Value-added tax

If your company sells goods or services for a value of over 10,000 euros during one financial year. you must register your company to the Value-added Tax Register. If you wish to, you may register your company even if your turnover is under EUR 10 000. Note, however, that some businesses are exempt from VAT: for example, health care organisations and medical services.

Add the value-added tax to your product’s selling price. Charge your purchaser the tax at the time of sale and pay the tax to the State each tax period - for example once a 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 value-added tax 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 the tax rate applicable / 100.

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

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

When you submit your value added tax return. calculated the total value-added taxes for all sales over the tax period. From this sum, subtract the amount of value-added taxes you have paid when purchasing products for your company’s taxable activities. In this way, you will be able to determine the amount of value-added tax you must pay the Tax Administration for the tax period or the refund that the Tax Administration will pay you.

Report and pay your value-added taxes to the Tax Administration of your own initiative. The general deadline for value-added tax payments is on the 12 day of not the following month but the month after that. For, example, taxes for June are reported and paid at latest on the 12th day of August. 

Please note that a tax return must be submitted for every tax period. even when your company does not have any activities that require the payment of value-added taxes. A tax period is generally a month. A small company can apply for an extended return and payment period.

Submit a tax return of your own initiative electronically via, for example, the MyTax service. You can also pay the tax in the MyTax service. If you pay via online banking or a financial management system, remember to use the correct account and reference numbers. 

If your company is registered to the Value-added Tax Register and imports goods or services from outside the EU, you should also declare the details relating to VAT on imports in your VAT return. Pay the value-added tax on imports to the Tax Administration without waiting to be asked.

If your company sells goods or services to companies based in other EU countries, you should file a VAT return as well as 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 should be filed before the VAT return. The Recapitulative Statement should be filed in the calendar month following the tax period: thus, the statement for January is filed in February.  On the other hand, the VAT return should be filed in the second month following the tax period: the return for January is filed in March.

The payment of value-added taxes generally performance based. Your company pays value-added taxes when sold goods have been delivered or a service provided.

Your company can voluntarily pay value-added taxes on an invoice basis. In this 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 500,000 euros for a financial year, it can pay its value-added tax on a payment basis. In this case, your company records the value-added tax to the month during which it will receive payment or sales or pay for purchases it has made. 

If your company’s turnover is less than EUR 30 000 in a twelve-month financial period, your company can receive VAT relief. Submit your tax returns and pay your taxes normally during the financial period. Calculate the turnover that would permit a reduction as well as the amount for tax and the relief itself. If your company’s tax period is one month, give the details in your VAT return for the last month of the financial year.

You can deduct from taxes paid to the State the value-added tax included in the price of products you have purchased from another party subject to VAT. The precondition for this is that you use the products in your company’s taxable business activities. You must be able to supply the invoices for the purchases where the value-added tax is separately specified.

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.