VAT, GST and Sales Tax in Finland

Summary

Name of the tax Value-added tax (VAT)
Local name Arvonlisävero
Date introduced 1-Jun-94
European Union (EU) Member State Yes
Administered by Finnish Ministry of Finance and National Board of Taxes (Verohallinto) (http://www.vero.fi)
VAT rates
Standard 24%
Reduced 10% and 14%
Other Zero-rated, exempt and exempt with credit
VAT number format 1234567-8 (used for domestic trade, imports and exports) FI12345678 (used for intra­Community trade)
VAT return periods Monthly (or in certain cases quarterly or annually)
Thresholds
Registration EUR10,000 (not applicable to non-established businesses and to municipalities)
Distance selling EUR35,000
Intra-Community acquisitions
General rule No threshold
Fully exempt businesses EUR10,000
Recovery of VAT by non-established businesses Yes

Scope of the tax

VAT applies to the following transactions:

  • The supply of goods or services made in Finland by a taxable person
  • The intra-Community acquisition of goods and acquisition of services (as provided in Article 196 of EU Directive 2008/8/ EY) from another EU Member State by a taxable person (see the chapter on the EU)
  • Reverse-charge services received by a taxable person in Finland (that is, services for which the recipient is liable for the VAT due)
  • Reverse-charge goods purchased by a taxable person in Finland
  • The importation of goods from outside the EU, regardless of the status of the importer

For VAT purposes, Finland does not include the insular province of Ahvenanmaa (Åland Islands). However, the province is part of the Finnish and EU customs territory.

Who is liable

A taxable person is any business entity or individual that makes taxable supplies of goods or services, intra-Community acquisi­tions or distance sales, in the course of a business.

The VAT registration threshold of EUR10,000 applies to businesses that are established in Finland or that have a fixed (permanent) establishment in Finland. The law also includes a tax relief for small businesses with a turnover between EUR10,000 and EUR30,000 during the financial year. The tax relief is gradual. As a result, the amount of the relief decreases as turnover increases.

Special rules apply to foreign or “non-established” businesses that have no fixed establishment in Finland.

Under the main rule, the place of supply of services is deter­mined by the location of the fixed establishment of the purchaser to which the services are supplied. If no such fixed establishment of a purchaser exists, the place of supply is the purchaser’s domi­cile. If the supplier does not have a domicile or a fixed establish­ment in Finland that would intervene in the rendering of the service in the country of the purchaser, the supplier must invoice the purchaser for the sale of the service without VAT. Based on the reverse-charge mechanism, the purchaser reports and pays the VAT on the supplier’s behalf. The main rule regarding the place of supply of services (Article 44 of Directive 2008/8/EY) is similar to the treatment of intangible services before 2010. However, for certain services (for example, services relating to immovable property, passenger transport, arranging of events and catering services), exceptions to the main rule exist.

Group registration. Group registration may be granted to taxable persons that supply exempt financial or insurance services and to other taxable persons controlled by financial or insurance com­panies. Group members must have close “financial, economic and administrative relationships.” All members of the VAT group must be established in Finland. However, Finnish fixed establish­ments of foreign entities may belong to a VAT group.

Group members are treated for VAT purposes as a single taxable person. No VAT is charged on transactions between group mem­bers. Members are jointly responsible for all VAT liabilities of the group.

Cost sharing. An independent group of domestic or foreign per­sons may be granted a VAT exemption on services that the group supplies to its members, subject to several conditions, among them that the provision of those supplies does not cause any dis­tortion of competition. The legal form of the group of persons or the member is not restricted in the VAT Act. It is recommended that the group request an advance ruling from Finland’s VAT authorities before launching a cost-sharing arrangement.

Non-established businesses. A “non-established business” is a business that has no fixed establishment in Finland. A non-established business that makes taxable supplies in Finland is not required to register for VAT if the reverse-charge rule applies to all of its transactions. Under the reverse-charge rule, the Finnish customer is responsible for accounting for the VAT. However, a non-established taxable person may opt to register for VAT pur­poses in Finland, and in that case, the reverse-charge rule no longer applies except for certain supplies of construction services or sales of metal scrap or metal waste (applied as from 1 January 2015).

