Basics of Value Added Tax, Part 1

Part I Contents

What is value added tax (VAT)?

Activities subject to and exempt from VAT

Requesting entry or applying for entry in the VAT register

Reverse charge mechanism for VAT

VAT relief for small businesses

Tax periods for VAT

Filing and paying VAT

Rates of VAT

Invoicing details

What is value added tax (VAT)?

Value added tax is a self-assessed tax

– the company itself calculates and pays the tax to the Finnish Tax Administration

VAT is a consumption tax

– VAT is a consumption tax that the seller adds to the price of the goods or services

– VAT is intended to be paid by the consumer

VAT is an indirect tax

– The seller transfers the VAT to the product’s selling price

– repeated taxation is prevented by granting companies the right to deduct VAT

Activities subject to VAT

VAT is paid to the State in accordance with section 1 of the Value Added

Tax Act:1. on the sales of goods and services in the conduct of business taking place in Finland,

2. on the importation of goods taking place in Finland,

3. on the intra-Community acquisition of goods taking place in Finland

As a rule, sales are subject to VAT, and sales being tax-free is an

exception. A sale is tax-free only if it has been specifically designated as

such by law.

The limit for a VAT-exempt small-scale business is EUR 10,000.

The limit for small-scale business does not apply to parties that are

already liable to pay VAT due to other activities.

Activities subject to VAT

The activity must be carried out in the course of business conducted against

payment.

– The payment is the price based on an agreement between the seller and the buyer.

Activity in the conduct of business is

– carried out for gain

– continuous or at least repeated

– focused outwards, independent and includes a normal entrepreneurial risk

– takes place in a competitive environment

– regardless of the purpose and results of the activity.

Activities exempt from VAT

Certain activities specifically listed in the Value Added Tax Act are exempt from

VAT. Examples of such activities include:

– selling and leasing of real estate and flats

– healthcare, medical care and social services

– education and training services specified in the VAT Act

– financial and insurance services

– compensation for copyright and performances specified separately in the Value Added Tax Act

– general postal services.

Sales exempt from VAT are not reported with the tax return for self-assessed taxes, and the

related purchases are not deductible

Activities exempt from VAT

Copyrights

VAT is not paid on certain types of compensation based on copyright or the fees of performing

artists or other public performers.

According to the Copyright Act (404/1961), the party that has created a literary or artistic work

has the copyright to that work.

Among other things, works protected by copyright include literary works, dramatic or

cinematographic works, photographic works or other works of fine art, works of architecture,

artistic handicrafts or industrial art, maps, descriptive drawings, graphically executed works and

computer programs or other works. The Copyright Act also provides for the protection of

photographs.

The threshold of originality in accordance with the Copyright Act must be met in order for the

sale to be tax-free.

Example of a transfer of copyright

Artist agency A transferred to Company C the right to use the composition with

words and music by musician B in the advertising campaign of Company C for

compensation. Earlier, musician B had already transferred the right to hand over

said right to a third party to artist agency A.

The right to use the composition transferred by artist agency A to Company C was

a tax-free transfer in accordance with section 45 of the Value Added Tax Act.

Transfer of a copyright subject to VAT

The transfer of rights specified as subject to tax in the Value Added Tax Act is

often related to a commercial purpose.

The following have been specified as subject to tax in the Value Added Tax Act:

– photographs

– advertising works

– maps or the map making material

– automatic data processing systems

– rights related to computer programs

– the right to present films, video programmes, or other similar programmes.

Requesting entry in the VAT register

Registration is mandatory if the turnover of a financial year of 12 months

exceeds EUR 10,000.

If the financial year is shorter or longer than 12 months, the turnover is

converted to correspond to the turnover for 12 months.

The liability to pay VAT starts when

• The activities begin

• The party starts to purchase goods/services for the business

• If the turnover exceeds the limit for small business operations (EUR 10,000),

retroactive entry in the VAT register from the start of the financial year.

