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VAT Returns & Recovery in Finland

Most businesses in Finland use a monthly accounting period to report their VAT to the tax authorities. However, businesses can apply to extend their accounting period to either a calendar quarter or a year if they do not exceed certain annual turnover thresholds.

The threshold for a quarterly accounting period is 100,000 euros, meaning that businesses with a turnover of less than this amount can apply to report their VAT on a quarterly basis. Similarly, the threshold for an annual accounting period is 30,000 euros, allowing businesses with a turnover below this amount to apply to report their VAT on an annual basis.

Read more about VAT recovery and VAT returns in Finland in our comprehensive guide.

VAT guide Finland

VAT Returns in Finland

VAT returns must be filed by several types of taxpayers, including:
  • Businesses that are required to pay VAT
  • Individuals who have opted to impose VAT on the letting of real property
  • Primary producers who are liable to pay VAT
  • Buyers of goods and services who are liable to pay VAT under the reverse charge mechanism or for intra-Community acquisitions
  • Reindeer farmers who are liable to pay VAT
  • Foreign taxable persons who have an obligation to submit VAT information in Finland.
Interests and Penalties

Late payment of VAT in Finland incurs interest charges at a rate of 7% above the reference rate set by the Finnish Ministry of Finance every six months. In addition to the interest charges, taxpayers who fail to pay their VAT on time may also be subject to penalties for violations such as filing VAT returns late or submitting incorrect information. These penalties can be imposed on top of the interest charges, resulting in additional financial consequences for non-compliance with VAT regulations in Finland.

In case of a delayed VAT return or a corrected VAT return after the deadline, a late filing penalty is imposed in Finland. If the VAT return is submitted within 45 days of the deadline, the penalty is 3 euros per day, starting from the day after the deadline and up to a maximum of 135 euros. If the VAT return is submitted later than 45 days after the deadline, an additional penalty is imposed, which is 2% of the amount of VAT due on the declaration, with a maximum of 15,000 euros. This means that the maximum combined penalty is 15,135 euros. However, if the VAT return shows that the taxpayer is entitled to a refund, only the late filing penalty of 135 euros is charged.

If a business fails to comply with its VAT obligations, despite a request from the Finnish Tax Administration, a penalty of up to 5,000 euros may be imposed. It’s important to note that penalties are imposed in addition to any interest charged on unpaid VAT.

Exempt Supplies or Equivalent

Certain supplies of goods and services are classified as “exempt” and no VAT is charged on their supply. Unlike zero-rated supplies, input VAT deduction for VAT expenses related to an exempt supply is not allowed. This means that the VAT paid on expenses related to exempt supplies cannot be claimed as an input VAT credit.

Exempt Supplies include:

  • Banking and financial services
  • Rentals
  • Leases
  • Sales of land and buildings
  • Insurance services

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VAT Recovery in Finland

VAT is calculated based on the total value of a transaction and cannot be reduced by expenses or other amounts. However, the amount of VAT owed can be decreased, and even result in a negative balance, by deducting the VAT previously paid on certain purchases, which is known as “input VAT.”

 

For input VAT to be available as a credit, the following general conditions must be met:

 

  • The person receiving the supply and acquiring or importing the goods must be taxable.
    • The supplies must have been purchased in connection with the recipient’s business.
    • The claimant must retain satisfactory documentary evidence of the input VAT incurred (i.e., invoices or receipts must be kept and must comply with VAT invoicing requirements).
    • Input VAT must be attributable to either taxable supplies or supplies made outside Finland that would have been taxable if made in Finland.

 

 

Last Updated: 14/12/2023

 

Disclaimer

The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax

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