The general VAT rate rises to 25.5% starting 1 September 2024
From 1 September, the general VAT rate will go up from 24% to 25.5%. The Finnish Parliament adopted the bill, and the changed VAT Act is awaiting confirmation.
The new percentage will be applied on the goods and services that are subject to the 24-percent VAT rate today.
This page contains instructions that need to be followed if the changes listed in the Government Proposal are adopted fully.
For supplies of goods, the date of delivery determines the VAT rate
In general, the VAT payable on a sale (=supply) of goods is allocated to the tax period when the goods were handed over to the buyer, i.e. delivered.
If the goods are delivered on or before 31 August 2024, the VAT rate is 24% even if the buyer were to pay for the goods some time later in September.
Example: A customer of a motor dealer places an order for a new car in August 2024. The car is delivered to the customer in September 2024, and he pays for it immediately on the same day. The VAT rate in this case is 25.5%. No importance is attached to the points in time when the purchase order was signed, or when the contract was signed, or when the new car’s vehicle registration was finalised. The applicable VAT rate is determined by the date of delivery.
Example: The seller sends a buyer a set of spare parts on 31 August 2024. The parts arrive in the buyer’s warehouse on 1 September 2024. If it was agreed that transportation is the seller’s responsibility, and the date of delivery is 1 September 2024 i.e. the day when the buyer received the parts. The VAT rate is 25.5%. If it was agreed that transportation is the responsibility of the buyer, then 31 August 2024, the date when transportation begins is deemed as the date of delivery. The VAT rate would in this case be 24%.
Paying a sum of money in advance
If an advance is paid to the seller, the seller must report VAT for it relating to the tax period when payment was made. If the seller is deemed as having received the advance before the VAT changes came into force, the VAT rate of 24% is applicable.
Example: A customer of a motor dealer places an order for a new car in August 2024. The car is delivered to the customer in September 2024. The agreement has been that the customer pay a partial advance to the dealer in the form of handing over his old vehicle during August. Because the date when the old car was delivered to the seller is before 1 September 2024, the VAT rate of 24% will be applicable to the advance.
Contracts involving payment by instalments
An instalment contract, often called ‘hire-purchase’, means that the seller and the buyer agree that the buyer can pay for the purchased item in many instalments. The time when the seller’s obligation arises to pay VAT is the date of delivery of the item.
Example: An home-appliances store sells a washing machine to a customer who will pay for it in accordance with an instalment plan. The store delivers the washing machine to the customer in August 2024. After delivery, the customer will pay for the machine in a series of instalments. The VAT rate for the entire price of the washing machine is 24%.
The point in time when a service performance is completed determines the VAT rate
Value-added tax on a service is allocated to the tax period when the service was given i.e. provided to the recipient. If the service performance is in an unfinished state at the time when the VAT change comes into force, the percentage rate to be applied will be the one in effect at the date when the finished service is provided. This means the date when the end result becomes available to the recipient of the service.
Example: You are a private individual. You place an order with a cleaning service company to have your windows washed at your home. The company performs this service and finishes it on 30 August 2024. The company sends you its invoice in early September. You pay the invoice on its due date in September. The VAT rate is 24%.
Example: A transport company sells a a private consumer a transport service of goods from Helsinki to Paris. The start date of the transportation is in August, but its end date is in September. The date when the finished service is provided to its recipient is the date when the transportation ends. The VAT rate is 25.5%.
Paying a sum of money in advance
If an advance is paid to the seller, the seller must report VAT for it relating to the tax period when payment was made. If the seller is deemed as having received the advance before the VAT changes came into force, the VAT rate of 24% is applicable.
Goods supplied or services provided on a continuous basis
When the supply of goods or services to the buyer is of a continuous nature, the payment for it is based on the passing of time. For example, a rental service involves performance of services in a continuous way.
