Interested to know the Finnish VAT Rates? Navigating the ins and outs of VAT rates in Finland is crucial for businesses and consumers. This blog will break down the Finnish VAT rate, from its history to compliance and the all-important VAT number. So, buckle up as we understand Finnish VAT rates and other necessary related information. If you're looking for a handy tool to calculate VAT, check out our VAT calculator for quick and accurate computations.
The standard VAT rate in Finland is 24%, and it has been that way since 2013. Products like food, feed, restaurants, and catering services are eligible for a reduced 14% VAT rate; however, tobacco and alcoholic beverages are not.
Certain products, such as books, newspapers, pharmaceuticals, lodging services, passenger transportation, etc., are subject to a 10% reduced rate.
For example, Sophie runs a small online business selling handmade jewellery. The sale of her unique jewellery items is subject to the standard VAT rate of 24%. Additionally, she offers personalised consultation services to her customers, helping them choose the perfect piece. The consultation services are, however, subject to a reduced VAT rate of 14%.
In Finland, the government sets the prices for regular, higher, and reduced VAT rates. The EU says the lowest standard rate must be over 15%, and it gives rules on which products get lower or zero rates. If a business from another country is registered for VAT in Finland, it must use the Finnish rates and make sure not to charge too little VAT.
In 1994, Finland became a member of the European Union (EU), compelling the adoption of the Value Added Tax (VAT). This marked the initiation of the tax system in the country, accompanied by an initial standard rate of 22%.
In 2013, Finland experienced an adjustment in its VAT rates. The standard rate escalated to 24%, positioning it as the fifth highest among EU member states. Two reduced rates were introduced – 14% for food and animal feed and 10% for passenger transportation, cultural services, and pharmaceuticals.
In 2022, Finland addressed the COVID-19 pandemic by temporarily reducing rates until December. The standard VAT rate is 24%, with 14% and 10% reduced rates for specific items. There's also a zero rate for exports and specific situations. The zero rate for goods donated to Ukrainian refugees expired in December 2022.
| Finland VAT Rate | Applicable Goods and Services |
|---|---|
| 24% | Most goods and services |
| 14% | Groceries, feed, restaurant, and catering services (excluding alcohol and tobacco products) |
| 10% |
|
| 0% |
|
Also Read about; Understanding Value Added Tax Austria
When operating in Finland and registered for VAT, foreign companies need to follow specific rules for accounting, invoicing, and other procedures. Here are the essential requirements:
Businesses must register for VAT if their taxable turnover exceeds EUR 15,000. Businesses with taxable turnover less than EUR 15,000 can also choose to voluntarily register.
Understanding the intricacies of VAT in Finnish business practices is essential for entrepreneurs and companies to navigate the tax landscape effectively. Therefore, certain activities are exempt from the VAT perspective and do not require VAT registration, but in some cases, voluntary registration is available.
The processing of registrations can take up to three weeks. You can complete the registration process via the MyTax portal if the company already has a Business ID in Finland. As soon as the company is founded, a Business ID is issued.
A Finnish VAT number, also known as ALV-numero or momsnummer, is important for businesses in two ways:
Structure:
Required for:
Who Uses It:
Conclusion
And there you have it - a journey through the Finnish VAT landscape! The standard VAT rate for most Finland products is 24%, with reduced rates of 14% and 10% applicable to specific goods and services. The Finnish government relies on the VAT collected from the sale of products to fund public services and infrastructure development. This is why understanding Finnish VAT rates is important for consumers and business owners.
FAQs
What is the standard VAT rate in Finland?
The standard VAT rate in Finland is 24%, applicable to most goods and services.
Are there reduced rates?
Yes, there are reduced rates of 14% for specific items like groceries and 10% for goods and services such as books and cultural events
How does a foreign company comply with Finnish VAT?
Foreign companies need to follow specific rules for accounting, invoicing, and other procedures, ensuring compliance with Finnish VAT regulations.
When does a business need to register for VAT in Finland?
Businesses with a taxable turnover exceeding EUR 15,000 must register for VAT. Voluntary registration is also an option for businesses below this threshold.
Rían Doyle
I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.
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