The reverse-charge rule applies to most supplies of goods and services. The reverse-charge rule does not apply to the following transactions:

  • Supplies of goods and services to private individuals
  • Supplies of goods and services to a non-established business that does not have a fixed establishment in Finland and has not opted to be registered for VAT in Finland
  • Distance sales in excess of the annual threshold
  • Supplies of passenger transport, supplies of the right of admis­sion to educational, scientific, cultural, entertainment or sport­ing events and other similar events, as well as services directly related to the admission to such events

If the reverse charge does not apply, the non-established business must register for VAT in Finland. The VAT registration threshold does not apply to supplies made by a non-established business that does not have a fixed establishment in Finland.

When registering for VAT in Finland a foreign business must fill in an explanatory form concerning the business activities con­ducted by it in Finland. The explanatory form is an enclosure to the VAT registration. The Finnish tax authorities are likely to use the information provided on the form in determining whether the foreign business has a permanent establishment in Finland.

A non-established business that is involved in intra-Community trade in Finland must notify the Finnish VAT authorities of its activities (see the chapter on the EU). Consequently, even if the business does not have to register for VAT (for example, because the reverse charge applies to its sales), it must still notify the Finnish VAT authorities of the fact that it has begun activities. It must also report details of its intra-Community trade to the VAT authorities on a monthly basis. The procedure for registering for the “notification duty” is the same as for general VAT registration.

Alternatively, a non-established business may opt to register for VAT. If a non-established business opts to register for VAT, it may recover Finnish input VAT more quickly through its periodic tax returns. The taxpayer must file a periodic tax return that contains VAT information and information regarding other taxes reported through the “tax account” (see Section I).

Tax representatives. A non-established business that must regis­ter for VAT in Finland is not required to appoint a tax representa­tive, but it may choose to do so. In practice, many non-established businesses appoint tax representatives to deal with correspon­dence from the Finnish VAT authorities, because it is normally written in Finnish or Swedish.

However, if a non-established business opts to register for VAT in Finland when it is not required to do so (for example, because the reverse charge would apply to its transactions), it must appoint a tax representative resident in Finland. This obligation applies only to businesses that do not have a domicile or a fixed establishment in the EU. The Finnish VAT authorities must approve the tax rep­resentative. The representative is not liable for any VAT due.

Reverse charge in domestic trade. The reverse-charge mechanism is also applied to the following domestic sales:

  • Sales of emission rights
  • Sales of construction services
  • Sales of investment gold
  • Sales of scrap metal and metal waste

The reverse charge is applied to the domestic supply of construc­tion services (also labor leasing for construction work). The reverse-charge mechanism is applied to supplies of construction work with respect to immovable property in accordance with specific requirements. The nature of the service and the status of the buyer are decisive in determining whether the supplied ser­vice falls under the reverse-charge mechanism. The condition is that the buyer is a business engaged in the rendering of construc­tion services on an ongoing basis.

The reverse-charge mechanism applies to local supplies within Finland between VAT-liable businesses provided that the goods supplied meet the specific requirements.

Digital economy. As of 1 January 2015, B2C electronically sup­plied services, telecom and broadcasting are always taxable in Finland. Non-EU and EU service providers must register for VAT and remit Finnish VAT. They can do this via the one-stop-shop portal in their own country (if they are established in the EU) or the portal in their EU country of choice (if they are established outside the EU).

Registration procedures. As described above, in Finland there are alternatives for VAT registration. In the case of mandatory VAT registration, retrospective VAT registration is required, provided that the business activities causing the Finnish VAT registration obligation have commenced in the past. In the case where a for­eign entity opts to register for VAT purposes in Finland voluntarily, the earliest possible point of VAT registration is the date of the filing of the VAT registration form.

In Finland, the VAT registration form must be filed in paper for­mat, including the company’s trade register extract with an English translation attached. On average, the completion of the VAT registration procedure takes two to four weeks after the fil­ing of the VAT registration application.

Mini One-Stop Shop. As of 1 January 2015, businesses supplying electronic services to EU nontaxable persons are able to choose Finland as their Member State of identification and declare VAT on services sold to other EU Member State consumers via the Finnish internet portal. For further information, see the chapter on the EU.

Late-registration penalties. No specific penalty is levied for late VAT registration in Finland. However, if the late registration results in the late submission of VAT returns or the late payment of VAT, penalties are imposed.

Deregistration. A taxable person that ceases to be eligible for VAT registration must deregister by filing a notification in paper format.