Continuous supply is deemed as having been supplied at the end of each period that determines the remittance of the payment. For example, if it is agreed that one single payment of rent to the property owner concerns the entire 1 June 2024–31 May 2025 period, the date when the service is provided to its recipient is 31 May 2025. In this example, the VAT rate would be 25.5% for the entire period. If the payer of rent were to make a full payment to the property owner in advance, thus covering the June 2024–31 May 2025 period fully before 1 September 2024, the rental service would be subject to 24% VAT instead.
If the property owner charges rent by the month, the period determining remittance would also be the month. Accordingly, the date that determines the VAT rate is the end date of that period. In other words, rent for August 2024 is subject to 24% VAT – and rent for September 2024 is subject to 25.5% VAT.
It should be noted that no continuous supply of goods or services is in question – although payment may be effected in many instalments over time – for a purchase of a single good or for a purchase of a construction service.
Filing and paying VAT from 1 September 2024 onwards
When you complete your VAT return, you will find only one space to fill in for sales effected at the general VAT rate.
Using MyTax for VAT reporting
When the VAT taxpayer’s tax period is the month, the VAT return in MyTax will display the following space starting 1 September 2024: “VAT on domestic sales by tax rate: 25.5% VAT”.
When the tax period is the quarter or the tax period is the calendar year, the new VAT rate will enter into force part way through the tax period.
For those with the quarterly tax period, MyTax will display the year’s third tax period’s VAT return 3/2024 — July, August and September — as follows: “VAT on domestic sales by tax rate: 25.5% VAT”. For those filing and paying VAT once a year, MyTax will display the 2024 calendar year’s VAT return as follows: “VAT on domestic sales by tax rate: 25.5% VAT”. When you report VAT on sales for the above tax periods, these spaces on the VAT return must be used although your actual VAT has in fact been 24%.
Filing VAT through other electronic services than MyTax and filing VAT on paper
Whenever the VAT rate is the general rate, you will need to fill in the spaces as explained above when using other e-services (www.ilmoitin.fi and the API interface) to send your VAT return. This means that although the VAT percentage rate is different, you fill in same space as before.
As for the paper VAT return, the Tax Administration will release an updated version as of 1 January 2025. Up to the end of 2024, the paper form available today will continue to be used. All sales with both the 24% and the 25.5% rates must be entered into the same space on the form (Domestic sales 24%).
Periodisation rules to be followed
Please note that when completing your VAT returns, the point in time when the obligation to pay VAT arises does not determine the tax period for which VAT must be reported. It may be that the tax rules governing periodisation make it necessary to report some sales with 24% VAT for September. Correspondingly, you may need to report other sales with 25.5% VAT during August.
Example: Your company has the monthly tax period and you file and pay VAT on cash basis. This means that your company is reporting its value-added taxes according to the actual sales and purchases of the month when it receives payment or pays another company for the goods or services it has bought. Both your VAT on sales and your deductible VAT on purchases are reportable upon payment.
You deliver goods to a buyer on 30 August 2024 and receive payment on 1 September 2024. The VAT in this case is 24%. Because of your company’s cash basis VAT reporting, the date of payment is important so you must include the VAT for this sale in your September VAT return. If you use MyTax for your company’s VAT reporting, you need to enter this sale in “VAT on domestic sales by tax rate: 25.5% VAT”.
Example: Your company has the monthly tax period and you file and pay VAT on accrual basis. The effect of accrual-based reporting is that your sales are reportable during the tax period when the invoice you send to your buyer is dated. This rule concerns supply of goods and supply of services alike.
You send an invoice dated 30 August 2024 to a buyer but you deliver the goods on 1 September 2024. Your buyer pays the invoice by its due date, in September. The VAT rate in this case is 25.5%. You must include the VAT for this sale in your VAT return for August as the invoice was dated for August. If you use MyTax for your company’s VAT reporting, you need to enter this sale in “VAT on domestic sales by tax rate: 24% VAT”.
If the date when you place a good or service in own use (instead of VAT-taxable business) is 1 September 2024 or later, the new VAT rate will apply.
