FINLAND: COVID-19 VAT IMPLICATIONS

Apr 1, 2020 | COVID-19

FINLAND – update 26th May

VAT paid earlier in 2020 can be claimed back and paid later

The company can claim back the VAT it paid in early 2020. In practice, the company makes a request for a payment arrangement and subsequently pays the refunded VAT back to the Tax Administration through the payment arrangement. The easiest way to request a payment arrangement is in OmaVero 26.5. onwards.

Taxes must be repaid later in the payment arrangement

By requesting a payment arrangement, you can reclaim the VAT paid by your business due in January, February, and March 2020. Please note that you will not be able to recover any late payment interest you paid at the beginning of the year. You will only receive a refund of the original VAT without interest on arrears.

If your VAT tax period is one year, you can request a refund of a quarter, or 25 percent, of your 2019 VAT.

However, a refund does not mean that your business should be able to keep refundable payments on a permanent basis. In the payment arrangement, your company undertakes to pay the VAT back to the Tax Administration later.

When you pay VAT back to the Tax Administration in accordance with the payment arrangement, you will also have to pay 3% default interest. Interest on arrears shall accrue from the original due date of the VAT. Interest is included in the payment arrangement items.

 

Source Credit – Veroskatt

 

FINLAND – update 29th April

VAT loans allow for a temporary refund of VAT payments against an interest charge of 3%

Finland is to offer VAT loans during the coronavirus crises. This enables businesses to apply for a temporary refund of VAT payments they have made on their returns in 2020. There will be an interest charge of 3%.

 

Source Credit – Richard Asquith (Avalara)

 

FINLAND – update 17th April

Businesses can request a removal of the late-filing penalty. However they advise to file VAT returns on time wherever possible.

 

Source Credit – Accordance VAT

 

FINLAND – update 17th April

One-Month Tax Return Extension and VAT/Customs Exemption for Imported Medical Devices Due to COVID-19

The Finnish Tax Administration has announced that due to the current exceptional circumstances (as a result of COVID-19), the tax administration is providing companies more time to file their tax returns. The tax return can now be filed within five months from the end of the accounting period, instead of the normal four months. The one-month extension applies for accounting periods ending between December 2019 and February 2020 and will be displayed in MyTax in April. Despite the extensions, however, the Tax Administration wishes that all companies and organizations who can file their tax return by the normal filing deadline would do so.

It is further noted that this decision applies to all corporate entities, such as associations, housing companies, real estate companies, foreign corporations, cooperatives, and investment funds. The Tax Administration has also announced that, due to the COVID-19 situation, medical devices imported from outside the EU are exempt from customs duties and VAT.

 

Source Credit – Orbitax

 

FINLAND – update 7th April

Finland Confirms Late Payment Interest Rate Reduction Due to COVID-19

Finland’s Ministry of Finance has issued a release confirming that the interest rate on late payments of taxes is temporarily reduced from 7% to 4%. The rate reduction applies retroactively for payments due after the beginning of March 2020 and will continue to apply for taxes due up to the end of August 2020 at the latest.

 

Source credit – Orbitax

 

FINLAND – Update 31st March (2)

  • Actually, no changes to filing or payment due dates. Application for extension for corporate income tax return filing possible – not possible for VAT return.
  • A company may not have to add late-payment interest to their payments if they are unable to pay the tax on time due to a special reason, such as illness. The removal of late-payment interest can be requested in electronically in MyTax.
  • Late filing penalties and late payment interest related to VAT can be removed on specific reasons only and only if requested by the taxpayer.
  • Companies with temporary financial difficulties can request payment arrangements with eased terms starting 25 March 2020.
  • Property owners must pay attention that tenants will continue to be liable for VAT (in particular in bankruptcy situations), if agreed in the lease agreement. Otherwise, the VAT deductions on real estate investments may have to be paid back to the Tax Authorities.
  • The Finnish Tax Authorities enhance the handling of VAT refunds to VAT registered companies but no practical measures have been taken yet.
  • Timing of output VAT payments to the Tax Authorities can be optimized, if invoices issued at the end of the month could be transferred to the beginning of the following month. This would allow one month additional time for the payment of the VAT. Companies can also improve cash flow if they file taxes on a cash basis method, where possible, and thus, pay output VAT only when payment is received from the customers.
  • If the actual income or expenses differ from the original estimates, the company may request a change to their prepayments. A refund related to prior year or a reduction of monthly prepayments related to current year can be applied for now.

FINLAND – Update 25th March (1)

  • Businesses can apply to the Tax Authority for penalties to be waived on late payments.
  • Filings and payments must be submitted as usual and on time.

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