VAT rates

The term “taxable supplies” refers to supplies of goods and ser­vices that are liable to a rate of VAT, including the zero rate. Zero rate supplies can also be classified as “exempt with credit,” which means that no VAT is chargeable, but the supplier may recover related input tax. Examples of exempt with credit sup­plies include intangible services supplied to another taxable per­son established in the EU or to a recipient outside the EU (see the chapter on the EU).

The following are the current VAT rates in Finland:

  • Standard rate: 24%
  • Reduced rates: 10% and 14%
  • Zero rate (0%)

The standard VAT rate applies to all supplies of goods or services, unless a specific measure allows a reduced rate or exemption.

Examples of goods and services taxable at 0%

  • Exports of goods

Examples of goods and services taxable at 10%

  • Cinema
  • Sporting services
  • Books
  • Medicine
  • Passenger transport
  • Accommodation
  • Compensation from copyrights received by a copyright organi­zation that represents the copyright holders
  • Newspapers and periodicals sold by subscription for a mini­mum of one month

Examples of goods and services taxable at 14%

  • Most foodstuffs including restaurant and catering services (food served at restaurants)
  • Animal feed
  • Drinking water

The term “exempt supplies” refers to supplies of goods and ser­vices that are not liable to tax. Exempt supplies do not give rise to a right of input tax deduction for related expenditure

Examples of exempt supplies of goods and services

  • Land and buildings
  • Financial transactions
  • Insurance
  • Education (as defined by law)
  • Health and welfare
  • Transfers of copyright ownership
  • Universal postal services supplied by universal postal service providers

Option to tax for exempt supplies. Leasing of land and buildings is generally exempt. However, provided that the certain precondi­tions are met, the lessor is able to register for VAT when leasing immovable property and consequently, charge leases with stan­dard VAT rate. This is possible only provided that the land and or building in question is used continuously for taxable purposes. There are also some additional requirements for mutual real estate companies.

Time of supply

The time when VAT becomes due is called the “time of supply” or “tax point.” The basic time of supply is the month in which the goods are delivered or the services are performed.

During the accounting year, a taxable person may account for VAT on the basis of invoices issued and received. At the end of the accounting year, the VAT reporting must be adjusted to follow the basic time of supply (that is, on the basis of goods delivered and services performed).

Prepayments. The time of supply for an advance payment or prepayment is when the payment is received by the supplier (even if the supplier has not yet issued an invoice or made the supply).

Intra-Community acquisitions. The tax point for an intra-Commu­nity acquisition of goods is the month in which the goods are received, but this is superseded if an invoice is issued in the month of receipt of the goods.

Imported goods. The tax point for importation of goods is the date of the written customs clearance confirming that the imported goods are in “free circulation” in the EU following their direct importation or their release from a customs regime. This is not necessarily the date on which the goods are imported.

Continuous delivery. The time of supply of continuous services is the month in which a settlement period ends. A service for which invoicing is based on time spent rather than on amounts received is considered to be continuous.

Cash accounting. Finland has not implemented Article 167a of Directive 2006/112/EC. A taxable person may use a cash accounting scheme during the financial year, but in the last VAT return of the financial year, the bookkeeping must be adjusted to an accrual basis. As of 1 January 2017, small companies with turnover less than EUR500,000 per financial year are allowed to notify and pay the VAT on a cash basis without the mentioned adjustment. This simplification only concerns fully domestic transactions.

Reverse-charge services. The time of supply of reverse-charge services follows the general time of supply rules described above.

Intra-Community supplies of goods. The time of supply of intra­Community supplies of goods reflects the time of supply of intra­Community acquisition. As a consequence, the basic time of supply for an intra-Community supply of goods is the month in which the goods are delivered to the purchaser. The tax point for an intra-Community supply of goods is the month following the one in which goods are delivered to the customer, but this is superseded if an invoice is issued in the month that the goods are delivered.

Leased assets. Usually, the (operational) lease of assets is seen as continuous supplies of services as the invoicing is based on time spent. The time of supply of continuously delivered services is the month in which a settlement period ends.

Recovery of VAT by taxable persons

A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for business purposes. The tax­able person generally recovers input tax by deducting it from output tax, which is the VAT due on supplies made.

Input tax includes VAT charged on goods and services supplied within Finland, VAT paid on imports of goods and VAT self-assessed on the intra-Community acquisition of goods and acqui­sition of services (as provided for in Article 196 of EU Directive 2008/8/EY) and reverse-charge goods and services.