If you provide construction services in the course of your business but you build an object and place it in own use, the 25.5% rate will be applicable for the part of the construction for which the date of completion is 1 September 2024 or later.
If you buy construction services from an outside constructor and receive the completed construction-service performance on 1 September 2024 or later, to place the construction service into own use will be subject to the 25.5% VAT rate. However, if you had paid for these construction services in full before 1 September 2024, the 24% VAT rate will be applicable to the placement of the construction service into own use.
It is additionally necessary to pay VAT due to own use in situations where – at the time of sale or transfer of the real estate – an unfinished construction service is still ongoing for construction of a new building or for construction involving major renovation work. Correspondingly, it is necessary to pay VAT if construction of a new building or construction involving major renovation is finished, but the real estate unit is sold or transferred before its entry into service. If a unit of real estate is sold or transferred on 1 September 2024 or later, its placement into own use is subject to the 25.5% VAT rate.
If you purchase a good from a seller in the EU, and the correct month for VAT reporting of the purchase is September 2024 or a later month, you need to apply the new VAT rate when you file and pay VAT. The calendar month for VAT reporting of purchases from other EU countries – intra-Community acquisitions – is the month following the month when you bought the goods, i.e. made the acquisition.
The date of acquisition is the date of delivery of the goods. However, if the supplier's final invoice for the purchase is dated within the month when goods are delivered, the intra-Community acquisition must also be reported during that month.
The reporting month for VAT purposes remains the same even if a part of the price had been paid in advance.
Example: A Finnish company buys a machine in Sweden. The company pays a part of the machine’s purchase price in the form of an advance payment in July 2024. Delivery takes place in August 2024. The seller draws up its invoice for the remainder of the purchase price in September 2024.
The intra-Community acquisition is made in August, and the month when VAT on it must be reported is September. The VAT rate on the entire intra-Community acquisition is 25.5%.
In an alternative scenario, if both delivery and invoicing for the machine were carried out in August, the VAT reporting month for the intra-Community acquisition would be August 2024. This would mean that the 24% rate would apply both to the paid advance and to the intra-Community acquisition.
If goods bought from other EU countries are delivered on a continuous basis and these deliveries go on for more than one month, the dates when the buyer is deemed as having received the goods are the end dates of each calendar month concerned. The VAT rates that are in force as of 1 September 2024 will apply to intra-Community acquisitions delivered in a continuous way if the acquisition is VAT-reportable during September 2024 or later.
The reverse charge mechanism is applied in all EU countries when a business sells a service governed by the VAT general provision to a business established in another EU country. In Finland, reverse charge also applies to certain other services, which are not among those governed by the VAT general provision. The VAT reverse charge mechanism means that the party paying VAT on sales is the Finnish buyer of the service, not the seller.
If a service subject to reverse charge is provided on 1 September 2024 or later, the VAT rate is 25.5%. However, if the buyer paid for the service in advance before 1 September 2024, the VAT is 24%.
Example: A Swedish company sells a consultancy service to a Finnish company. The service is fully provided to the Finnish company in August 2024, but the Swedish company draws up an invoice for it in September 2024. The VAT rate is 24%. The Finnish company – the buyer of the service – pays VAT in accordance with the reverse charge mechanism. The Finnish company must report this VAT when it files its VAT return for August 2024.
Read more about value-added taxes on international supply of services.
If the date when VAT liability arises concerning a good imported to Finland is 1 September 2024 or later, the new VAT rate will apply. VAT liability arises on the date when the Customs acknowledges receipt of the import declaration.
If that date is before 1 September 2024, and the goods being imported are subject to the general VAT rate, the VAT rate is 24%. Correspondingly, if VAT liability arises on 1 September 2024 or later, the VAT rate is 25.5%.
The calendar month for reporting VAT on imports is the month when Customs issued the decision on customs clearance. VAT on imports has to be reported to the Tax Administration.
Example: On 31 August 2024, a company with a valid VAT registration imports a set of spare parts from Norway to Finland. Finnish Customs first acknowledges receipt of the import declaration on 31 August 2024, and then issues its decision on release for free circulation on 1 September 2024.
