VAT for small-scale businesses
If you are conducting small-scale business, you do not have to register for VAT.
The scale of your business operations is determined based on the turnover. The business is small in scale if the company’s turnover for the accounting period (12 months) does not exceed €15,000. The threshold applies to accounting periods that have started on 1 January 2021 or after. (In 2020, the threshold was €10,000.) If the turnover exceeds the threshold, the company must be entered in the VAT register.
The company can register for VAT voluntarily even if its turnover does not reach the threshold. This may be beneficial, for example, if the company buys a lot of goods or services subject to VAT for its taxable business operations. When the company is VAT-registered, you can usually deduct the VAT included in the goods or services you buy.
Note: The threshold for small-scale business is not applicable to foreign companies with no permanent establishment in Finland. Read more about VAT for foreign businesses in Finland.
You must estimate the turnover yourself
You must estimate in advance whether your sales for the accounting period will exceed the threshold of €15,000. If you think the threshold will be reached, register for VAT.Make sure your estimate of the turnover for the accounting period is not too low. If you do not register for VAT and your turnover is higher than allowed for a small-scale business, you will have to pay VAT retroactively for the entire accounting period. You may also have to pay late-payment charges.
VAT-related reductions for small-scale businesses
- If your turnover for the accounting period is less than €30,000, you may be entitled to a VAT relief, i.e. a reduction from the VAT you have paid during the accounting period. A requirement is that the company has been registered for VAT. Read more about the VAT relief scheme.
- The VAT period is usually one month. In other words, VAT must be reported and paid on a monthly basis. For small businesses, the VAT period may be longer: a quarter or a year. Read more about VAT periods.