80 Pirate IPTV Sellers Face $3.5m Bill After Failing to Charge Customers VAT

In recent years, rightsholders in Sweden have reported significantly increased consumption of pirate IPTV services, and law enforcement’s inability to tackle the problem due to a lack of funding.

Complaints like these are nothing new for rightsholders or indeed anyone else in Europe; when resources are already stretched, it’s inevitable that some crimes will be considered less of a priority than others.

But while there’s insufficient funding for police to tackle pirate IPTV suppliers in Sweden, resources are available to investigate those committing the greatest crime of all; generating money by criminal means but failing to surrender the government’s share of the spoils.

Skatteverket Investigates

The Swedish Tax Agency (Skatteverket) is responsible for collecting personal income tax from citizens, and from companies via corporate tax, VAT, and excise tax. Collecting taxes is critical to the functioning of any country since without revenue, public services like policing may find themselves without appropriate funding, leaving it up to the tax agency to weed out tax evaders, pirate IPTV sellers included.

“During 2021 to 2023, the Swedish Tax Agency has conducted investigations against those who sell illegal IPTV to consumers,” a Skatteverket report on pirate IPTV services reveals.

“To identify sellers, the Swedish Tax Agency has made test purchases and also searched for sellers on the internet. The result was about 200 identified retailers, of which 97 were selected for in-depth investigation.”

Tax Evading Resellers Pursued By Government

The Swedish Tax Agency says that to learn more about the IPTV ecosystem, it collaborated with anti-piracy groups Nordic Content Protection and Rights Alliance, which represent the rights of broadcasters and film and TV companies respectively.

Since distributing content is illegal without first obtaining the rights, most popular unlicensed IPTV services are illegal by default. Skatteverket says that it’s therefore unlikely that distributors and resellers of pirate services register or declare their business activities.

In this investigation, the tax agency focused on resellers, most of whom have shifted away from services such as PayPal in recent years in favor of cryptocurrencies, predominantly bitcoin.

“The Swedish Tax Agency notes that the consumer only needs to swipe money to a crypto exchange, which then ensures that the seller receives their bitcoin. For the consumer, who thus does not need to familiarize themselves with how cryptocurrency works, this makes it extremely easy,” the agency reports.

Tax Agency Has Crypto Experience

“An important success factor for the investigation is that the Swedish Tax Agency developed expertise in tracing cryptocurrencies at an early stage. Several sellers have been identified thanks to the Swedish Tax Agency’s work with cryptocurrencies,” Skatteverket notes in the report.

The agency says that in order for IPTV sellers to be able to use their profits in everyday life, cryptocurrencies need to be turned into regular currency, such as Swedish kronor, euros or dollars. This often requires sellers to have at least one foreign bank account but today, opening an overseas account is easy.

“When the Swedish Tax Agency discovers that payments for illegal IPTV go to foreign bank accounts, a so-called executive order is required. This means that the Swedish Tax Agency can request the information via other countries’ tax authorities. Such warrants have been a common feature of the investigations. They allow the tax authorities to determine the income of the dealer.”

Unrecorded revenue and unrecorded VAT

The Tax Agency reports that the vast majority of its investigations show that IPTV sellers fail to declare their income, and they don’t account for output VAT on IPTV sales either, currently set at 25% in Sweden.

By October 2023, Skatteverket says it had completed 80 in-depth IPTV seller investigations. In 73 of those investigations the agency found unrecorded income and unrecorded output VAT. As a result, the individuals involved had their tax obligations adjusted accordingly.

“In total, the amount to be paid in tax is over SEK 37,000,000 [$3.53 million]. 17 investigations are still ongoing – the amount is highly likely to increase by several million kronor,” Skatteverket notes.

Bigger Money Being Made Higher Up The Chain

The Swedish Tax Agency says that at the bottom level, each reseller generates between SEK 5,000 [$4,770] and SEK 1,000,000 [$95,500] but above them significantly higher revenues have been observed.

“In the largest investigation to date, illegal IPTV was sold for over SEK 30 million [$2.86 million],” the agency notes, adding that other crypto wallets linked to illegal IPTV sales show several hundred million kronor.

For perspective, one hundred million kronor is currently worth around $9.55m.

The full report is available here