Important VAT compliance changes in Finland
The Finnish tax authorities have announced a number of VAT compliance changes applicable as from 1 January 2017 that will impact all companies currently VAT registered in the country.
VAT payments and e-filing
Non-established companies will no longer be able to submit VAT returns on paper. These returns must be filed electronically via the new online system of the authorities ´OmaVero´. In addition, the below changes are already in force.
Regarding VAT payments, the reference to be included in your bank transfer when making a VAT payment to the tax authorities has changed. Going forward, this reference will be available in the online tax account of the taxpayer.
Previously, the reference was received by post in a letter sent by the tax authorities. It could also be consulted in the former online tax system of the authorities, which is no longer available.
The frequency of VAT returns
The standard VAT return filing period in Finland is monthly. However, quarterly reporting is allowed where the annual turnover does not exceed a certain threshold. This limit has been extended from €50,000 to €100,000. Therefore, certain taxpayers registered in Finland may be able to start filing quarterly VAT returns if their annual turnover is below the new threshold.
For businesses with a low turnover, annual VAT returns are allowed. The threshold to determine the right to submit annual VAT returns has been increased from €25,000 to €30,000.
In Finland, it is also possible to adapt the period in which VAT is accounted for the financial year of the business. This may be especially interesting for UK businesses with an April to March financial year.
VAT compliance changes: new penalties
There is a new penalty foreseen for late VAT registrations. Where a business should have registered but did not get a VAT number early enough, a penalty of €5,000 applies. This penalty also applies on late de-registrations.
In addition, the Finnish authorities clarified that taxpayers have 45 days after the due date to correct a VAT return without any penalties. This simplification only applies where the original VAT return was submitted on time.
When a VAT return is submitted late, there is a penalty foreseen of €3 per day for the first 45 days with a maximum amount of €135. After the 45 day limit, a penalty of 2% of the VAT due applies with a maximum amount of €15,000 per VAT return. Penalties will be imposed automatically by the Finnish tax authorities.
Finally, there is an increased penalty foreseen for ECSL returns. Where this return is filed late or wrong information is reported, there is a maximum penalty of €15,000 (previously this limit was €1,700).