A valid tax invoice that fulfills the requirements of the Finnish VAT invoicing rules (see Section H) or a customs document must generally accompany a claim for input tax.

Nondeductible input tax. Input tax may not be recovered on pur­chases of goods and services that are not used for business pur­poses (for example, goods acquired for private use). In addition, input tax may not be recovered for some items of business expen­diture.

The following lists provide some examples of items of expendi­ture for which input tax is not deductible and examples of items for which input tax is deductible if the expenditure is related to a taxable business use.

Examples of items for which input tax is nondeductible

  • Business entertainment
  • Purchase, lease, hire and maintenance of passenger cars and cars for mixed purposes (that is, cars designed and equipped for carrying passengers and goods), unless used exclusively for business use
  • Private use of trucks and vans
  • Fuel for private cars
  • Private expenditure

Examples of items for which input tax is deductible
(if related to a taxable business use)

  • Hotel accommodation (VAT on hotel breakfast is not deduct­ible)
  • Books
  • Advertising
  • Staff entertainment (subject to limitations)
  • Home and mobile telephone bills (portion of private use is nondeductible)
  • Attendance at conferences, seminars and training courses
  • Fuel and maintenance of vans, to the extent used for business purposes
  • Public transport and taxis

Partial exemption. Input tax directly related to the making of exempt supplies is not generally recoverable. If a Finnish taxable person makes both exempt supplies and taxable supplies, it may not recover input tax in full. This situation is referred to as “par­tial exemption.”

In Finland, the amount of input tax that a partially exempt business may recover is calculated in the following two stages:

  • The first stage identifies the input VAT that may be directly allocated to exempt and to taxable supplies. Exempt with credit supplies are treated as taxable supplies for these purposes. Input tax directly allocated to exempt supplies is not deductible. Input tax directly allocated to taxable supplies is recoverable in full.
  • The second stage apportions the remaining input tax, i.e., the input tax that relates to both taxable and exempt supplies, in order to allocate a portion to taxable supplies (which may then be recovered). For example, this treatment applies to the input tax related to general business overhead. The pro rata calcula­tion is normally based on the value of the taxable supplies made compared to the total value of all supplies made, but other well-founded methods of apportionment may be used.

Capital goods. Capital goods are items of capital expenditure that are used in a business over several years. Input tax is deducted in the VAT year in which the goods are acquired. In Finland, special treatment for capital goods is restricted to purchases of land and buildings and to construction and fundamental improvements.

Special rules apply to deductions on real estate investments, including:

  • Input tax on real estate investments is deducted in the VAT year in which the goods or services are acquired for taxable business purposes. The amount of input tax recovered depends on the use of the immovable property for taxable business activity. If the use of the property for taxable business activity increases or decreases, the amount of input tax recovered is adjusted. The right or obligation to adjust relates only to real estate used for business purposes.
  • The adjustment period is 10 years, beginning with the year in which the construction or renovation work is completed. This period also applies to certain cases in which the real estate is taken into use after the completion of the real estate investment (that is, cases in which the real estate is not taken into use immediately after the real estate investment has been comple­ed). Each year 1/10 of the input VAT paid for the real estate investment is subject to adjustment.
  • The annual adjustment may result in either an increase or a decrease of deductible input VAT, depending on whether the portion of taxable use of the property has increased or decreased compared with the year in which the investment was made. The annual adjustment is reported in the last periodic tax return of the calendar year in question (that is, the periodic tax return for December). Adjustments do not apply to operating costs or maintenance costs.
  • If the immovable property is sold to a business, the right or liability for adjustments is transferred to the acquiring business. In some cases, a full adjustment must be made instead of annual adjustments.
  • The adjustment and monitoring rules also apply to tenants that have made real estate investments with respect to the leased premises. Consequently, with respect to the transfer of the adjustment obligation, the status of the tenant is comparable to the status of the owner of the immovable property.

Other rules may also apply to specific situations, such as a sale of the real estate that is under construction.

Refunds. If the amount of input tax recoverable in a monthly period exceeds the amount of output tax payable in that period, the taxable person has an input tax credit.

Under the so-called “OmaVero” procedure, the amount of VAT that has not been used for the payment of VAT due during the tax period (i.e., the input tax credit) is set off against other taxes due if needed or otherwise refunded to the taxpayer after the tax period. Alternatively, the taxpayer can allocate the amount of VAT into the tax account. This amount can be used for the pay­ment of the VAT due in the future. As a result of the introduction of the tax account procedure, two earlier practices are, in general, no longer applicable: the VAT advance refund procedure that applied during the accounting period and the VAT refund proce­dure that applied after the accounting period. For further infor­mation, see Section I.

