FinlandManual

VAT in Finland

VAT Deduction Limits in Finland

Input VAT is generally deductible as long as the goods or services are used for business purposes.

However, certain expenses are subject to special rules:

  • Hotel accommodation: input VAT is 100% deductible provided the invoice is issued to the company and the expense is incurred for business purposes. The VAT on hotel breakfast is not deductible though.
  • Business entertainment: input VAT is generally not deductible. However, staff entertainment is 100% deductible, although subject to limitations.
  • Gifts to employees are not deductible.
  • Marketing and samples of goods or advertising gifts are deductible.
  • Attendance to conferences, fairs and exhibitions: input VAT is 100% deductible.
  • Cars, vans and trucks cost: the deduction of input VAT is restricted, particularly when it comes to vehicles for mixed use. We recommend check the guidelines in detail.

A valid and fully compliant VAT invoice must be issued for each expense on which VAT is deducted.

The VAT deduction limits are regulated in Chapter 10, Arts. 102 and following of the Finnish VAT Law. Also, find here general information about VAT deduction in Finland, and here the VAT deduction rules for VAT on vehicles.

Statute of Limitations in Finland

The statute of limitations is three years in Finland.

The statute of limitations period determines the periods on which the tax authority can go back to review the information declared, and apply additional VAT assessments, penalties or interests. An extended period of time may apply in certain scenarios, for example, when the Finnish tax authorities receive the information from international exchange of information between tax administrations.

The statute of limitations also determines the period a taxpayer can voluntarily correct any errors on past submissions, as well as deduct input VAT. This is three years calculated from the beginning of next year.

You can find an overview of the statute of limitations in Europe under the following link

Tax point rules in Finland

The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to submit and pay the VAT return.

  • General rule: When the supply of goods or services is subject to the mandatory issuance of an invoice, then the tax point is by the time of the supply of the goods or services. If the invoice is issued prior to the supply of goods or services, the tax point arises on the invoice date.
  • Prepayments or advanced payments create a tax point because an invoice must be issued for each instalment or prepayment. Special rules apply for vouchers.
  • Continuous supplies of services: if the intra-Community acquisition of a service covers a period of more than 1 year, VAT has to be accounted on an annual basis. Tax point is considered to have occurred the last day of the year.
  • Intra-Community acquisitions and supplies: Tax point occurs on the invoice date or the 15th day of the month following the month in which the invoice was issued, whichever occurs earlier
  • Import: Tax point occurs when the goods are imported according to the relevant import documents.

Find here official information about time for issuing an invoice.

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