The company must report information concerning these imported goods to the Tax Administration when filing its VAT return for September. The VAT rate is 24%.
The tax border between Åland and mainland Finland – imports of goods
The rate of VAT to be applied on imports between Åland and mainland Finland is determined by the date indicated on the decision on the first customs clearance of the goods. This means that if the date is 1 September 2024 or later, the VAT rate is 25.5%.
However, you must report information concerning the imported goods to the Tax Administration on the VAT return for the tax period when the customs clearance decision was issued.
Read more
When you include any discounts you have granted, writeoffs of bad debts, etc. in your VAT reporting, you must use the VAT rate that was in force when the goods were delivered or when the services were provided to the buyer. This rule extends to situations where an accounting adjustment is made and the tax period where the adjustment entry should be booked is a period starting 1 September 2024 or later.
It is possible that deliveries or service-provisions – both before and after 1 September – are later adjusted because of giving customers various discounts afterwards. When this has happened, the impact of the discounts should be spread out, reflecting the passing of time and reflecting the old and the new VAT rates.
Example: A company sells office supplies during 2024. It decides to give one of its customers an annual discount based on the customer’s total purchases during the year 2024. As a result, €5,000 (not including VAT) is subtracted from the customer’s purchase prices. The seller company can reduce its VAT base by €5,000 in its VAT reporting.
The related VAT must be divided in proportion to the passing of time. In other words, 8/12 of the discount (for January–August) relates to the company’s sales at 24% VAT, and the remaining 4/12 (for September–December) relates to the company’s sales at 25.5% VAT. Accordingly, after the company reduced its VAT base by €5,000, the adjustment to VAT payable is 8/12 × €5,000 × 0.24 = €800 for the first eight months, and for the remaining months 4/12 × €5,000 × €0.255 = €425, which makes €1,225. The company is expected to comply with good accounting practice when choosing the tax period when this adjustment is entered in company books.
If a writeoff for a bad debt has been entered in accounting, but it turns out that the customer pays the amount later, the seller must file and pay VAT using the VAT rate that was in force when the original sale was made.
Example: A company is a seller of home appliances. No payment arrives from a customer for a sold appliance, which was delivered to the customer before 1 September 2024. In accordance with good accounting practice, the date when an entry in the books should be made in order to write off a bad debt is the day when it became apparent that no payment will likely be received. The home-appliances company includes a writeoff entry in its books for December 2024.
The 24% VAT rate is applied on the bad debt and on its writeoff, even though the company reports this to the Tax Administration when it files its VAT return for December 2024.
If the customer finally pays for the purchased appliance in January 2025, the VAT rate to apply would still be 24%. After the amount has been received, the company would have to report it as a sale subject to VAT when the company files its VAT return for January 2025.
It is customary for sellers of water and various forms of energy – including electricity, gas, heating – to draw up invoices reflecting actual consumption of water or energy. On the other hand, a widespread method of invoicing is based on first drawing up an invoice for estimated consumption during the year, and then, after the year’s end, send the customer another invoice based on actual consumption. The invoices may contain other elements in addition to consumption of water or energy, such as an annual fee and a basic charge, the sizes of which are unrelated to the customer’s consumption.
Supply of water or energy cannot be treated as falling into the category of continuous supply (for more information, see the sub-heading “Goods supplied or services provided on a continuous basis” above). Instead, the general VAT rules apply. The VAT rate depends on the point in time when delivery of goods or completion of a service is carried out, or if relevant, the point in time when an advance is received by the seller.
Example: During 2025, an electric company sends an invoice for the 1 January – 31 December 2024 period. The VAT rates on that invoice must be 24% concerning deliveries of electricity before 1 September and 25.5% concerning later deliveries. However, if the electric company were to draw up an invoice and receive payment for it before 1 September 2024 for its deliveries of electricity that will take place later, such an invoice would be subject to 24% VAT.