment |
|---|---|
| Standard granting of land covered by the real estate exemption | Normally no VAT. |
| Agricultural lease | Taxable according to the VAT Act's exception to the exemption. |
| Hunting, fishing, or grazing | Tax liability may apply explicitly. |
Simple accounting example
If a company pays SEK 12,000 in a VAT-exempt lease fee for one year, the expense is recognized over the year. If the entire amount is paid in advance before the start of the financial year, a prepaid expense may need to be recognized and then expensed on an ongoing basis.
If the lease is subject to VAT, input VAT is also recorded, provided the business has a right of deduction. The exact account depends on the company's chart of accounts and accounting setup.
Check before you account
- What form of lease and tenure applies?
- Is the invoice with or without VAT?
- Does the payment cover multiple periods?
- Are there separate remunerations for other services or rights?
Also read the main guide on lease agreements.
For the legal classification behind the invoice, see also the Land Code's rules on leases.
