Finland VAT (2025)

1. Standard and Reduced VAT Rates:

• Standard VAT Rate: Finland applies a standard VAT rate to most goods and services. It is very important to verify the current exact standard rate with the Finnish Tax Administration (Vero Skatt) as it may change.
• Reduced VAT Rates: Finland also applies reduced VAT rates to certain goods and services, such as:
  • Foodstuffs.
  • Passenger transport.
  • Cultural and sports events.
  • Books and periodicals.
  • It is very important to verify the current exact reduced rates and the items that they apply to with the Finnish Tax Administration (Vero Skatt) as they may change.

2. VAT Registration:

• Businesses making taxable supplies in Finland exceeding a certain threshold are required to register for VAT.
• Foreign businesses conducting taxable activities in Finland may also be required to register, even without a physical presence.
• Voluntary VAT registration is possible.

3. VAT on Imports and Exports:

• Imports of goods from outside the EU are subject to import VAT.
• Exports of goods to countries outside the EU are generally zero-rated.
• Intra-community supplies of goods within the EU are subject to specific VAT rules.

4. Input VAT Deductions:

• Businesses registered for VAT can deduct input VAT incurred on purchases related to their taxable supplies.
• Certain restrictions apply to input VAT deductions, such as for specific entertainment expenses.

5. Reverse Charge Mechanism:

• The reverse charge mechanism applies to certain transactions, where the recipient of the goods or services is responsible for accounting for the VAT.
• This is common in cross-border transactions and specific B2B services.

6. VAT Returns and Payment:

• Businesses must file VAT returns periodically, typically monthly, quarterly, or annually, depending on their turnover.
• VAT payments are due by the deadlines specified by the Finnish Tax Administration.
• All filing is done electronically.

7. Distance Selling:

• Rules regarding distance selling of goods to consumers within the EU are important to understand.
• The One-Stop Shop (OSS) system simplifies VAT obligations for distance sellers.

Important Considerations for Foreign Investors:

• Finnish Tax Administration (Vero Skatt): The primary authority for VAT matters.
• Accurate Record-Keeping: Maintain detailed records of all VAT transactions.
• Compliance with Deadlines: Ensure timely filing of VAT returns and payment of VAT.
• Professional Advice: Seek professional VAT advice to ensure compliance and avoid penalties.
• EU VAT Directives: Finnish VAT is based on EU VAT directives.

Key Takeaway:

• Finland's VAT system is aligned with EU standards.
• Compliance is essential to avoid penalties.
• Digital filings are the standard.
• It is very important to stay updated with the guidelines published by the Finnish Tax Administration (Vero Skatt).