Authorisation for the operation of a VAT refunding office (tax-free tourist sales)

Since 1 July 2015, business enterprises that carry out VAT refunding relating to tax-free tourist sales must have an authorisation. Authorisations are granted by the Tax Administration.

Cash refunding requires an authorisation

If a business pays out cash refunds of VAT, i.e. if they engage in VAT refunding relating to tax-free tourist sales, an authorisation is required. It should be noted that the refunding activity is connected with an obligation to verify that the travellers take the goods with them when they leave the country.

Businesses engaged in VAT refunding must organise their activities in such a way at every border-crossing that they can:

  • Ascertain the country of residence of every traveller
  • Take action to supervise and obtain proof that travellers take the goods away from the VAT territory of the European Union as required by the provisions of the Finnish VAT Act.

Authorisation for cash refunding may be granted to natural and legal persons alike. Holders of an authorisation are entitled to appoint an agent that will handle the refunding work on their behalf. However, although the agent performs the work, the authorisation holder is still accountable for meeting all the obligations related to the refunding activity.

It is considered a public administrative task to control and obtain proof of proper exportation of goods to destinations outside the VAT territory of the EU.

Requirements

If the applicant requesting authorisation is a natural person, the following requirements apply:

  • Applicant must be at least 18 years of age
  • He or she has the right to operate a trade or business in Finland
  • He or she has not filed for bankruptcy
  • He or she is not of limited competency
  • He or she is a reliable person
  • The supervision that the applicant has planned to exercise on tourist sales is likely to be based on a reliable system
  • Applicant’s professional skills are sufficient for the cash refunding work

If the applicant requesting authorisation is a legal person, the following requirements apply:

  • Applicant has the right to operate a trade or business in Finland
  • Applicant is a business enterprise that has not filed for bankruptcy
  • Applicant’s – i.e. the legal person’s – members of the Board of Directors, including the deputy members, the Managing Director, the general partners and other individuals in charge of the management of an incorporated legal person are reliable
  • Someone among the applicant’s – the legal person’s – staff members is appointed to bear responsibility, within the meaning of the act governing cash refunds (Palautusliikelaki (250/2015)), that the operation satisfies the relevant legal requirements
  • The supervision that the applicant has planned to exercise on tourist sales is likely to be based on a reliable system

Requirements for an agent:

  • The agent must be at least 18 years of age
  • He or she has the right to operate a trade or business in Finland
  • He or she has not filed for bankruptcy
  • He or she is not of limited competency
  • He or she is a reliable person
  • The agent’s professional skills are sufficient for the cash refunding work

If agent is a legal person, it is additionally required that the agent’s board members, including the deputy members of the board, Managing Director, general partners and other individuals in charge of the management are reliable.

For purposes of the above rules, individuals are deemed reliable if:

  • during the past five years, the individual concerned has not been convicted to imprisonment under any Court ruling that has gained legal force
  • during the past three years, he or she has not been ordered to pay a fine for an offence that may indicate that the person is not suited for a work assignment that involves supervision of VAT-exempt selling of goods to tourists.
  • during the past five years, he or she has not been sentenced to a ban on business operations or has not committed such an action that could indicate that he or she is not suited for supervision of VAT-exempt selling of goods to tourists

Required contents of the application letter

To submit an application for an authorisation to operate a cash refund service for tourists, write a free-text letter to the Tax Administration. Your application letter must be written in Finnish or Swedish.

The following facts and information are required:

Information about the applicant

  • Business ID
  • Full name or business name
  • Company name and auxiliary company name, if any
  • If the applicant has an agent, the agent’s name, auxiliary company name and Business ID
  • street addresses and exact locations (shown on a map) of the applicant’s service office(s) for refunding, including the office(s) belonging to the applicant’s agents
  • An account describing the applicant’s professional skills and experience
  • A description of the system to be used when following up the exports of goods by travellers or tourists

If the applicant is a legal person, a natural person must be appointed as the person in charge He or she bears responsibility for the cash-refunding activity’s compliance with law

As part of the processing of your application, and to allow the Tax Administration to assess the personal dependability of each individual as required by law, extracts from the criminal record must be made available as follows: If the applicant is a natural person, an extract from his or her criminal record. If the applicant is a legal person, extracts from the criminal record are required for the Board members, deputy Board members, the Managing Director, general partners and other people who are in charge of the management of the incorporated legal person, and for the individual to be appointed as the person in charge, and for the agent. However, the Tax Administration will take action to obtain the above extracts through official channels. Accordingly, you are not expected to enclose them with the application letter.

Account on the location(s) of the service office(s)

A “service office” is a place held by the business enterprise or its agent. It is a place where a tourist can receive cash refunds of the VAT that has been paid. Such a refund can be paid in cash – or it may be transferred to the tourist’s bank account, as well. Service offices must be located at the border-crossing station on Finland’s side of the border, which also is the border of the EU VAT territory, or, as the case may be, at the border of the Province of Åland.

The application must indicate the street addresses and exact locations, covering both the applicant’s and the agent’s offices. In addition, enclose a map showing the border-crossings where you plan to set up future service offices.

Accounts and reports providing information on the applicant and the staff members employed by the applicant

Enclose a free-form account or report that affirms that your VAT refunding operation complies with the legal requirements laid down by the act governing cash refunds and meets the express requirements that concern yourself as the operator of cash refund activities.