Requesting entry in the VAT register

Example:

The entrepreneur starts the business on 1 November 2019, and the first financial year ends on

31 December 2019.

The entrepreneur estimates that the turnover from November to December is roughly EUR

5,000.

Because the length of the financial year is two months, the turnover is converted to correspond

to a turnover of 12 months when assessing whether the limit of small business operation is

exceeded:

EUR 5,000 x 12 = EUR 30,000.

2

The turnover converted to 12 months is EUR 30,000.

The entrepreneur must request entry in the VAT register starting already from the beginning of

the first financial year.

Applying for entry in the VAT register

Application for entry in the VAT register is open to

– small-scale business operators (turnover EUR 10,000 at maximum)

– non-profit entities promoting the public good, religious communities

– foreign companies

– parties transferring the right to use a real estate unit, if the requirements for application are

met

– performing artists, other public performers and athletes as well as parties selling their

performances, with regard to the performance fees and compensation received from the sale

of performances transferred to the organiser of the event.

Application for entry in the VAT register is not possible with regard to compensations related to copyright or the

part of performance fees or other compensation processed as earned income in income taxation.

Application is always voluntary.

Reverse charge mechanism for VAT

As a rule, in value added taxation the party liable to pay VAT is the seller of goods or services.

When the VAT reverse charge is applied, the party liable to pay tax is the buyer of the goods or

services who pays the tax on behalf of the seller.

The reverse charge mechanism for VAT applies to certain situations in trade between two

entrepreneurs, such as in

– intra-Community trade

– construction services and related leasing of workforce

– certain situations involving the sale of metal scrap and metal waste

– sales by a foreign entrepreneur in Finland

The VAT return has separate sections regarding VAT reverse charge for both the seller and the

buyer.

VAT relief for small businesses

Entrepreneurs and companies registered in the VAT register with a turnover of less than EUR

30,000 per financial year (12 months) can receive VAT relief for small businesses.

– the information on VAT relief is filed in a VAT return

– if the turnover does not exceed EUR 10,000, the VAT relief covers all VAT for the entire financial year

– VAT relief is paid at a decreasing level when the turnover is EUR 10,000 or more but less than EUR

30,000.

VAT relief is not available:

– if the VAT for the financial year is negative, meaning that the amount of tax included in the purchases

during the financial year exceeds the tax paid on sales.

VAT relief for small businesses

Example 1:

The financial year of the entrepreneur is 1 January – 31 December 2019 and the tax period of VAT is one month. The

entrepreneur has EUR 10,500 in domestic sales subject to VAT (excluding the share of VAT). The VAT (24%) for these

sales is EUR 2,520. The entrepreneur has also had deductible purchases in Finland, and their total VAT during the financial

year is EUR 150.

The turnover that qualifies for VAT relief is EUR 10,500.

The VAT that qualifies for VAT relief is EUR 2,370, the difference between the VAT paid on domestic sales (EUR 2,520) and

the VAT deducted from the financial year (EUR 150).

The VAT relief is calculated as follows:

2,370 - (10,500 – 10,000) x 2,370 = EUR 2,310.75

20,000

The amount of VAT relief received by the entrepreneur is EUR 2,310.75.

The entrepreneur reports the VAT relief information in the VAT return filed for December 2019.

VAT relief for small businesses

Example 2:

The financial year of the entrepreneur is 1 January – 31 December 2019. The entrepreneur has EUR 12,000 in domestic

sales subject to VAT (excluding the share of VAT). The VAT (24%) for these sales is EUR 2,880. During the financial year,

the entrepreneur has made intra-Community acquisitions, on which the entrepreneur must pay EUR 1,500 as VAT. The

entrepreneur can deduct the VAT for the intra-Community acquisitions. The entrepreneur has also made deductible

purchases in Finland. The total VAT of these purchases during the financial year is EUR 1,600.

