Finland VAT Guide

Navigating Finland’s VAT Law: A Guide for Businesses

Introduction

Understanding Finnish Value Added Tax (VAT) can be tricky. While Finland follows the EU’s VAT system, it has unique rules businesses must know, like thresholds, registration, rates, and filing requirements.

Whether local or international, VAT obligations may include registering in multiple countries, verifying VAT numbers, or filing Recapitulative Statements, Intra-EU trade, imports, and global services have specific rules, but tools like the One-Stop Shop (OSS) can simplify compliance.

What is VAT in Finland?

VAT is paid by the end consumers of goods and services. In Finland, VAT applies to most goods and services, but certain exemptions exist (such as for health services or some educational activities). Businesses that are taxable need to register for VAT if their taxable revenue exceeds a certain threshold

Should you collect VAT in Finland?

Businesses operating in Finland must generally collect VAT on any taxable transactions conducted within the country. These transactions typically include:

1. Supply of Goods: according to Finland tax Administration, goods are Tangible objects, meaning they have physical substance. This includes physical products, raw materials, and even certain forms of energy like electricity and gas.

Goods supply includes the transfer of ownership of tangible property.

• Providing services: services are intangible. They involve the performance of an action or the provision of expertise. Examples include Professional Services, Transportation, Telecommunications, Financial services, etc.
• Digital platform operators: Digital platforms (e.g., apps, websites) must collect and report seller and transaction data to tax authorities annually under the EU DAC7 directive. This applies to the platform’s sales, service, and rental income. For more Info, please check supply goods or services through app or website .
•  Intra-Community Trade: When VAT-registered businesses in different EU countries sell goods and services to Finnish taxable persons, it’s called “intra-community supply.” The Seller won’t charge VAT for these transactions due to the reverse charge mechanism. From the Finnish buyer’s standpoint, this transaction is categorized as “intra-community Acquisition,” the buyer would be responsible for paying VAT in Finland. However, this input VAT is deductible if it’s for business use purposes only.

• Import of Goods: As a seller, you’ll need to consider Finnish VAT rules when you import goods into Finland from outside the EU. VAT is generally due to imported goods, and businesses are responsible for fulfilling all VAT obligations upon importation.

 When should you register for VAT in Finland?

As a general principle, VAT is a destination-based tax, meaning any business, whether registered anywhere or not, must register for VAT if engaging in taxable transactions within Finland. Here’s a breakdown of key scenarios for Finnish VAT registration:

Domestic Sales:  Finnish businesses must register for VAT when their annual turnover exceeds €15,000.

Selling Goods and Services on Digital Platforms (DAC7): Digital platforms Reporting is required only if you have sold at least 30 items or earned over €2,000 in sales on a single platform in a calendar year.

Cross-Border B2C Sales:  Businesses selling goods or services from other EU countries to Finland must register with the Finland tax Administration if their annual sales to Finnish consumers exceed €10,000 unless they utilize the  EU One-Stop Shop (OSS) scheme.

B2B Sales Within the EU: When selling goods or services to another business (taxable person) within the EU, the Seller won’t charge any VAT to the buyer. This is known as the “reverse charge” mechanism. (We will cover the reverse charge mechanism in more detail later in this article)

Imports from Outside the EU: when you import goods from outside the European Union into Finland, you’ll need to consider Finnish VAT rules. VAT rules vary depending on whether you sell to businesses or consumers (non-taxable person)

• B2C Sales: Businesses selling goods to consumers in Finland generally need to register for VAT from their first sale.

Goods up to €150: the Seller must hire an IOSS intermediary to enjoy the Import One-Stop Shop (IOSS) for simplified VAT compliance. For more details on this concept, refer to our article: (IOSS) Compliance in the European Union.

Goods exceeding €150: For sales exceeding €150, you may need to appoint an Intermediary (for Seller out of the EU) in Finland to handle your VAT obligations, as the IOSS cannot be used for goods exceeding this threshold.