You must also enclose a free-form account affirming the adequate professional skills of the staff members who participate in the supervision work with respect to exportation of the goods by tourists.

Information on the reliability of supervision of exports

A required enclosure to the application letter is a description of your plans to organise the work at each of the planned offices that will offer refunding services. The rules require that work must be organised in such a way that the applicant’s business enterprise can reliably ascertain the country of residence of every traveller. In addition, the applicant (your business enterprise) must oversee and be able to prove that the tourist or traveller takes the goods away from the VAT territory of the European Union as required by the provisions of the Finnish VAT Act.

The following stages of the planned VAT refunding work must be described:

  • The way the purchases are recorded in the VAT-refunding system
  • The way the business enterprise plans to seal the packages of the goods
  • The methods of verifying that the goods are taken out of the country
  • The way the VAT refunds are paid out
  • The way your VAT refund agency plans to provide documentation of the export for the retail store that had sold the goods to the traveller

In addition, you must describe the receipts, vouchers, and documents to be used in the planned refunding service, and list the information they contain, and describe how they will be processed. Finally, we require information on the following:

  • What kind of entries does the accounting system for VAT refunds contain in order to verify that the relevant requirements for tax-free tourist selling were satisfied and that the goods were actually exported?
  • What measures are taken in order to safeguard data security?
  • What kind of records does the accounting system for VAT refunds contain in order to facilitate any tax auditing, including field audits for gathering third-party data for purposes of comparison?

If the export control system is electronic, your application must contain an account of the control rules of the system.

Any changes to the information stated in the application letter must be communicated to the Tax Administration

The holder of an authorisation must notify the Tax Administration without delay if the applicant’s information has changed, or if there are changes that concern the agents, the offices or the export control system. Any of the above changes must be reported in writing. In the same way, the authorisation holder must inform the Tax Administration of any other facts and circumstances that may affect the continued fulfilment of the legal requirements relating to the authorisation.

The Finnish Tax Administration approves the new agents and service offices and the control rules relating to the electronic exports system

If the holder of an authorisation plans to expand its business and engage other agents or open a new service office, the agents and offices must be subjected to the Tax Administration’s approval before they can start serving customers.

If supervision of tourist sales is based on electronic systems, the applicable control rules must have the Tax Administration’s approval before they are implemented. Documents that contain information on the control rules must be kept secret.

Confidentiality requirements and information on accountability

Holders of authorisations, agents, and those who are persons in charge in an incorporated legal person bear responsibility for carrying out the control function over exportation of goods. Every staff member controlling the exportation of goods when working for the holder or for agents bears responsibility, as well. The legal provisions on how damages must be paid are found in the Finnish Tort Liability Act.

Holders of authorisations, agents, their staff members and members of their governing bodies are bound by confidentiality. They are not allowed to disclose any information about the control rules of the electronic system to third parties.

Contact information

Send your completed free-text application to the Southern Finland Corporate Tax Office:

Southern Finland Corporate Tax Office
(Application for VAT refund agency authorisation) – Palautusliikehakemus
P.O. Box 30
FI-00052 VERO

Street address: Vääksyntie 4, 00510 Helsinki

How the authorisation is granted – information on supervision of activities

Decision on authorisation

The Tax Administration requests the Customs to prepare a statement of opinion on the applicant’s request for authorisation before the Tax Administration can proceed to make a decision on the matter. Once granted, the authorisation is in force until further notice.

The decision can be appealed. The appeal authority is the Administrative Court (Hallinto-oikeus; Förvaltningsdomstol).

In case an official decision on the cancellation of an authorisation or approval is made, the authorities will enforce the decision unless the Administrative Court rules otherwise.

The Tax Administration releases an official list of authorisation holders and agents

The Tax Administration’s website contains an up-to-date list of authorisation holders and agents. The list shows the following details:

  • The holder’s name or company name and auxiliary company name, if any
  • Business ID
  • The name, personal identity code or Business ID of the person in charge appointed by the authorisation holder
  • Information on whether a holder of an authorisation or an agent is in question
  • Street addresses for every service office
  • Date when the authorisation was granted
  • In the case of a revoked authorisation, date when the authorisation was revoked.

For revoked authorisations, the Tax Administration will delete the information from the list when one year has elapsed since the date of revocation.

The Tax Administration oversees the procedure of cash refunding to tourists

The Tax Administration exercises control to ensure that business enterprises abide by the act governing cash refunding and that their system of refunding is functional.

On the Tax Administration’s request, the holder of an authorisation and the agent must submit all documentation, materials, and assets that may be needed for carrying out an audit in order to control their activity.

Revoking an authorisation

If the holder of an authorisation no longer fulfils the requirements for having the authorisation, or if the holder has requested revocation, the Tax Administration will revoke the authorisation.

Otherwise, an authorisation can be revoked if either the holder, or the agent, has breached the provisions of the act governing cash refunding. Before the Tax Administration takes action to revoke an authorisation, the holder or agent is notified of the problem and a deadline is given for remedying the problem.

The Tax Administration may revoke the authorisation completely, or for one service office only, or for one agent only.

Legislation applicable to the operation of a VAT refunding office

  • § 70 b, subsection 1 of the VAT Act
  • Act governing cash refunding in tax free sales to travellers (Laki matkailijamyynnistä suoritetun arvonlisäveron käteispalautustoimintaa harjoittavan velvollisuuksista (palautusliikelaki), 250/2015)