Value-added tax

If your company sells goods or services for a value of over EUR 15,000 during a financial year, you must register the business for VAT. Note that if your company is not registered for VAT and its turnover exceeds this limit, you will have to pay VAT retroactively for the whole financial year.

Your company can also voluntarily register for VAT even if the turnover is under EUR 15,000. A company registered for VAT can deduct the VAT it pays on business purchases on its VAT return.

Note also that some businesses, such as health care and medical services, are exempt from VAT.

When you are registered for VAT and sell goods or services, you must add VAT to the sales price. Charge the buyer the tax in connection with the sale and pay the tax to the State each tax period. The tax period is usually one calendar month. Give the buyer an invoice or a receipt with the details specified in the Finnish VAT Act. Always include you company’s Business ID on documents.

Note that the tax rate varies for different goods and services. The normal tax rate, which is 24%, applies to the majority of goods and services. A 14% tax rate is applied to, for example, food and restaurant services. A 10% tax rate is used, for example, for books and accommodation services.

The VAT is based on the pre-tax price of goods or services. It includes all the extras the seller charges the customer. These can include an invoicing fee, transport and postage costs, daily allowances and travel expenses based on mileage/kilometrage. Extras are taxed at the same rate as the actual goods or services.

The amount for VAT on a pre-tax price is calculated this way:

(pre-tax price + extras) x applicable tax rate/100.

The amount for VAT on an after-tax price is calculated this way:

applicable tax rate x after-tax price/(100 + applicable tax rate).

Report and pay the VAT to the Finnish Tax Administration of your own initiative in accordance with the applicable tax period. The tax period is usually one calendar month. However, a small company can apply for an extended return and payment period.

The general deadline for VAT payments is on the 12 day of not the following month but the month after that. For example, when a calendar month is used as the tax period, VAT for June must be reported and paid at latest on the 12th day of August.

Note that a tax return must be submitted for each tax period. even when your company does not have any activities that require the payment of VAT.

The easiest option to submit the VAT return is to do it electronically in the MyTax service where you can also pay the tax. If you pay the VAT using online banking or a financial management system, remember to use the correct account and reference numbers. You can check the details in the MyTax service.

On your VAT return, you can deduct from the payable amount the VAT that is included in the prices of the products that you have purchased from other companies. The requirement is that you use the products in your company’s taxable business activities. The required receipts for the purchases must be available.

If you made purchases before your company registered for VAT, you can make a deduction for initial stock. The purchases must have been made for your company’s taxable business activities. You will need to have the original invoices and the memo vouchers produced at the time the products were first used.

If your company is registered for VAT and it imports goods or services from outside the EU, you must also declare the VAT on imports on your VAT return. Pay the VAT on imports to the Finnish Tax Administration without waiting to be asked.

If your company sells goods or services to companies based in other EU countries, you must file a VAT return and a VAT EU Recapitulative Statement. File the Recapitulative Statement electronically, using, for example, the MyTax service no later than the 20th day of the following month. Only file a Recapitulative Statement for those months in which your company sold goods or services to other EU countries.

Note that the Recapitulative Statement must be filed before the VAT return. The Recapitulative Statement must be filed in the calendar month following the month when the goods were supplied: for example, the statement for January must be filed in February. The VAT return, on the other hand, must be filed in the second month following the tax period: for example, the return for January must be filed in March. In addition to the sales, purchases from companies based in other EU countries must also be reported on the VAT return.

VAT-payments are usually performance-based. Your company pays VAT when the goods sold have been delivered or a service provided.

Alternatively, your company can pay its VAT on an invoice basis. In that case, sales are recorded in the tax period during which your company has invoiced your purchaser for delivered goods or a provided service.

If you company’s turnover is no more than EUR 500,000 for a financial year, it can pay its VAT on a payment basis. In that case, your company records the VAT to the month during which it will receive payment or sales or pay for purchases it has made.

The VAT relief for small businesses is a form of tax credit for entrepreneurs and companies who are registered for VAT and whose turnover for the financial year (12 months) is less than EUR 30,000.

If the company’s turnover

• does not exceed EUR 15,000, it will be refunded the entire amount of the VAT qualifying for the relief.
• more than EUR 15,000 but less than EUR 30,000, the company will receive a partial VAT relief.

Submit your VAT returns and pay your taxes normally during the financial year. Calculate the turnover that would permit a reduction as well as the amount for tax and the relief itself. You can use the calculator in vero.fi to determine the amount of relief.

Submit the application for VAT relief on your VAT return. If your company’s tax period is one month, give the details on your VAT return for the last month of the financial year. 

Visit the vero.fi website to read more about applying for the VAT relief.Opens in a new window.