This means that the total amount of deductible VAT is EUR 3,100: the EUR 1,500 in VAT deducted from the intra-

Community acquisition and the EUR 1,600 in VAT deducted from domestic purchases.

The turnover that qualifies for VAT relief is EUR 12,000.

Tax paid on domestic sales EUR 2,880 – tax deducted from the financial year EUR 3,100 = EUR -220.

The entrepreneur is not entitled to VAT relief, because the VAT qualifying for VAT

relief is negative.

Tax periods for VAT

The tax returns for self-assessed taxes are filed and the taxes reported on the

tax returns are paid in accordance with the tax period.

– As a rule, the length of the tax period is one month.

– You can apply for an extended tax period,

if the turnover of a calendar year is EUR 100,000 at maximum; in that case, the company can report and

pay the VAT, employer's contributions and tax at source once every quarter.

If the turnover is EUR 30,000 at maximum, the company can report and pay VAT every calendar year and

the employer's contributions and tax at source once every quarter.

Reporting value added tax

VAT is reported using

– The tax return for self-assessed taxes (self-assessed tax return)

– The Finnish Tax Administration must receive the tax return on the 12th day of each month, that is, the general due

date (the last day of February for those using the annual process)

– VAT must be reported on the 12th day of the second month following the tax period at the latest (for example,

January’s VAT return must have arrived on 12 March at the latest).

– The VAT return must be filed, even if there was no activity in the target period.

– The tax return for self-assessed taxes is filed electronically via the MyTax service at vero.fi, or

– via accounting software

– by sending the file generated by the software via the Ilmoitin.fi service or the Tyvi operators.

– There must be a special reason to file the return on paper

Reporting value added tax

If the VAT return is filed late, it results in a late penalty charge.

The late penalty charge consists of one part based on the number of days and another part

based on the amount of tax owed.

A daily late penalty charge of three euros per each day of delay of the tax return is imposed up

to 45 calendar days, or a maximum of EUR 135.

If the tax return is filed more than 45 days after the due date, a late penalty charge of EUR 135

is imposed in addition to two per cent of the amount of tax to be paid that was reported in the tax

return.

The maximum amount of late penalty charge is EUR 15,000.

Reporting value added tax

An error in the VAT return is corrected by filing a new VAT return for the same tax period to replace the

previous information.

The reason for the error must be stated in the replacement return.

A minor error (EUR 500 at maximum) can be corrected by taking it into account in the following VAT

returns.

Errors must be corrected without undue delay.

No daily late penalty charge is imposed on the replacement return, if it is filed 45 days after the due date of

the original return at the latest. The amount of daily late penalty charge for a return filed more than 45 days

late is two per cent of the amount of reported tax to be paid.

Failure to file a VAT return results in tax assessment by estimation.

The Finnish Tax Administration can revoke the estimated decision if the tax return is filed after the tax for

the tax period has been imposed based on an estimation. In that case, the tax return is considered to be

filed late.

Paying VAT

VAT is paid on the 12th day of the second month following the tax period at the

latest (for example, January’s VAT is paid on 12 March at the latest).

– You can get the reference number from MyTax or by calling the service number of the Finnish Tax

Administration.

– The reference number is permanent and customer-specific.

– If you pay the tax via MyTax, the bank account number, reference, payment recipient and date of

payment are already included in the online payment template, which means that you do not need to fill

in this information yourself.

– In MyTax, the balance of the current day with interest has been entered as the amount to be paid, but

you can change the amount of tax yourself.

– If you are paying the tax via your online bank, for example, instead of MyTax, use the account number

for self-assessed taxes for the payment.

– If you are only paying the VAT after the due date has already passed, you must pay late-payment

interest in addition to the tax. In 2019, the interest for late payment is 7%.

Rates of VAT

The VAT rates or VAT percentages determine the amount of VAT on each

commodity or service.

Three tax rates are used in Finland

– General VAT rate 24%

– Food and animal feed etc. 14%

– Books, accommodation etc. 10%

In addition, the so-called zero rate is used in certain situations related to

international trade, among other things.