• B2B Sales: In all B2B businesses, the Seller will charge the buyer ZERO VAT on the invoice (due to the reverse charge mechanism). Furthermore, the Seller must register with the Finnish Tax Administration and file VAT returns, even though the VAT rate is zero in this case. For more Information, please check the VAT for cross-border supply and acquisition of services.

Export of Goods/Services: Although exports are generally zero-rated, you may still need a VAT number for record-keeping purposes. Please check Rates of VAT

Here are a few examples to illustrate VAT registration requirements in Finland:

Domestic Sales: A Finnish clothing store with annual sales exceeding €15,000 must register for Finnish VAT, collect and do VAT filing.

Cross-Border B2C Sales:

Example 1: A German online retailer selling €12,000 worth of electronics to Finnish consumers annually must register for Finnish VAT or utilize the OSS scheme to collect and file VAT.

Example 2: A French company selling €8,000 worth of cosmetics to Finnish consumers annually does not need to register for Finnish VAT as their sales are below the €10,000 threshold. In this case, the French company will apply the French VAT rate and file the VAT return to the French tax authority.

B2B Sales Within the EU:

Example 1: A VAT-verified German company sells software to a Finish company (a VAT-verified business) for reselling purposes. In this case, the Seller, which is a German company, will apply a Zero rate due to the “Reverse charge mechanism/ Intra-Community Supply.” However, they must still register with the Finnish Tax Administration and file VAT in Finland.

 Example 2: A Finnish company selling software to a German company. The German company is responsible for paying VAT under the reverse charge mechanism.

Imports from Outside the EU:

B2C Sales: A Chinese company selling clothing to Finnish consumers generally needs to register for Finnish VAT from their first sale.

• Goods up to €150: The Chinese company must hire an IOSS intermediary to utilize the Import One-Stop Shop (IOSS) to collect and remit VAT to the Finnish Tax Administration.
• Goods exceeding €150: the Seller must appoint an Intermediary in Finland to handle their VAT obligations directly with the Tax authority in Finland.

B2B Sales: A US-based business selling software to a Finnish company. Due to the reverse charge mechanism, the US company will not charge the Finnish company VAT. However, the US-based business must register for VAT in Finland and appoint a Fiscal Representative to fulfill its VAT obligations.

Export of Goods/Services: A Finnish company exporting furniture to Germany. While exports are generally zero-rated, the company may still need a Finnish VAT number for record-keeping purposes.

Finland VAT Threshold Summary

As we mentioned earlier, the VAT thresholds in Finland vary based on the type of supply and the origin of the goods or services.

Notice: Reverse Charge Mechanism Applies to All B2B Transactions. We will explain this concept more later in this document.

Finnish VAT Rates

now that you understand when to register for VAT, let’s look at the different VAT rates in Finland. Finland applies a multi-tiered VAT system with a standard rate of 25.5% (effective September 1, 2024) and two reduced rates:14, % and 10%, apply to certain goods and services like food, restaurants, books, medicines, and cultural events and a zero rate Reduced rate. Key changes to VAT rates in 2025 include an increase in the reduced rate for several goods and services from 10% to 14% on January 1, 2025, and an increase in the VAT rate for candy and chocolate to the standard rate of 25.5% from June 1.

Standard VAT Rate

Reduced VAT Rate (10%)

Reduced VAT Rate (14%)

Zero Rate

*Notice: Exports of goods are typically zero-rated, meaning no VAT is charged on the sale, while businesses can reclaim input VAT on related purchases.