Preregistration costs. In general, costs related to the starting up of a taxable business are deductible.

Write-off of bad debts. Bad debt relief is available for both estab­lished businesses and non-established businesses registered for VAT in Finland. The amount does not need to be final based on bankruptcy or enforcement procedures, but it must be considered to be accrued in accordance with good accounting practice.

Noneconomic activities. In general, input VAT on costs related to noneconomic activities is not deductible.

Recovery of VAT by non-established businesses

Finland refunds VAT incurred by businesses that are neither estab­lished in Finland nor registered for VAT there. A non-established business is allowed to claim recovery of Finnish VAT to the same extent as a VAT-registered business.

Effective 1 January 2010 for businesses established in the EU, refund is made under the terms of EU Directive 2008/9. The Finnish VAT Act was amended to reflect EU Directive 2008/9.

For businesses established outside the EU, refunds are made under the terms of the EU 13th VAT Directive. Finland does not exclude claimants from any non-EU country from the refund process.

For the general VAT refund rules applicable to these refund schemes, see the chapter on the EU.

Refund application. Under EU Directive 2008/9, a claim form must be filed electronically with the domestic tax authorities of the taxpayer’s country (for example, if the fixed establishment or domicile of the taxpayer is Finland, the competent tax authority is located in Finland). After a preliminary review of the claim form, the tax authorities will forward the claim form electroni­cally to the tax authorities of the country of destination. The taxpayer must attach to the claim form scanned copies of the purchase invoices and other documents, such as importation documents with a tax base of at least EUR1,000. In addition, the tax authorities of the country of destination may also demand to see the original invoices and documents.

The claim form may have to contain a closer specification of the invoices and importation documents (among others, the nature of the purchased goods or services itemized to different codes).

For refund applications under the 13th Directive, the deadline for refund claims is 30 June of the year following the year in which the supply was made. The date of supply may be earlier than the date of the invoice. The deadline for claims is strictly enforced.

Claims must be submitted in Finnish, English or Swedish. The refund application must be accompanied by the appropriate documentation.

The minimum claim period is three consecutive months during the same calendar year. The maximum claim period is one year. The minimum claim amount for a period of less than a year is EUR400. For an annual claim, the minimum amount is EUR50.

Applications for refunds of Finnish VAT may be sent to the fol­lowing address:

Uudenmaan Verovirasto

Yritysverotoimisto

PL34

00052 VERO

Finland

Invoicing

VAT invoices and credit notes. A Finnish taxable person must generally provide a value-added taxable invoice for all supplies made to other taxable persons and to all legal entities, including exports and intra-Community supplies. As of 1 January 2013 there is no longer an obligation to issue invoices for advance pay­ments for intra-Community supplies. Invoices are required for supplies to private persons regarding intra-Community supplies of new means of transport and distance sales.

Both sales and purchase invoices must be in accordance with the Finnish VAT invoicing rules. A purchaser of goods and services may recover the input VAT on the purchase only if it retains an invoice that fulfills the requirements. If purchase invoices do not fulfill all the requirements, the purchaser may lose the right to recover the input VAT, unless the inadequate invoice is replaced with a new (corrected) invoice.

Under the EU Directive 2010/45/EU, effective from 1 January 2013, an invoice for intra-Community supplies of goods carried out in accordance with the conditions specified in Article 138 or for supplies of services for which VAT is payable by the cus­tomer pursuant to Article 196 must be issued on the 15th day of the following month at latest.

The following information must be included in the invoice:

