VAT for foreign businesses in Finland
Value-added tax is paid on the sales of goods and services. The standard VAT rate is 24% until 31 August 2024 and 25.5% as of 1 September 2024. Read more about different VAT rates
If your company is liable for VAT, you must
- enter your company in the VAT register
- file regular VAT returns and pay VAT.
Who must register for VAT?
Your company is liable to register for VAT if
- your company has a fixed establishment in Finland
- a VAT reverse-charge scheme cannot be implemented for example under one of the following circumstances:
- the buyer is a foreign business entity with no permanent establishment or VAT registration in Finland
- the buyer is a private person
- the sales in question are distance sales of goods from another EU country to Finland – read more about VAT regulations concerning distance selling to Finland
- the service being sold is passenger transport
- the services being sold relate directly to entry to events that involve teaching, science, culture, entertainment and sports, or to events such as fairs and exhibitions.
Fixed establishment for VAT purposes
A permanent establishment for the purposes of VAT is known as a fixed establishment. Your company may have a fixed establishment in value-added taxation even if you do not have a permanent establishment in income taxation.
For purposes of VAT, fixed establishment means a fixed place of business through which the company conducts some or all of its operations.
- The place of business may be a production facility, a certain set of rooms, or a set of machinery and equipment that the company uses in its business.
- The place of business may be a certain space that the company occupies on a permanent basis.
- The place of business may be located inside another company’s premises.
A place of business can be treated as a fixed establishment if it is considered to be sufficiently permanent and if it has human and technical resources required for the supply of goods or services that the company sells.
The place of business must have a definite geographical location. However, it is not required that the place of business is literally fixed to the ground. For example, if your company sells transportation services in Finland with a regular schedule and route, you are considered to have a fixed establishment in Finland.
The company as a whole or in part must also conduct business in the place of business. For example, if your company has an office in Finland but it does not take part in the selling of the goods and services that your company offers, the local office is not a fixed establishment.
In practice, you must have employees in the country where the fixed establishment is located to run its operations. Even if the business operations at the place of business are highly automated, it can be considered a fixed establishment if there are employees in its country of location overseeing technical maintenance and control.
The place of business does not have to operate without interruption in order to be considered a fixed establishment, but it does have to operate on a regular basis.
Examples of fixed establishments in value-added taxation:
- offices where company management is located
- local offices
- production facilities
- workshops
- retail outlets and trading locations
- mines, quarries, peat extraction sites, and other similar sites for the use of natural resources
- warehouses, inventories or stocks.
However, your company may not have a fixed establishment if your operation consists only of renting out real estate or movable property or licensing immaterial rights.
Construction, building and installation projects constitute a fixed establishment if they last longer than nine months, either as a single project or as several successive projects. The first start date of the operations is also the start date of the fixed establishment.
Call-off stock is goods that the seller has stored in the buyer's facilities before selling them to that specific buyer. If your company has call-off stock in Finland, this does not give rise to a fixed establishment. You do not need to register for VAT in Finland just for transporting goods to call-off stock to Finland.
If your company transports goods to Finland to be stored in a warehouse it owns, you are considered to have consignment stock in Finland. Consignment stock requires you to register for VAT in Finland.
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