Digital Products/ Services

Digital products and services encompass a wide range of goods and services delivered electronically that are subject to VAT in the European Union, and for many digital services, for VAT purposes, the place of supply is based on where the customer is located. You may need to charge the VAT rate applicable in the customer’s country. Digital products include:

• Software: Software downloads, software-as-a-service (SaaS), cloud computing services – Standard rate (25.5%)
• E-books, audiobooks: Reduced rate (14%) (from January 1, 2025)
• Music and videos: Reduced rate (14%)
• Online games and subscriptions: Standard rate (25.5%)
• Online advertising and marketing services: Standard rate (25.5%)
• Website hosting and domain name registration: Standard rate (25.5%)
• Streaming services (music, video, etc.): Reduced rate (14%)
• Online courses and educational materials: Reduced rate (14%)

The standard VAT rate for digital products and services in Finland is 25.5%, with reduced rates applicable to certain categories. Please refer to Rates of VAT and Changes to VAT rates as of 2025

Finnish VAT Registration: how to register?

Businesses operating in Finland generally need to register for VAT if their annual turnover exceeds €15,000. This applies to domestic sales within Finland. You must apply online through the Finnish Tax Administration’s website (MyTax), which requires a Finnish business ID.

If your company already has a Business ID, register using MyTax. For more guidance, refer to How to request entry in the Tax Administration’s registers in MyTax.

Alternatively, register through the Business Information System (BIS) that the application will require you to provide Information such as:

• Company name, address, and contact details
• Nature of business
• Details of offices/facilities, including branches and warehouses
• Bank account details
• If registered elsewhere, your tax office and VAT number in the other EU Member State
• Articles of Association (if applicable)
• Certificate of Incorporation (if applicable)

The registration process may involve some formalities. TaxDo can streamline this process by assisting you with the application and guiding you through the necessary steps.

Registration is required for cross-border B2C sales to Finnish consumers when your annual sales exceed €10,000. However, you don’t need to register directly with the Finnish Tax Administration (FTA); instead, enjoy the EU One-Stop Shop (OSS) to simplify VAT compliance for these cross-border sales. Visit our EU One Stop Shop article for more details. The reverse charge mechanism typically applies for B2B sales within the EU, meaning the buyer is responsible for VAT.

VAT is generally applicable when importing goods into Finland. For goods valued up to €150, the Import One-Stop Shop (IOSS) can simplify VAT compliance. However, for imported goods of more than €150, appointing a Fiscal Representative is usually necessary; they act as your legal representative for VAT obligations like VAT registration, filing returns, and ensuring compliance with Finnish VAT regulations.

How to calculate VAT in Finland

In Finland, Value Added Tax (VAT) is calculated based on the destination principle outlined in the Finnish VAT Act. As mentioned earlier, VAT rates in Finland, Based on the product and transaction types, include a standard rate of 25.5%, reduced rates of 14% and 10% for specific goods and services, and a zero rate for certain activities, exports, and international transport services. The VAT amount is calculated using the formula: VAT Amount = (Sale Price * VAT Rate) / 100. For example, on a €100 product with the standard 25.5% rate, the VAT would be (€100 * 25.5) / 100 = €25.50.

VAT in Finland is generally charged on a destination-based principle. This means VAT is typically due on sales made within Finland, regardless of where the Seller is located. For more Information, please check the VAT calculator_ How to calculate VAT.

VAT Exemptions

Some goods and services in Finland qualify for VAT exemption. This means you don’t charge your customers VAT on these sales and can’t deduct the VAT you paid on expenses related to providing these exempt services.

Commonly exempt categories include:

• Healthcare and medical services (with some exceptions)
• Financial and insurance services (with some exceptions)
• Educational services (including general education, vocational training, and university-level teaching, with certain exceptions) (Finnish VAT Act, Articles 39 and 40)  
• social services
• Certain performing artists’ fees
• Copyright
• Sales and rental of real estate and apartments
• Gambling activities (with some exceptions) (Finnish VAT Act, Article 59 2k)  
• International organizations and diplomats (under specific conditions)
• Defense activities (under particular conditions)

B2B and Reverse Charge Mechanism in Finland

The Reverse Charge Mechanism(RCM) in European countries is a key VAT rule that shifts the responsibility for paying VAT from the Seller to the buyer in certain business-to-business (B2B) transactions. In this method, as the Seller, you won’t charge your customer (who is a taxable person) VAT in Finland, but you need to take care of VAT registration and filing for all your transactions with or without VAT in Finland. This means that instead of the Seller charging VAT, the buyer is responsible for accounting and paying the VAT. This typically occurs in B2B transactions within the EU, but it can also apply in some cases when dealing with businesses outside the EU.

