Value-added tax is a type of consumption tax that applies to goods and services. More than 170 countries collect VAT, including all EU (European Union) member countries, which follow VAT rules and guidelines established by the EU.
However, EU member states, such as Finland, do have some leeway regarding the tax rates they charge and which goods and services are subject to tax. This guide explains the EU and Finland rules that your business needs to know if you sell to Finnish customers, so you don’t run afoul of tax regulations and face audits, fines, and fees.
How VAT works in Finland
In Finland, VAT is called Arvonlisävero (ALV). Companies located in Finland or that sell to customers there may become obligated to register in the country and collect VAT. Once a business is registered, it must charge the correct VAT rate on taxable transactions.
Finnish VAT rates
If you sell goods or services in Finland, you have to know which rate applies to which goods and services. Note that in January 2026, Finland changed its 14% reduced VAT rate to 13.5%.
- 25.5% standard rate: Applies to all taxable goods and services that aren’t subject to a reduced or the zero rate.
- 13.5% reduced VAT rate: Applies primarily to foodstuffs, animal feed, and certain agricultural products, as defined by Finnish VAT law.
- 10% reduced VAT rate: Applies to some types of media, including books, e-books, newspapers, and periodicals; domestic passenger transport; cultural and entertainment event tickets; and hotel accommodations.
- 0% VAT rate: Applies to some intracommunity and international transport, and intracommunity supplies in some situations.
In Finland, products and services that are exempt from tax include healthcare, education, and financial and insurance services.
Registering for VAT
Companies that sell goods or services in Finland may be required to register for VAT. Registration requirements vary depending on whether the business is established in Finland or operates from another country.
Finnish businesses: Businesses established in Finland must register for VAT once their annual taxable turnover exceeds €15,000.
Non-resident businesses: Non-resident companies generally have no VAT registration threshold in Finland and must register if they make any taxable sales in the country.
Distance selling (cross-border B2C sales): Under EU VAT rules, businesses engaged in intra-EU distance selling to customers (B2C) must apply Finnish VAT once their total EU-wide cross-border sales exceed €10,000. Businesses may either register for VAT in Finland or report and remit Finnish VAT through the One-Stop Shop (more on this later).
Fulfilment by Amazon: Companies that store inventory in Finland, including those using Fulfilment by Amazon (FBA), are required to register for VAT in Finland.
How to register
You can register for VAT in Finland through the Finnish Tax Administration (Vero Skatt) website. It typically takes about four weeks to receive your VAT number.
Working with a tax representative in EU countries
Companies based in non-EU countries may be required to appoint a fiscal representative in order to register in Finland, depending on where they are established. This is a local representative that agrees to share financial and legal responsibility for your company’s VAT obligations.
When to charge tax
If you are selling into Finland, you will need to charge tax if:
- You’re required to register in Finland, or you’re reporting applicable sales through the One-Stop Shop or Import One-Stop Shop, two programs that make VAT compliance easier for companies doing business in EU countries.
- You are involved in a taxable B2B or B2C transaction, and the reverse charge mechanism does not apply.
It’s important to note that Finland’s rules for what is taxable are different from those of other EU countries, so you’ll need to confirm which items are subject to VAT and at what rates.
Reverse charges
In Finland, VAT on certain sales can be accounted for using the reverse charge mechanism, shifts the obligation to report and pay VAT from the seller to the buyer. This mechanism applies primarily to B2B (business-to-business) transactions and is governed by EU and Finnish VAT law.
Using this mechanism, when a non-resident business sells qualifying goods or services to a VAT-registered business in Finland, the seller does not charge VAT. Instead, the Finnish buyer calculates the VAT due, reports it on their VAT return, and may deduct the VAT at the same time, subject to normal deduction rules.
This means that the reverse charge mechanism allows foreign suppliers to avoid registering for VAT in Finland in some situations, provided they make only reverse charge sales and have no other VAT registration obligations in the country.
B2B vs. B2C
The specific process by which you comply with Finnish VAT requirements can be determined in part by whether you are engaged in B2B or B2C sales.
In some B2B sales, the reverse charge mechanism may apply, allowing you to shift the VAT obligations to the registered buyer. For B2C sales, on the other hand, you may be able to fulfill your obligations through participation in the One-Stop Shop or Import One-Stop Shop schemes.
One-Stop Shop and Import One-Stop Shop
If your business sells to customers in Finland and other EU countries, keeping up with varying VAT rules and registration requirements can be complex.