Invoicing details

The seller must give the buyer an invoice for the sale of goods or services subject to tax, if the

buyer is an entrepreneur.

The invoice must always be provided for sales subject to VAT as well as certain sales that are

tax-free and related to international trade.

The Value Added Tax Act includes a list of details that must be included in the invoice.

Common invoice details must be followed when the invoice concerns, for example:

– intra-Community sales of goods

– distance selling of goods

– sales of goods or services in another EU country, for which the buyer pays the tax based on the reverse

charge mechanism for VAT

If necessary, the invoice must include an indication of issues such as VAT reverse charge or the

sale being tax-free.

Invoicing details

When the total amount of the invoice is EUR 400 at maximum, reduced invoice

details are sufficient:

– date when the invoice was issued

– name and VAT number (business ID) of the seller

– number or amount and type of goods and type of services sold

– amount of tax to be paid by tax rate or tax basis by tax rate

– with regard to amendment invoices, a reference to the original invoice and the information

amended with the invoice

Invoicing details

The reduced requirements on invoice details are also applied (regardless of the

total amount of the invoice) to:

– retail

– other comparable sales made almost exclusively to private individuals

– sales activities comparable to retail, such as kiosks, shoemakers, hairdressers or funeral

services

– restaurant and catering service invoices and passenger transport invoices

– invoices printed out by parking meters and other similar devices

Invoicing details

An invoice provided by the seller is required for the buyer’s right to deduct VAT.

The invoice can contain more information than required by the Value Added Tax

Act.

Both sales and purchase invoices must be kept for six years at minimum.

File VAT online in MyTax

MyTax

Log in: https://www.vero.fi/en/e-file/mytax/

Instructions for MyTax

Basics of Value Added Tax, part 2

Part II Contents

VAT deduction rights

Tax basis

How the amount of value added tax to be paid is

determined

How value added tax is calculated

Periodisation

Intra-Community sales and intra-Community

acquisitions

Import and export

International sales of services

Vero.fi links to instructions

VAT deduction rights

The purpose of right of deduction is to prevent value added tax from being

levied at multiple stages.

The party liable to pay VAT can deduct the tax related to the purchases from the

VAT included in the sales, meaning the VAT included in the price of goods and

services purchased by the company.

Requirement of the VAT deduction right:

– the goods and services were purchased from another party liable to pay VAT, and the buyer

has an invoice including VAT or other document on the purchase

– the goods and services are used in business that qualifies for deduction. For example, own

use is non-deductible.

Initial stock deduction

When starting activities subject to VAT, an entrepreneur can make a so-called

initial stock deduction for the goods and services purchased for the business

already before registering for VAT.

The deduction is made according to the current value at the time of the transfer.

This requires the original invoice including VAT and a memo voucher for the

transfer, drawn up at the time when the purchase was used for a deductible

purpose.

An initial stock deduction cannot be made for construction services or real

estate units, however.

Splitting a deduction

If the purchase will be used only partially for the buyer’s business subject

to VAT, the VAT deduction can only be made for that part.

Example: The entrepreneur buys a van to be used in the business. The van will also be used for

driving an estimated 30% of private kilometres. The VAT included in the purchase of the van and its

operating costs can only be deducted for the part where the van is used for a business subject to

VAT.

The driver’s log can be used after the fact to determine the share of private kilometres and

kilometres related to the business out of all journeys. The deductions are corrected to match the

actual amounts at the latest when the financial statements are drawn up.

Using a vehicle for activities subject to VAT

The use of a vehicle for activities that qualify for a deduction must be proven

with a driver’s log or other reliable report.

The following must be entered daily into the driver’s log:

- the start and end date and time of trips

- the starting point and destination of trips

- the route, if necessary

- the odometer reading when the driving started and ended

- the length of the trip

- the purpose of the trip

- the user of the car

Limitations on the right of deduction

Limitations have been set on the VAT deduction of some purchases, even if the

purchase was connected to an activity subject to VAT.