Here are some everyday situations where the reverse charge mechanism applies in Finland:

Construction services: When a business regularly engages in construction activities, it becomes responsible for paying VAT on construction services received from other firms, including foreign companies.

Purchases of scrap metal and metal waste: The buyer is responsible for VAT on transactions involving scrap metal and metal waste.   

Intra-community acquisitions of goods: A common scenario is when a taxable person from one EU Member State sells goods or services to another VAT-registered person in another EU Member State. For example, a French company sells software to a Finnish company. In this case, the Finnish company is responsible for paying the VAT.

Transactions with foreign businesses: The reverse charge mechanism often applies when purchasing goods or services from businesses outside the EU that do not have a physical presence in the country where the VAT is due

VAT Invoice in Finland

A VAT invoice is a legally required document that details a transaction involving goods or services subject to Value Added Tax (VAT). It serves as proof of the transaction for the Seller and the buyer, enabling accurate VAT accounting and supporting input tax deductions.

Every VAT invoice must include essential Information such as a unique invoice number, the date of issue, and details of both the Seller and Buyer (including names, addresses, and VAT identification numbers). The invoice must clearly describe the goods or services delivered, specifying the quantity, unit price, and total amount. The applicable VAT rate and the amount of VAT must be clearly stated, along with the time of delivery or service provision.

Before issuing an invoice, The Seller needs to validate whether its buyer is a taxable person. If the buyer is a taxable person within the EU and the reverse charge mechanism applies, the Seller should issue an invoice with a zero rate and a note stating, “Due to reverse charge mechanism.”

• If the Seller is an EU-taxable person, They must be registered for VAT in the buyer’s country and then file the VAT return accordingly.
• If the buyer is outside the EU, The Seller must appoint an intermediary to handle VAT obligations and filing.

 Specific rules apply to various situations, such as intra-community supplies (often subject to the reverse charge mechanism), distance selling, and self-billing. Electronic invoicing is permitted and may be preferred by both buyers and sellers. 

Important Considerations: Invoices should indicate the application of the reverse charge mechanism for intra-community supplies and specify the reason for the exemption in case of VAT-exempt sales (e.g., “Supply of immovable property, tax-exempt, section 27 of the VAT Act”). The invoice should indicate that these are pass-thru expenses and may be exempt from VAT. Businesses must retain copies of all issued and received VAT invoices for at least 10 years. Non-compliance with invoicing requirements can result in penalties and fines. For more Info, please refer to the VAT invoice requirement.

How should you file VAT in Finland?

Businesses operating in Finland that exceed a specific annual turnover threshold must register for VAT and file periodic VAT returns. The Finnish Tax Administration determines the filing frequency based on your company’s annual turnover:

Filing Frequency

Filing Deadlines

Note: If your tax due date is a holiday or weekend, the next business day would be considered the final due date.

File Electronically: File your VAT returns electronically through the Finnish Tax Administration’s online portal (MyTax).

Also, The One-Stop Shop (OSS) and Import One-Stop Shop (IOSS) simplify VAT for businesses conducting Business-to-Consumer (B2C) sales within the EU.

OSS and IOSS: Utilize the One-Stop Shop (OSS) for simplified VAT compliance for B2C sales within the EU (selling services or goods to EU consumers) and the Import One-Stop Shop (IOSS) for selling imported goods (from outside the EU) to EU consumers (up to €150 per item). For more Information, refer to the VAT special scheme (OSS).