  • Invoice date.
  • A sequential number, based on one or more series, which uniquely identifies the invoice.
  • The VAT identification number of the supplier. For domestic supplies, it is the business identification number, and for intra­Community supplies and supplies of services mentioned in Article 44 of the EU VAT Directive, it is the EU VAT number.
  • The VAT identification number of the customer if the customer or buyer is liable to pay tax on goods supplied or services ren­dered, if the goods have been supplied as an intra-Community supply or if the service is a supply mentioned in Article 44 of the EU VAT Directive.
  • The full name and address of the supplier and the customer or buyer.
  • The quantity and nature of the goods supplied or the extent and nature of the services rendered.
  • The date on which the supply of goods and services is made or completed. For an advance payment, the invoice must show the date on which the payment on account is made if such date may be determined and differs from the date of issuance of the invoice.
  • The taxable amount (excluding VAT) for each VAT rate or exemption, the unit price exclusive of VAT and the amount of any discount or rebates if they are not included in the unit price.
  • The VAT rate applied (for each VAT rate).
  • The VAT amount payable in euros (unless the margin scheme applicable to secondhand goods, works of art, collectors’ items and antiques is applied).
  • In the case of an exemption, a reference to the appropriate pro­visions of the Finnish VAT Act or the EU VAT Directive, or any other reference indicating that the supply of goods or services is exempt.
  • If the customer is liable for the payment of the VAT, the refer­ence “Reverse charge” must be used.
  • If the customer receiving a supply issues the invoice instead of the supplier, the reference “Self-billing” must be used.
  • Information regarding new means of transport sold to another Member State (such as date of sale, date of first use, cubic displacement or power rating of the engine, mileage driven).
  • If the margin scheme for travel agents is applied, the reference “Margin scheme – Travel agents” must be used.
  • If one of the special arrangements applicable to secondhand goods, works of art or collectors’ items and antiques is applied, the reference “Margin scheme – secondhand goods, works of art or collectors’ items and antiques” must be used.
  • Indication of the sales of taxable investment gold.
  • If a corrected invoice (for example, a credit note) is issued, an unambiguous reference to the original invoice.

In some specific cases, the invoicing requirements are less de tailed. Less-detailed invoices may be issued in the following cases:

  • Invoices for amounts up to EUR400 (including VAT).
  • Invoices relating to supplies made by certain businesses whose clients are principally private persons, such as retailers and kiosks, and hairdressers.
  • Invoices regarding passenger transport or restaurant services and receipts concerning parking meters and vending machines. For these invoices, only the following information must be included:
    • The invoice date.
    • The supplier’s name.
    • The supplier’s VAT identification number.
    • The quantity and nature of the goods supplied or the nature of the services rendered.
    • The amount of VAT payable (at each VAT rate) or the taxa­ble amount exclusive of VAT (at each VAT rate).

A VAT invoice is necessary to support a claim for input tax deduction or a refund under the EU Directive 2008/9 or 13th Directive refund scheme (see the chapter on the EU).

A VAT credit note may be used to reduce the VAT charged and reclaimed on a supply.

Electronic invoicing. Effective 1 January 2013, the VAT law has been amended to permit electronic invoicing in line with EU Directive 2010/45/EU.

Proof of exports and intra-Community supplies. Finnish VAT is not chargeable on supplies of exported goods or on the intra-Commu­nity supply of goods. However, to qualify as VAT-free, exports and intra-Community supplies must be supported by evidence, such as proof that the goods have left Finland. Acceptable proof includes the following documentation:

  • For an export, a copy of the export document, officially vali­dated by customs. The authorities may also approve the use of other documentation such as consignment notes (or other com­mercial evidence) or the import declaration of the customs destination. Depending on the party that arranges the transpor­tation, other requirements may need to be satisfied for the VAT exemption to be allowed.
  • For an intra-Community supply, the supplier must include the purchaser’s valid EU VAT identification number (issued by an EU Member State other than Finland) on the sales invoice and must retain commercial documentation (for example, transport documentation, consignment notes, proof of payment and proof of receipt of the goods) to show evidence of the transportation of the goods from Finland to another EU Member State.

Foreign-currency invoices. A valid Finnish VAT invoice may be issued in a foreign currency, but the VAT amount must be con­verted to euros using the latest selling rate of the Bank of Finland or the rate published by the European Central Bank at the time the tax becomes chargeable.

B2C invoices. Effective 1 January 2015, new rules apply to the place of supply for supplies of telecommunications, broadcasting and electronic services to non-VAT taxable customers. For details, refer to the European Union chapter.

Finnish suppliers are not specifically required to issue tax invoic­es to nontaxable customers for these services, but in practice, an invoice may often be required.

VAT returns and payment

Periodic tax returns. Finnish periodic tax returns are submitted monthly or, in certain cases, quarterly or annually.

