VAT on international supply of services

If there is no special rule on the sale of a service, the place of supply is determined by the general rule. If you do not know which services are governed by special rules, read more at "What services do you sell?"

General rule on the sale of services to a business

When you sell services to businesses, the place of supply is determined by the buyer's fixed establishment or place of establishment of a business. Under the general rule applicable to businesses, the place of supply is the country where the fixed establishment receiving the service is located.

When you sell a service to a business, the service is regarded as being sold in Finland if

• it is supplied to the buyer’s fixed establishment located in Finland
• the service is not supplied to a fixed establishment located in Finland or abroad, but the buyer’s place of establishment of a business is Finland.

When is the buyer a business?

In the supply of services, “business” is understood in the broad sense. Businesses include all companies engaged in VAT-liable activities, even if their activities are limited or they sell only services that are not subject to VAT, such as financial or insurance services.

For example, a non-profit association that has both VAT-liable activities and non-profit activities is a business. Also, a municipality conducting sales activities subject to VAT as well as acting as a public authority is regarded as a business.

If there is no special rule on the sale of a service, the place of supply is determined by the general rule. If you do not know which services are governed by special rules, read more at "What services do you sell?"

General rule on the sale of services to a consumer

When you sell a service to a consumer, the place of supply is determined by the seller's fixed establishment or place of establishment of a business. Under the general rule applicable to consumers, the place of supply is the country where the seller’s fixed establishment that sells the service is located.

When you sell a service to a consumer, the service is regarded as being sold in Finland if

• it is supplied from the seller’s fixed establishment located in Finland
• the service is not supplied from a fixed establishment but the seller’s place of establishment of a business is Finland.

When is the buyer a consumer?

If the buyer is not a business operator, they are a consumer. Consumers include private individuals who buy a service for private consumption. Consumers also include non-profit organisations that do not conduct VAT-liable supply of services, and businesses that buy services only for their own or their employees’ private consumption.

To determine the place of supply, you often must ascertain whether the service has been supplied to the buyer’s fixed establishment or supplied from the seller’s fixed establishment, and in what country the fixed establishment is located.

A fixed establishment is, for example, a fixed apartment or fixed business premises where a company can conduct business on a regular basis. In addition, the fixed establishment must have a sufficient amount of staff and appropriate information technology, machinery or equipment to allow the establishment to receive or supply services.

If the buyer has several fixed establishments and it is not possible to determine which is the one to which the service is supplied, then the place of supply of the service is the country where the buyer has established its place of business. The place of establishment of a business is the place of the company's central administration.

Read more about “fixed establishment” and “place of establishment of a business” in the Tax Administration’s detailed guidance “Value-added taxation of cross-border supply and acquisition of services” (chapter 4)

The place of supply of a service depends on the type of service you are selling. The place of supply of most services is determined by the general rule, but some services are governed by special rules. If there is no special rule applicable to a service, the general rule is applied.

Some special rules concern the sale of services to all buyers, i.e. it is irrelevant whether the buyer is a business or a consumer. Other special rules only apply when services are sold to consumers.

The following services are subject to special rules regardless of the type of buyer:

• services related to real estate
• passenger transport services
• admission fees
• restaurant and meal services
• short-term rental of means of transport.

The supply of travel agency services to businesses is subject to a special rule, whereas their sale to consumers is governed by the general rule. In this case, however, the rules are similar in content, so when the country of supply is determined, it is irrelevant whether the buyer is a consumer or a business.

The following services are subject to special rules only when sold to consumers:

• goods transport
• services related to goods transport
• valuation of a movable object, and work related to a movable object
• long-term rental of a means of transport or a pleasure craft
• brokerage services
• sale of immaterial services to non-EU countries
• radio and TV broadcasting services, electronic services, and telecommunications services.

Read more about the special rules in the Tax Administration’s detailed guidance “Value-added taxation of cross-border supply and acquisition of services” (chapter 7).