VAT Filing for Intra Community Supply: While the Seller (a verified VAT Business) won’t charge VAT while selling products and services to another VAT-Verified Business in Finland, Seller still needs to do the VAT registering and filing with the Finnish Tax Administration.  

 VAT Filing for Intra-EU Acquisitions: Finnish businesses must report the transaction in their VAT return when purchasing goods from other EU countries. The buyer must account for VAT on the acquisition, which is usually done under the reverse charge mechanism. This means the buyer is responsible for reporting and paying the VAT instead of the Seller. Also, the VAT paid on these acquisitions is generally deductible, provided the goods are purchased for business use.

Important note: The VAT control system within the EU Internal Market relies on collaboration between member countries to oversee the trading of goods and services. Tax authorities exchange Information from VAT returns to ensure compliance. In Finland, the Tax Administration cross-checks VAT-return data from sellers and purchasers, using the Value Added Tax Information Exchange System (VIES) to verify the accuracy of transactions. If the data matches, further tax control measures are unnecessary. Accurate and up-to-date reporting in VIES is crucial for reducing administrative effort and ensuring fair competition for businesses that follow the rules. For more Info, please check. How does the VAT control system of trading in the Internal Market work?

Should you appoint a fiscal representative in Finland?

You must appoint a Fiscal Representative when importing goods valued up to €150 from outside the EU. This is mandatory. For other situations within the EU One-Stop Shop, such as selling to consumers in other EU countries, a Fiscal Representative might be required depending on the specific rules of the country where you register. They are responsible for filing VAT returns, paying VAT to the Finnish Tax Administration, ensuring compliance with all relevant regulations, and acting as the primary point of contact with the tax authorities on behalf of the business. For more Info, please check this  tax representative in Finland

TaxDo can assist you in appointing a fiscal representative and managing your VAT.

Are there any fines or penalties for default when filing or paying VAT?

Late filing of VAT returns in Finland can result in penalties. These penalties include a daily charge of €3 per day up to a maximum of €135 and an additional charge of 2% of the tax amount filed late, with a maximum of €15,000 per tax period. Please refer filing after deadline  

VAT Refunds in Finland

Businesses eligible for VAT refunds include those that have paid more VAT than they have collected, resulting in a negative VAT balance, or those whose self-assessed tax payments were later adjusted or remain unused. Businesses can also apply for refunds on VAT if the Tax Administration accepts their application.

To ensure eligibility for VAT refunds, businesses must meet specific requirements. First, they must file all required tax returns, including VAT returns, on time. Any overdue taxes or outstanding debts will be deducted from the refund amount. Maintaining accurate records is crucial for businesses, as well as keeping their bank account details updated in MyTax to facilitate the smooth processing of refunds.

Through MyTax. Businesses can set preferences for refund times and limits.

For example, businesses can receive refunds immediately after processing or save them for future tax liabilities. However, if there are overdue taxes, the refund will first be used to settle those debts before any remaining amount is refunded.

Additionally, businesses can request refunds for unused payments to the Tax Administration, provided these payments are correctly referenced. If there are any overdue taxes, those payments will first be applied to settle those debts. For more Info, please check VAT Refund page

Terminating VAT Registration in Finland

You must terminate your VAT registration when your business ceases conducting VAT-liable activities. The process typically involves:

1. Submitting a Termination Notification: File a notification through the Finnish Tax Administration’s online portal (MyTax) to inform them that you are ceasing VAT-liable activities.
2. Filing a Final VAT Return: Submit a VAT return for the final period of operation, even if no further transactions occurred.
3. Paying Final VAT: Pay any outstanding VAT liabilities associated with the final period of operation.

Inventory Considerations: If you have any unsold inventory, you may need to calculate and include VAT on the remaining stock in your final VAT return.

Final Notes

VAT rules in Finland might seem complicated at first, but understanding the basic principles like registration requirements, reverse charge mechanism, and so on can make things much more manageable. It’s important to follow the rules and processes specific to your business to stay compliant; TaxDo can help you avoid missteps.