FinlandManual

VAT registrations and simplifications in Finland

When do I need a Finnish VAT number?

Generally, a foreign business must register for VAT (Arvonlisävero in the local language (ALV)) in Finland as soon as a taxable supply is made. The following are the usual examples of taxable transactions:

  • Domestic supply of goods not reverse charged: A supply of goods located in the Finland where reverse charge does not apply requires a VAT registration of the supplier.
  • Supply of services not reverse charged: Foreign non-established businesses supplying services on which Finnish VAT is due by the supplier must register for VAT. These services are rather exceptional, as the general B2B rule would apply.
  • Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
  • Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT.
  • Intra-Community supply: Supplying goods another Member State is also a taxable transaction that obliges the supplier to register for VAT. 
  • Distance sales: When applicable in case the Seller has not joined OSS. See the E-commerce manual for more information.

Finnish established companies can benefit from a VAT registration exemption threshold amounting to EUR 15,000. This is the VAT registration threshold applicable to small established businesses; however, a voluntary VAT registration is allowed. See Section about special VAT schemes.

Non-established companies must submit apply for VAT registration before performing any taxable transactions. There is no turnover threshold applicable to non-established companies.

Backdated registrations are allowed in Finland. Note that the first few VAT returns and payments for the accounting period may already be late if your company’s tax period is determined to be a month or a quarter but a longer period has already passed.

Input VAT incurred previous to the VAT registration may be deducted in certain circumstances, provided that the cost complies with the VAT deduction limits in Finland. This input VAT will be included in the first VAT return submitted by the taxpayer. 

For VAT purposes, Finland does not include the Åland Islands.

VAT registration pack in Finland

The registration pack shall contain:

  • Form Y1 + Form 6204: foreign corporate entities
  • Form Y2 + Form 6204: foreign business enterprises comparable to a Finnish general partnership or limited partnership
  • Form Y3 + Form 6206: foreign self-employed individuals
  • Remember to include any required attachments, such as a trade registration certificate from the company's country of tax residence or a copy of your contract agreement or employee leasing agreement.

The registration pack for non­-resident companies must be sent to:

PRH-Verohallinto

Yritystietojärjestelmä

PL 2000. 00231 Helsinki. Finland.

If the address above does not work when organizing the shipment, you can use the following one:

Helsinki Area Tax Office
Rajatorpantie 8 A, Vantaa  
P.O. Box 400, 00052 VERO, Finland

VAT registrations take on average from 2 to 4 weeks to be processed. While the authorities are currently processing the your application for VAT registration, the seller is entitled to indicate the VAT payable and the VAT rate on the invoice, provided that the seller indicates that the VAT registration is currently pending in the invoice. In this case, the invoice must include ‘VAT registration pending’. To have the right to VAT deduction on such an invoice, the purchaser must check that the seller has been successfully registered. This instruction can be found here, section 5.1.10 VAT payable.

More details about VAT registration in Finland can be found here. Also, the registration form and instructions for foreign companies can be found here and also here.

Finally, if you are a company that de-registered in the past in Finland and you need to register again for VAT purposes, the process consists of a VAT reactivation of your previous VAT number. You should submit the form for notification of changes instead of a new start-up notification form.

 See below the feedback received from the tax administration concerning the reactivation of a Finnish VAT number:

In Finland the Finnish Business id is permanent. VAT id is formed from the business id. Therefore, the VAT id should simply be reactivated.

When restarting business in Finland a new start-up notification should not be filed. Instead, a notification of changes should be filed according to the business form. (...)

Note that the Y4 form lacks questions about the Finnish business activities. It is recommended to explain in the additional fields, what business has been restarted and why for example VAT registration is requested.

 

VAT number format in Finland

  • Country code: FI
  • Structure: FI 88 88 88 88
  • If you are registered for VAT in Finland, the VAT number is formed using the country code FI and a string of digits that is the same as the Business ID without the dash between the two last digits. For example, if the Business ID is 0765432-1, the Finnish VAT number is FI07654321.

Find here the official information about Finnish VAT numbers.

Where to check Finnish VAT numbers?

Find here the link to search for Finnish companies and verify if a foreign company is VAT registered in Finland.

Fiscal representative requirements in Finland

A fiscal representative has to be appointed in Finland by companies not established in an EU Member State, or in Norway.

The VAT representative shall be a person resident in Finland, or a company established in the country. Also, the VAT or fiscal representative is jointly and severally liable for the VAT due by the foreign taxpayer.

In such cases, the resident representative completes a combined VAT return for the foreign companies (transactions mentioned in § 93 of the VAT Executive Order). After subsection 3, the resident representative must keep an account for each individual liable for VAT.

Have a look at Section 9.3 of the Finnish guide.

