LOCAL VAT MEASURES FOR FOREIGN COMPANIES IN FINLAND
Do special arrangements apply to "call-off-stock" in Finland?
Finland had simplification measures applicable for call-off stock arrangements up to 31/12/2019. If conditions were met, foreign companies were not required to register for VAT purpose locally.
Since 01/01/2020, the European simplification regime for call-off stock arrangements ("2020 Quick Fixes") entered into force and is to be applied by all Member States. This implies that all other possible national arrangements regarding call-off stock arrangements are mute and, if they provide for divergent rules, should be viewed as not in line with EU Law.
Simplification measures applicable for call-off-stock arrangements in Finland up to 31/12/2019 have been withdrawn and replaced by the new European simplification VAT regime in respect of call-off stock accordingly.
Call-off stock refers to the situation where at the time of transport of goods to another Member State, the supplier already knows the identity of the person acquiring the goods to whom they will be supplied at a later stage and after arrival of the goods in the Member State of destination. This currently gives rise to a deemed supply (in the Member State of departure of the goods) and a deemed intra-Community acquisition (in the Member State of arrival of the goods), followed by a 'domestic' supply in the Member State of arrival and requires the supplier to be identified for VAT purposes in that Member State.
Simplification measures have been implemented in various Member States avoiding the VAT registration of the supplier in the country of destination.
Triangulation can be applied when the middleman (B) is VAT registered for others supplies in the 3rd country (Member State of destination)?
Yes
Triangulation regime can be applied even if the middleman B is VAT registered as a non-established company in Finland [Member State C].
Triangulation can be applied when the chain transaction involves four or even more parties?
No
Triangulation scheme is not applicable in chain transaction involving four or even more parties.
Chain transactions refer to successive supplies of goods which are subject to a single intra-Community transport. The intra-Community movement of the goods should only be ascribed to one of the supplies, and only that supply should benefit from the VAT exemption provided for the intra-Community supplies. The other supplies in the chain should be taxed and may require the VAT identification of the supplier in the Member State of supply.
However, the divergent approach amongst Member States in the application of these exemptions for cross-border transactions has created difficulties and legal uncertainty for businesses.
Optional reverse charge for supply of goods?
Yes
Reverse charge is applicable to major supplies of goods [with exception for specific topics] carried out by non-established supplier in case the customer is VAT registered in Finland. In case the foreign supplier needs or has opted to register for VAT, reverse charge mechanism is no more applicable.
Optional reverse charge for supply of services
Reverse charge is applicable to major supplies of services [with exception for specific topics, incl. access rights to educational-, scientific-, cultural-, recreational-, and athletic events, fairs and exhibitions, or other similar activities] carried out by non-established supplier in case the customer is VAT registered in Finland. In case the foreign supplier needs or has opted to register for VAT, reverse charge mechanism is no more applicable.
Optional reverse charge (art. 194 of the VAT Directive)
Member States in which the VAT is due may provide that the person liable for the payment of VAT is the person to whom the goods or services are supplied where the transaction is carried out by a taxable person who is not established in the country in which the VAT is due.
VAT Warehousing implemented in Finland?
Yes
Finland has introduced VAT warehousing regime applicable under specific conditions.
VAT Directive
Member States may exempt the importation of goods and the supply of goods which are intended to be placed under warehousing arrangements other than customs warehousing.
Is it possible for a company to pay the import VAT via the periodical VAT return?
Yes
Postponed accounting of import VAT entered into force on 01/01/2018. Importations of tangible items from outside of the EU into Finland can be done under the coverage of a reverse charge mechanism. In practice, importers with a Finish VAT registration will be allowed to pay import VAT in their VAT return. Doing so the cash flow inconvenience entailed in the common procedure with payment at the custom clearance will disappear.
VAT DIrective
Member States may provide that VAT on importation does not need to be paid at the time of importation on condition that it is entered as such in the VAT return to be submitted.
VAT OBLIGATIONS IN FINLAND
How is the tax period determined in Finland?
Monthly/Quarterly/Yearly
Your company has to report its VAT position by filing periodical VAT returns on a monthly basis [standard tax period]. Quarterly reporting period can be opted for if your annual turnover of the preceding calendar year is under € 100.000 (previously € 50.000). Yearly reporting period is also possible provided your annual turnover does not exceed € 30.000 (previously € 25.000).
When should periodical VAT return be filed?
Periodical VAT returns must be submitted electronically to Finnish VAT authorities by the 12th day of the second month (12 of N+2) following the tax period.If reporting frequency is yearly, the due date is the last day of February of the following year.
VAT Directive
The tax period shall be set by each Member State at one month, two months or three months. Member States may, however, set different tax periods provided those ones do not exceed one year. The VAT return shall be submitted by a deadline to be determined by Member States. That deadline may not be more than two months after the end of each tax period.
Is this requirement laid down in the country and what is the filing deadline?
Your company is not required to file any summarizing annual VAT return in Finland.
VAT Directive
Member State may require taxable persons to submit a return in respect to all transactions carried out in the preceding year. That return shall provide all the information necessary for any adjustments.
Are quarterly filings allowed by the country and what is the filing deadline?
The recapitulative Statement [ESL] must be drawn up for each calendar month and submitted to local VAT authorities by the 20th of the month after the end of the reporting period [month]. Filing the Statement on a quarterly basis is not possible.
VAT Directive
The recapitulative statement shall be drawn up for each calendar month. However, Member States, in accordance with the conditions and limits which they may lay down, may allow taxable persons to submit the recapitulative statement on each calendar quarter where the total quarterly amount of intra-EU supplies of goods does not exceed either in respect of the quarter concerned or of any of the previous four quarters the sum of € 50.000 or its equivalent in national currency. The recapitulative statement shall be submitted within a period not exceeding one month.
What is the payment deadline?
The VAT due must be paid by filing deadline for the VAT return [12th day of the second month following the tax period]
Are interim payments required?
Interim payments are not required.
VAT Directive
Any taxable person liable for the payment of the VAT must pay the net amount of the VAT when submitting the VAT return. Member States may, however, set a different date for payment of that amount. Member States may require interim payment to be made.
Is any VAT credit automatically carried forward or refunded?
No carry-forward mechanism. A VAT credit is in general automatically refunded after the tax authorities have approved it.
VAT Directive
Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period. However, Member States may refuse to refund or carry forward if the amount of excess is insignificant.
VAT OVERVIEW IN FINLAND
What is the local name of the tax?
Arvonlisavero [ALV]
What is the structure of the VAT number?
Finnish VAT numbers have 10 characters [FI + 8 digits].
VAT Directive
Member States must apply a standard VAT rate [not lower than 15%] which must be the same for the supply of goods and for the supply of services. Member States may apply either one or two reduced rates [not lower than 5%] only to supplies of goods or services as listed in the Annex III of the VAT Directive.
VAT rates
Finland applies a standard VAT rate of 24% and two reduced VAT rates: 10% and 14%.
€ 35,000
see various thresholds applied in the EU
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