A Christmas Story: Reindeer, Taxation, and (Of Course) a Happy Ending

Sweden has long winters that offer wonderful sights. They celebrate Christmas and have a lot of reindeer, especially in the north of the country, where the Sámi people live. The Sámi are an indigenous people living in Sápmi (Lapland), an area covering northern parts of Sweden, Norway, Finland, and the Murmansk Oblast region of Russia. They live traditional lives and have their own language. Their main source of income is derived from reindeer herding, which has always been central to Sámi cultural identity. But the practice has grown increasingly challenging in Sweden because of land exploitation, the expansion of the mining industry (shrinking herding lands), and Swedish government discrimination and intolerance.¹

The story of Ida-Maria Svonni and her dog, Rikke,² is seemingly small and irrelevant on the larger scale of global human affairs, but its smallness also enables us to easily relate to the heartfelt frustration with stone-deaf tax authorities. The story of Rikke, a happy dog doing his job, and his owner is bigger when placed in the context of a cultural clash and the struggle to continue the practice of Sámi culture in today’s Sweden.

In 2017 Svonni bought a dog, a Lapphund, which is traditionally used for herding (especially driving) and guarding reindeer. The dogs are rumored to be the favorite canine of Santa himself. When she bought the dog, Svonni was charged SEK 3,000 (about $276) VAT by the seller, which she wanted to recover, starting a two-year-long path of frustrating appeals to the tax authorities and courts.

VAT is levied at each stage of the supply chain, regardless of whether the buyer is a business or a consumer. However, because VAT is aimed at taxing private consumption expenditure, businesses receive relief from the tax by allowing them credit for VAT paid on purchases (inputs), generally exercised by deducting the input VAT from VAT collected on sales (output VAT). The tax moves forward through the supply chain as debits and credits until it reaches the retail stage, where it generates revenue for the Treasury.

Reindeer herding is a business, and each reindeer owner is considered a self-employed person, so Svonni deducted the VAT charged to her for the dog. But the tax agency of Luleå refused to accept the deduction, arguing that it was “unlikely that the dog was bought for the business.” Svonni expressed her astonishment that the tax officials seemed unable to understand that Rikke is a herding tool and not a pet.

She filed an administrative appeal for reconsideration (handled by the tax agency in Kiruna) but to no avail. Her claim that the dog is essential for reindeer herding “does not change our evaluation. In modern reindeer care, motor vehicles, such as snowmobiles, play a major part.” The request is denied, and the earlier decision is affirmed.

If Friedrich Nietzsche³ is correct that “the world was conquered through the understanding of dogs,” the tax authorities just demonstrated that they know little of dogs and their use, or of the traditional way of life of the Sámi people. Neither do the agencies demonstrate proper reasoning or try to establish the facts of the case. It may be true that the use of snowmobiles is important in modern reindeer herding, but that is irrelevant. Crucial is how Svonni manages her herd of reindeer and whether she uses Rikke in this context. You cannot simply extrapolate from a general finding and make assumptions about the specific situation of a single taxpayer. For Svonni, the response from the authorities was dismissive and condescending. It confirmed the government’s disregard for Sámi culture and offered another example of the widening rift between her people and the cultural majority in her country.

Nietzsche in the same book called his pain (he suffered from migraines and neurological illnesses) a dog. Treating his pain as if it were a dog to be trained and disciplined enabled him to control it and to conquer it. Indeed, we learn better from pain than from happiness how to direct our lives. If we understand our pain and train it like a dog, we can overcome it, master it, and conquer our world.

In the end, Ida-Maria Svonni overcame the bureaucracy. It was a simple case and should not have taken two years and two appeal procedures with tax agencies, followed by two judiciary proceedings, to finally find justice. After her claim was rejected by the Luleå Administrative Court, Svonni remained true to her belief in the righteousness of her refund claim, “not for the money but to pave the way for coming generations,” and approached the Sundsvall Court of Appeals, which simply (indeed) found that she is using Rikke for herding and thus for business purposes and was entitled to the tax deduction.

Merry Christmas to y’all.