If a Finnish business registered for Value Added Tax (VAT) receives services from a non-resident supplier and doesn’t supply from a fixed place of business in Finland, then it’s required to account for VAT on the supply under the “reverse charge” mechanism if Finland is the place of supply. This is according to Article 9 of the Finnish VAT Act.
Under the reverse charge method, the Finnish VAT-registered business is considered to have made a taxable supply of the imported services to itself, resulting in an output VAT liability and an equal input VAT credit. If the Finnish company only makes taxable supplies, then it won’t incur any cost, not even a cash flow cost, since these two sums will cancel out immediately.
Read more about Reverse Charge and “Call-off stock” in Finland in our comprehensive guide.
Consignment stock is, generally, stock that is sent by a transferor (or “consignor”) to a warehouse, to then be sold to a final customer by an intermediary called a consignee. The stock remains under the consignor’s control, and the title generally passes to the consignee just before the stock is finally sold.
Call-off stock is generally goods transferred by a supplier to a warehouse or storage facility, where a previously identified customer may take them at will. The warehouse is often owned or controlled by the customer.
When a foreign consignor transfers consignment stock to a warehouse in Finland from outside Finland, they are typically required to register for Finnish VAT. If the stock is transferred from another European Union (EU) member state, the transaction is considered an intra-Community acquisition under Article 26a of the Finnish VAT Act.
However, if the stock is transferred from a third country, the transaction is treated as an import, and the consignor is responsible for VAT if they are considered to be holding the goods for customs purposes. The consignee’s removal of the stock from the warehouse is treated as a domestic supply.
Sales of call-off stock that involve a movement of goods into Finland generally also trigger a registration requirement. However, suppliers of call-off stock registered in the EU Member States may be able to avoid registration in Finland under a simplification scheme if certain requirements are met. Different simplification schemes apply as of January 1, 2020, and before that date.
Starting from January 1, 2020, one of the “Quick Fixes” provided by Article 17a of the EU VAT Directive, which has been implemented into the Finnish VAT Act under Articles 18c-d, 26h-i, and related provisions, has harmonized call-off stock arrangements across the EU Member States. These regulations apply when a supplier in one EU Member State transfers stock to a warehouse in another EU Member State to satisfy a known purchaser.
Under this simplification rule, the transfer of stock to the warehouse is not a taxable event. However, the subsequent transfer of ownership of the goods to the recipient is a taxable event. This taxable transfer is treated as a zero-rated intra-Community supply of goods from the supplier to the recipient and an intra-Community acquisition in the Member State. This eliminates the requirement for the supplier to register for VAT in the Member State of destination.
However, the transfer must occur within 12 months. After 12 months, the obligation to register for VAT in the destination Member State is in place.
In Finland, the VAT liability is based on the location where the goods or services are supplied rather than the supplier’s location. The VAT rate charged on goods or services obtained from outside Finland is the same as the rate applied if the goods or services were delivered in Finland. For imported goods, VAT (known as “import VAT”) is payable upon importation, while for services, the “reverse charge” mechanism or location of supply regulations are used to determine VAT liability.
Under Article 1 of the Finnish VAT Act, all products imported into Finland are subject to VAT.
When items are imported from outside the EU, the importer usually pays VAT. An “importer” in this sense is a corporation that sells items in Finland and, as a result, is almost certainly necessary to register as a VAT payer.
If an importer is not VAT-registered, however, the Finnish recipient of the products must pay the import VAT and customs tax when the goods are received. If imported products are used to make other taxable goods or services, the Finnish recipient of the items is subject to the standard requirements for recovering input VAT.
Under Article 86b of the VAT Code, goods are treated as imported when:
Last Updated: 14/12/2023
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