Such purchases are typically related to private consumption.

The following purchases, for instance, are not deductible for any part:

– entertainment expenses

– residences, premises related to hobbies, and leisure time locations

– travel between home and workplace

– motorcycles, caravans and vessels intended for leisure and sports use

Passenger cars are only deductible in certain special situations.

Passenger cars

The VAT included in the purchase and operating costs of a passenger car is only

deductible, if

it is intended for sale (car dealers)

for rent (the renting must be done in the conduct of business)

for use in professional passenger transport (e.g. taxis)

or for driving instruction (driving schools)

in the situations mentioned above, the own use of a passenger car does not remove the right of

deduction from the share of activities subject to VAT

used exclusively for purposes subject to VAT that qualify for a deduction

The requirement for the right of deduction is that the passenger car is used only for activities qualifying

for deduction. Not for own use at all. The possessor of the vehicle must keep a driver’s log as evidence.

VAT deduction rights

The following purchases are nevertheless deductible:

- ordinary meeting and negotiation costs

- ordinary promotional gifts and samples

- marketing expenses

- occupational safety equipment and protective clothing

Periodisation

Periodisation refers to the time when the VAT to be paid on and deducted from

the sales is reported and paid.

The main principle is the performance principle: VAT is assigned to the month in which the

goods/services sold were delivered and the goods/services purchased were received.

Advance payments are assigned to the payment month.

Invoicing principle: during the financial year, sales and purchases can be assigned to the

invoicing month. When the financial year ends, the sales and purchases that have not been

invoiced are assigned to the last month of the financial year.

Payment principle: VAT is assigned to the month in which the goods/services sold or

purchased were paid.

VAT on the basis of payment for small businesses

Small businesses (turnover max. EUR 500,000) have the right to transfer the

VAT paid on sales and deduct the VAT included in purchases on the basis of

payment.

The VAT from sales does not need to be corrected so that it is performance-

based at the end of the financial year.

However, it must be assigned, at the latest, to the calendar month during which

12 months have passed from the delivery of the goods or the performance of

the service, if the selling price has not been paid before that.

If the payment of tax on the basis of payment is selected, it applies to both the

company's sales and purchases.

Tax basis

The tax basis is the price of the goods/services excluding VAT, i.e. the net

price. The price also includes all additional fees, such as

– invoicing fee, invoicing fee for small amounts

– fees charged for using a bank card

– packaging, transport and postal fees and fees for cash-on-delivery shipments

– commissions

– daily allowances of the party performing the service, as well as travel and accommodation

costs

additional fees have the same VAT rate as the main performance

Tax basis

Example

• Construction work EUR 1,000

• Travel costs EUR 88

• Invoicing fee EUR 12

• Total EUR 1,100

• Tax basis (price excluding VAT) EUR 1,100.00

• VAT 24% * EUR 1,100 EUR 264.00

• Price including VAT EUR 1,364.00

How do I calculate the amount of VAT based on the price before tax?

VAT based on the price excluding tax:

price without tax x applicable tax rate

Example: The price of the product excluding VAT is EUR 1,000 and the general tax rate of 24%

applies to the sale. VAT of 24% is added, i.e.

1,000 x 24/100 = EUR 240.

The price including VAT is EUR 1,240.

How do I calculate the amount of VAT based on the price including tax?

VAT based on the price including tax:

price including tax x applicable tax rate

100 + applicable tax rate

Example: The price of the product including VAT is EUR 1,000 and the general tax rate of 24%

applies to the sale. The amount of tax is determined by calculating 1,000 x 24/124 = EUR

193.55.

The price of the product includes EUR 193.55 of VAT.

The price of the product excluding VAT is 1,000 – 193.55 = EUR 806.45

How to calculate the VAT to be paid?