VAT groups in Finland

VAT grouping is possible in Finland only for businesses involved in supplying exempt financial or insurance services to other taxable persons controlled by financial or insurance companies. Group members must be closely bound by financial, economic, and organizational links, so they may form a VAT group and be treated as a single taxable person for VAT purposes in Finland.

In addition, the following VAT grouping rules apply in Finland:

  • Only Finnish established business as well as Finnish fixed establishments can be part of a VAT group.
  • VAT grouping is optional in Finland and, once is formed, the group members are treated as a single taxable person.
  • Intra-group transactions are disregarded for VAT purposes.
  • Every group member is jointly and severally liable for the VAT debts and penalties of the entire group.
  • There is no minimum time period for the duration of a VAT group.
  • Members of a VAT group submit one single consolidated VAT return – periodical VAT returns and the annual VAT return.

The VAT grouping in Finland is regulated in Art. 13a Finnish VAT Law.

Consignment and Call-off stock in Finland

The EU introduced a call-off stock simplification that all EU Member States must implement. This was put into place so that businesses that operate under a consignment stock structure do not have to VAT register in the country of destination. Finland has introduced the consignment stock simplification.

Check out our article on the EU call-off stock simplified VAT rules for more detailed information.

Have a look at the guide about call-off stock published by the Finnish tax authorities. Companies using call-off stock simplification and sending goods from Finland to other EU countries under this simplification must submit a special declaration.

Finnish Bad Debt Relief

Bad debt refers to an unpaid invoice for which the supplier has paid the VAT to the tax administration: this is, an invoice has been issued with VAT, reported in the VAT return and the VAT amount has been paid to the tax authorities but the whole price has not been collected from the customer. This is often due to the client´s bankruptcy, insolvency or simple missed payments to suppliers. In these cases, most countries allow to recover the VAT initially paid to the authorities, however, the conditions change from one country to another.

Bad debt relief refers to the possibility of recovering the VAT from that invoice. Finland allows for bad debt relief by adjusting the out VAT paid in the periodic VAT return.

The necessary adjustments can be made in accordance with Generally Accepted Accounting Principles, i.e., when it has become evident that the payment will most likely not be received.

Finnish Import Deferral and Postponed VAT Accounting

Finland has introduced a postponed import VAT accounting mechanism where import VAT can be reported as input and output VAT (reverse charged) in the VAT return instead of being paid to the authorities upon importation. Postponed import VAT accounting applies automatically if conditions are met. Taxpayers do not need to file a separate application.

The condition to apply postponed import VAT accounting (or reverse charge on import VAT) is that the importer is either a VAT registered company at the time of the import (it is not sufficient if the company is under registration process), or a self-employed VAT registered business, importing the goods for business purposes. In order to clear the goods from Customs, if condition are met, import VAT is paid to the tax administration directly in the VAT return (reverse charge mechanism), instead of paying import VAT to Customs. Private individuals and self-employed persons importing goods for private use cannot benefit from postponed import VAT accounting.

Import VAT deferral, meaning delaying the payment of VAT for a given period, is not applicable in Finland. You should however be aware of the difference as postponed import VAT accounting is sometimes referred as deferral import VAT.

Find here more information about import VAT in Finland.

Also, have a look at our general article about postponed import VAT accounting.

Finnish Customs and VAT warehouses

Customs or bonded warehouses are available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due. Sales within the customs warehouse are zero-rated.

VAT warehouses are available for cleared goods (T2). These goods have already paid customs duties. The conditions are similar to those of Customs warehouses. The goods allowed are those included in Appendix V of the VAT Directive.

Read more about Customs warehouses. Learn also about import special procedures: Temporary admission, End-use; Inward processing; and import after outward processing.

Finally, find here official EU guidelines on Customs’ special regimes.

Special VAT Schemes in Finland

Businesses may benefit from the following special VAT regimes:

  • VAT relief for small businesses
  • Travel agents
  • Margin scheme

 Special VAT relief for small businesses in Finland

Small business may avoid a VAT registration in Finland.

The small businesses are considered for this special scheme when the company’s turnover for the accounting period (12 months) does not exceed EUR 15,000. The threshold applies to accounting periods that have started on 1 January 2021 or after.

This regime is optional. Therefore, businesses can always opt to register for VAT.

Find here more information about the small business VAT relief scheme.

 Special scheme for small businesses in Finland

The VAT relief for small businesses applies only to businesses established in Finland, or foreign companies with a fixed establishment in the country. It is a form of tax credit for entrepreneurs and companies who are registered for VAT and whose net sales for the accounting period (12 months) are less than EUR 30,000.

If the company’s net sales are:

  • EUR 15,000 or less, the company will be refunded the entire amount of the VAT qualifying for the relief.
  • Over EUR 15,000 but less than €30,000, the company will receive a partial VAT relief.

Find here more information about the small business VAT relief scheme.

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