Reverse Charge in Finland

Reverse Charge for Non-established Companies in Finland

According to art 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses.

Finland has introduced this reverse charge on certain supplies. Domestic supplies of goods and services performed by a non-established supplier in Finland fall into the reverse charge mechanism provided that:

• The Supplier does not have a fixed establishment in Finland involved in the sale, and that it has not applied for a voluntary registration.
• The Customer is VAT registered in Finland (except the supply relates to construction services).
• Other exceptions where reverse charge does NOT apply: the Customer is a private individual; passenger transport service;. right to access an educational, scientific, cultural, entertainment or sports event, trade fair, exhibition or other similar event organized in Finland, as well as a service directly related to access.

Check the Legal Guidance about reverse charge on supplies made by non-established companies.

When reverse charge applies, the trader must mention in the invoice to the buyer that reverse charge applies (wording "reversed tax liability" or "käännetty verovelvollisuus" in the local language).

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Reverse Charge on B2B Services

Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located.

According to the general B2B rule, any business resident outside Finland supplying services to a Finnish based customer will not charge any VAT and the transaction will be reverse charged by the customer.

There are however a number of exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in Finland provided the following conditions are met:

• Services connected to immoveable property are located where the property is located.
• Passenger transport services will be located where the transport takes places (apportioned if necessary).
• Catering services are located where the catering takes place.
• Short term leasing of means of transport are located where the vehicle put at the disposal of the customer.
• Access to conferences, fairs and exhibitions is located where the event takes place.

The general rule may also be deviated where the supplier has a permanent establishment in the country of the customer and the PE has intervened in the supply.

Find out more about the rules for B2B services in the EU here. Exceptions to general rule are regulated in Articles 23 and following of the Finnish VAT Act .

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Reverse Charge on Specific Goods and Services in Finland

Domestic reverse charge may also apply to domestic supplies of certain goods and services made by companies in Finland. This reverse charge applies irrespective of the country of establishment of the Supplier.

• Supplies of CO2 emission allowances.
• Supplies of investment gold. For reverse charge to apply, the Customer must be VAT registered for VAT in Finland, and the Supplier has not opted to tax.
• Supplies of metal waste and scrap. For this reverse charge to apply, both the Supplier and the Customer must be VAT registered in Finland. Learn more.
• Supplies in the construction industry to a customer usually involved in the construction industry. Reverse charge applies to construction services and to hiring staff for construction. Find more information here.

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