International trade within the EU – intra-Community supplies and acquisitions
When VAT taxpayers in different countries within the EU buy and sell goods with one another, it is “intra-Community trading”. The selling, known as “intra-community supply” (selling goods to a VAT-registered business in another EU country) is normally exempted from VAT. For the VAT exemption to be in force,
- The goods must be physically transported from Finland to another EU country,
- The buyer must be a VAT taxpayer in a EU country that is not Finland, and
- The parties to the transaction, being registered for VAT in their own EU countries, must have valid VAT numbers
If the above requirements for VAT exemption are not fulfilled, the seller of the goods must file and pay VAT in Finland as usual.
What to do when selling goods to another EU country and the VAT requirements for exemption are fulfilled:
Deliver the goods
Deliver the goods to your customer (buyer). Alternatively, the transport can be taken care of by the buyer as well.
Prepare the invoice
Send the customer an invoice by the 15th of the following calendar month.
For the exemption to be valid, the invoice must contain the following information:
- Enter the VAT numbers of both the seller and the buyer in the invoice
- Enter a phrase in your invoice stating that the sale is exemptible. For example, ”VAT 0%, intra-Community supply”.
Complete the VAT recapitulative statement
On the 20th of the following calendar month, you must file the VAT recapitulative statement. Log in to MyTax to do so.
Do not forget the VAT return
Enter the details on the sale in “Sales of goods to other EU Member States” when you file your VAT return in MyTax. Filing deadlines depend on your VAT tax period.
Transferring goods to a call-off stock is not an intra-Community sale
Goods transferred to call-off stocks means that you as the seller have transferred a quantity of goods to another EU country, to a warehouse belonging to your customer or buyer, and you have agreed this with the buyer in advance.
When you transfer the goods to call-off stock, it is not yet regarded as a supply of goods against payment. For purposes of VAT filing and payment, intra-Community supply and intra-Community acquisition will take place later, at the time when your buyer calls off the goods, i.e. when the right of ownership passes on to the buyer.
If you are a seller that transfers goods to call-off stocks, you must submit a report to inform the Tax Administration of the transfers. Complete a specific call-off report form.
Buying goods from sellers in other EU countries
While selling – intra-Community – supply does not entail VAT payment, when you buy goods as intra-Community acquisitions you must usually pay VAT. However, the input VAT is deductible, subject to the condition that the goods must be bought for a business purpose.
Give details on your purchases in MyTax. Complete the VAT return and fill in the following lines:
- Purchases of goods from other EU Member States
- Tax on goods purchased from other EU Member States
- Tax deductible for the tax period
The VAT recapitulative statement does not contain information on purchases, so you do not have to report purchase information on it.
Examples of VAT filings
A Finnish business sells a machine for €15,000 to a company in Belgium. Delivery is included.
The Finnish business sends an invoice to the Belgian company. The invoice must contain the following information:
- The seller’s VAT number
- The buyer’s VAT number
- A phrase stating that the sale is exemptible: ”VAT 0%, intra-Community supply”.
This sale is an intra-Community supply i.e. it is exempted from VAT for the Finnish business being the seller. The Belgian company, on the other hand, is making an intra-Community acquisition subject to VAT.
The Finnish business reports the information as follows:
The VAT recapitulative statement must be filed:
- Country code, BE
- The buyer’s VAT number
- Total selling of goods €15,000.
The VAT return must be filed:
- Sales of goods to other EU Member States, €15,000
A Finnish business enterprise buys a machine for €15,000. It needs the machine for its VAT-taxable business activities, and the seller is a company in Germany. The machine is delivered from Germany to Finland. The Finnish business enterprise is making an intra-Community acquisition subject to VAT in Finland.
The German company sells the machine to its Finnish customer without having to add German VAT to the price because the Finnish enterprise has a VAT number and because the machine gets delivered.
Being the buyer, the Finnish enterprise must fill out its VAT return as follows:
- Purchases of goods from other EU Member States, €15,000
- Tax on goods purchased from other EU Member States, €3,600
- Tax deductible for the tax period, €3,600
No EU VAT Recapitulative Statement must be filed by the Finnish business enterprise.