To simplify compliance, the EU introduced the One-Stop Shop (OSS) and Import One-Stop Shop (IOSS) in July 2021. With the OSS and IOSS, while businesses must still apply the correct VAT rates and rules in each country where they sell, they don’t always need to register and file VAT returns in every EU member state.
Instead, eligible businesses can register in one EU member state and submit a single VAT return that covers their qualifying transactions across the EU. OSS applies primarily to cross-border B2C sales within the EU, while IOSS is used for distance sales of imported goods valued at €150 or less.
Under both systems, VAT is charged at the point of sale based on the customer’s location. The seller reports and pays the VAT through OSS or IOSS, and the tax authorities distribute the funds to the appropriate EU countries.
Marketplace facilitators
Although you generally must charge VAT when you supply goods and services, this is not necessarily the case when you’re selling to Finnish customers through a third-party marketplace. The key question in EU countries like Finland is whether the third-party marketplace is a deemed seller or not.
Deemed sellers do more than just process payments; they feature their own brands prominently and play a major role in the transaction. This could include influencing pricing, providing customer service, or taking on shipping responsibilities. When a marketplace is a deemed seller and plays a major role in the transaction, it becomes responsible for VAT collection, so you don’t have to handle this task for those sales.
VAT deductions
Because VAT is collected as value is added at each phase of the supply chain, companies pay tax only on the value they add. This means they can deduct the input VAT they paid.
You can deduct input VAT on your VAT returns when it relates directly to a taxable transaction, and when you have an invoice that is compliant with Finland’s rules and that lists the VAT you paid.
Statute of limitations
There is a three-year statute of limitations for VAT collection in Finland.
Staying compliant
To stay compliant with Finland’s VAT regulations, you need to register and charge tax on taxable items, file returns on time, keep complete records, and create VAT-compliant invoices.
Invoicing requirements
To comply with Finnish VAT regulations, invoices must include:
- Contact details for the supplier and the buyer.
- Information about the goods sold to the buyer.
- The date the invoice was issued and, if different, when the goods were delivered.
- The seller and purchaser’s VAT number.
- The quantity and nature of goods supplied.
- The VAT base per VAT rate.
- The VAT payable.
- Information on exemptions or whether the reverse charge applies.
Filing VAT returns
The required filing schedule for VAT returns depends on annual turnover. Here is how often you must submit your VAT based on turnover (actual deadlines may vary depending on the taxpayer’s filing status):
- Over €100,000 in annual turnover: monthly.
- Between €30,000 and €100,000 in annual turnover: quarterly.
- Under €30,000: annually.
Filing deadlines
Filing deadlines for VAT returns depend on the frequency with which you must file. Here are the deadlines:
- Monthly VAT returns: Due the 12th of the second month after the reporting period.
- Quarterly VAT returns: Due by the 12th of the second month after the end of the quarter.
- Annual VAT returns: Due by the end of February following the tax year.
Recordkeeping requirements
Records must be kept for 10 years under Finnish law.
Risks of noncompliance
Finland conducts audits to identify companies that have failed to register when required, failed to submit required VAT forms, or failed to remit VAT payments as mandated by law.
The audit process can be invasive and costly, and if you’re found to be noncompliant, you can face fines, fees, interest charges, and other penalties. Compliance failures can also damage your company’s reputation and impact future business opportunities by affecting your ability to attract investors, facilitate a sale, or go public.
You don’t want to put your company’s finances at risk or impact ongoing business opportunities, so make sure you follow all Finnish rules to fulfill your VAT obligations when doing business in the country.
Tips on staying compliant
To stay compliant with Finland VAT regulations, it’s helpful to take advantage of any available opportunities to simplify your compliance efforts, such as the OSS and IOSS. You can also use software tools that simplify the compliance process.
Software Solutions
Even with programs like the reverse charge mechanism, it is not easy to follow the rules in Finland, much less in Finland and dozens of other countries where you may be doing business now or in the future.
You don’t have to manage this process on your own, though. In fact, Numeral can manage all of your VAT compliance obligations, leaving you spending just five minutes a month on VAT and sales tax issues. Numeral can take care of the entire process for you, from registering to collecting VAT to filing and paying taxes and more.
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Final thoughts
With multiple tax rates and complex rules to follow, Finland can be a complicated place to comply with VAT rules. But it doesn’t have to be.
Numeral makes VAT compliance truly effortless, so you can focus on other aspects of the business while we take care of the tedious tasks involved in making sure you’re following tax rules across more than 70 countries. Reach out today to learn more about how we can help.