The amount of tax to be paid is calculated by deducting the VAT included in the

deductible purchases made during the tax period (month, quarter or year) from

the VAT of the sales during the same period.

+ VAT from sales

- VAT from purchases

= =

If the VAT from purchases during the tax period is greater than the VAT from

sales, the Finnish Tax Administration returns the difference, meaning the

negative VAT.

VAT to be paid

International trade

The regulations of the Value Added Tax Act on the country of sale determine

which country’s VAT legislation is applied to the sale.

– Any sales that take place in Finland in accordance with the regulations on the country of sale are subject

to the provisions of the Finnish Value Added Tax Act and the VAT is paid to Finland. The sale may also

be exempt from VAT if it has been specified as VAT-exempt by law.

– If the country of sale is not Finland, no tax is paid to Finland for the sale (the seller must determine

whether they need to register in the country of sale and pay the tax there).

Regulations on the country of sale in the trade of goods and services

– Different regulations on the country of sale apply to the trade of goods and services.

– There are also different regulations on the country of sale that apply to sales to businesses and

consumers.

International trade

In order to discover the country of sale of the commodity/service, the following

must be determined:

1. What is being sold? (goods or services/what kind of a service)

2. To whom is it being sold? (is the buyer an entrepreneur or a consumer)

3. Where is it sold? (where the goods are transported or the service provided)

Trade of goods and services between EU countries

Goods and services can be sold to a business in another EU country without

VAT, if the buyer has a valid VAT number.

In the sale of goods, there must also be proof that the goods are transported to

another EU country.

The buyer must give the seller their VAT number

The buyer pays the VAT on behalf of the seller in their own country based on the

reverse charge mechanism for VAT.

Where you can get a VAT number?

When a company buys or sells goods or services from another EU country, a

VAT number is needed for the sale. It is generated based on the business ID as

follows:

The ID is generated by adding the Finnish country identifier ‘FI’ in front of the

business ID and removing the dash from between the two last numbers.

Example:

Business ID 1234567-8

VAT ID FI12345678

Intra-Community trade

Intra-Community trade: The selling and buying of goods between VAT taxpayers in

different EU countries is called intra-Community trade. Intra-Community trade includes intra-

Community supply and intra-Community acquisitions.Example of intra-Community supply:

A Finnish company sells honey to a German GmbH at a price of EUR 5,000. The German company is

liable to pay VAT in its own country and gives its valid VAT number to the Finnish seller. The honey is

delivered from Finland to Germany, the Finnish company sells the goods without VAT, and the GmbH pays

VAT for the purchase in its own country in accordance with the German VAT rate.

Sales of goods to other EU countries are reported on the self-assessed

tax return, and an EU VAT recapitulative statement is filed on them.

Note: Sales of goods by companies with small-scale operations (not registered

for VAT) are not intra-Community supply. No recapitulative statement.

Intra-Community trade

Example, intra-Community acquisition: A Finnish company buys construction

materials for its business from an Estonian OÜ at a cost of EUR 10,000 (VAT

0%). The Finnish company gives the Estonian seller its own valid VAT number. The goods are

delivered from Estonia to Finland, and the seller sells the goods without VAT. The Finnish

company pays 10,000 x 24% of VAT, or EUR 2,400, for the intra-Community acquisition in

Finland based on the reverse charge mechanism for VAT.

Purchases of goods from other EU countries and the VAT to be paid on them

are reported in the self-assessed tax return. The purchases are VAT deductible

as usual.

Sale of goods to consumers in another EU country

The regulations on intra-Community supply and intra-Community acquisitions

do not apply to consumer sales.

When the country of sale of the goods is Finland, the seller is liable to pay the

Finnish VAT for its sales of goods to the consumer/party in the position of a

consumer.

– As a rule, the so-called country of origin principle is applied. For example, a Finnish company sells

and mails a linen tablecloth to a private individual in the Netherlands at the price of EUR 50 + VAT

24%.