Under the “OmaVero” procedure, the taxpayer files one periodic tax return that consists of VAT information and also information regarding other taxes re ported through the tax account. In gen­eral, the periodic tax return must be filed electronically by the 12th day of the second month following the return period. If the taxpayer’s tax period is a calendar year, the due date for the tax return and payment of the tax due is the 28th day of the second month following the return period. The periodic tax return is considered to be filed on time when the Finnish tax authorities receive the tax return within the prescribed period. For example, the due date for the January 2017 tax return is 12 March 2017.

Under the OmaVero procedure, all taxes and payments are entered into a tax account maintained by the tax authority. The taxpayer must pay all taxes due, in euros, by the 12th day of the month by using a certain reference number. The OmaVero proce­dure replaces the former tax account procedure containing simi­lar functionalities. The amount of VAT that is not used for the payment of VAT due during the tax period is set off against other taxes due if needed or otherwise refunded to the taxpayer after the tax period. Alternatively, the taxpayer can retain the VAT in the tax account and use it for the payment of the VAT due in the future. Voluntary extensions of VAT reporting and payment peri­ods to a quarter or a year are available for small companies (turnover not more than EUR100,000 or EUR30,000 per calen­dar year, respectively).

The supply and acquisition of services that fall within the main rule for the place of supply of services (Article 44 of the EU VAT Directive; see Section C) must be reported in the periodic tax return, effective from 1 January 2010, as well as in EU Sales Lists (ESLs; see Section K).

Electronic filing and archiving. Electronic filing of VAT returns is compulsory as of 1 January 2017 unless the Finnish Tax Administration has granted a special permission to file the VAT return in paper. Since November 2013, non-Finnish users have also had access to electronic filing services. E-filing of docu­ments such as VAT returns and EU Sales Lists is organized through a so-called KATSO identification (Katso ID).

Consequently, in order to be able to make electronic filings, tax­payers should set up a Katso ID for electronic filing. Currently, the starting up of an e-filing procedure is rather complex, espe­cially for foreign companies with no Finnish citizens as employees.

In principle, documentation related to Finnish VAT returns should be stored in Finland. However, in general this documenta­tion can be stored abroad provided that the storage is arranged by electronic means and real time access from Finland is guaranteed.

Special schemes

As of 1 January 2017, small companies with turnover less than EUR500,000 per financial year are allowed to notify and pay the VAT on a cash basis. This simplification only concerns fully domestic transactions.

A special VAT margin scheme also applies for transactions car­ried out by travel agents and for transactions concerning second­hand goods, works of art, collectors’ items and antiques.

Penalties

For the late payment of VAT, interest at an annual rate of 7.5% is assessed for 2015 beginning with the day following the due date to the date of payment.

If the periodic tax return is filed late, a penalty payment of EUR3 per day is assessed until the tax return is filed, up to a maximum of EUR135. If the tax return is filed more than 45 days late, the penalty payment is EUR135 plus 2% of the VAT payable on the return in question. The maximum amount of the penalty payment dependent on the tax payable is EUR15,000 per type of tax per tax period.

EU filings

Intrastat. A Finnish taxable person that trades with other EU countries must complete statistical reports, known as Intrastat, if the value of its sales or purchases exceeds certain thresholds. Separate reports are required for intra-Community acquisitions (Intrastat Arrivals) and for intra-Community supplies (Intrastat Dispatches).

The threshold for Intrastat Arrivals for 2016 is EUR550,000. The threshold for Intrastat Dispatches for 2016 is EUR500,000.

Finnish taxable persons must complete Intrastat declarations in euros.

The Intrastat return period is monthly. The submission deadline is the 10th business day following the return period.

A penalty is assessed for late filing or for a failure to submit a return or for the submission of an incorrect Intrastat return in an amount ranging between EUR10 and EUR2,500.

EU Sales Lists. If a Finnish taxable person makes intra-Communi­ty supplies, it must submit an EU Sales List (ESL; also called EU recapitulative statement) to the Finnish tax authorities. An ESL is not required for any period in which a taxable person does not make any intra-Community supplies. Supplies falling under Article 44 of the EU VAT Directive must be reported on an ESL if the purchaser is located in the EU and is liable to pay the VAT on behalf of the supplier in the country where the purchaser is established.

The reporting period for an ESL is one month. The due date for filing the ESL is the 20th day of the month following the month of the transaction. The ESL must be filed electronically. Subject to certain conditions, the tax authorities can allow the taxpayer to file the ESL in paper format if a request is made.

The tax authorities may impose a penalty fee from EUR80 to EUR1,700 for late or inaccurate ESLs.