– The reverse charge mechanism for VAT cannot be applied.

– The sales are reported in the VAT return, in the taxes of domestic sales.

– Exception: distance selling and a new means of transport.

Import/export of goods

Export = the sale of goods from the EU to countries outside the area.

For example, a Finnish company sells barbeque pavilions to Russia. The pavilions are

transported from Finland to Russia by order of the seller.

Import = the bringing of goods from outside the EU into the EU area.

For example, a Finnish company buys LED lamps from China, from where they are

transported to the buyer in Finland.

Main rule: The export of goods is exempt from VAT and import is subject to VAT.

The VAT on imports is calculated and reported independently by using the value

added tax return (for buyers liable to pay VAT). Buyers not liable to pay VAT pay

the VAT in connection with the customs clearance.

International sales of services

The regulations on the country of sale of services apply to the trade of services

both within and outside the EU.

The country of sale of a service is determined by the type of service.

The sale of services to businesses and consumers is governed by different

general rules regarding the country of sale.

The general rule applies, unless an exception is applicable to the service.

Selling services to businesses

Selling services to businesses, general rule: taxed in the country of the buyer.

The sale is exempt from VAT in Finland.

The buyer is usually liable to pay tax based on VAT reverse charge. If VAT

reverse charges do not apply, the seller may need to register for VAT

in the country in question.

– For example, a Finnish company sells a consulting service to a Swedish entrepreneur (valid VAT

number). According to the regulations on the country of sale, the service was sold in the country of the

buyer, which is Sweden. VAT is not paid on the sale of the consulting service in Finland. The Swedish

entrepreneur pays the Swedish VAT in their own country based on VAT reverse charge.

Selling services to businesses

Sales of services (in accordance with the general rule) to businesses in

other EU countries are reported with the self-assessed tax return and an EU

VAT recapitulative statement is filed on them.

Note: A small-scale business operator must also register as having a duty to

report on EU service sales, and report the sales in the self-assessed tax return

and file a recapitulative statement (for the months when sales have taken

place).

Sales of services outside the EU are reported with the tax return for self-

assessed taxes, but not in an EU VAT recapitulative statement.

Purchasing services from entrepreneurs

Finnish entrepreneurs are liable to pay VAT reverse charge for the purchase

of services from other EU countries and outside the EU in accordance with the

general rule.

– The purchases of services from EU countries and the tax paid on them are reported with the

tax return for self-assessed taxes.

– The tax paid on the purchases of services from outside the EU is reported with the tax return

for self-assessed taxes.

– The VAT for the purchase of services is deductible as usual.

Selling services to consumers

Selling services to consumers, general rule: taxes are paid in the country of the

seller.

– For example, a Finnish company sells a canoeing trip of 3 hours to an Italian consumer.

According to the regulations on the country of sale, the service was sold in the country of the

seller. The Finnish company sells the service with Finnish VAT.

Exceptions to the main or general rules on the

sale of services to businesses and consumers,

for example:

– services that involve real estate (e.g. accommodation services) the country in which the real estate

unit is located

– restaurant and catering services -> country of performance

Instructions on VAT

Enter into the VAT register

On the value added taxation of fine artists (in Finnish)

The limit for a VAT-exempt small-scale business is EUR 10,000

VAT relief for small businesses (in Finnish)

Filing and paying self-assessed taxes

Requesting a shorter/extended tax period

VAT rates

Invoicing requirements for VAT (in Finnish)

Instructions on VAT

Deducting VAT on purchases

VAT on a vehicle and its operating costs (in Finnish)

Marketing and entertainment events in value added taxation (in Finnish)

Value added tax in the EU sales of goods (in Finnish)

Value added tax on exports (in Finnish)

Value added tax procedure for importation as of 1 January 2018

Value added taxation on the foreign trade of services starting from 1 January 2019 (in Finnish)

Value added taxation of telecommunications, broadcasting and electronic services (in Finnish)