VAT relief for small businesses
The VAT relief for small businesses is a form of tax credit for entrepreneurs and companies who are registered for VAT and whose net sales for the accounting period (12 months) are less than €30,000.
If the company’s net sales are
- €15,000 or less, the company will be refunded the entire amount of the VAT qualifying for the relief.
- over €15,000 but less than €30,000, the company will receive a partial VAT relief.
Starting 2021, you are entitled to full VAT relief if your net sales are at most €15,000. Previously, the threshold was €10,000.
What information is required for requesting the relief?
To request VAT relief, fill in the information on the VAT return form:
- net sales qualifying for the relief
- amount of VAT qualifying for the relief.
The amounts of net sales and VAT that qualify are not automatically the same as the company’s net sales and VAT recorded in its accounting, because not all sales and taxes can be taken into account in the relief.
Use the VAT relief calculator for the required figures. The calculator takes into account that some of your sales and VAT do not qualify for the relief. The calculation result gives you the information you need for requesting the relief.
- Calculator when the accounting period started in 2020 or earlier
- Calculator when the accounting period started in 2021 or later
When to request VAT relief
Report the information relating to your request for VAT relief on your VAT return. Your tax period for VAT determines when you should make the request. You can request the relief either on the final VAT return for the calendar year or for the accounting period.
| Tax period | When the relief must be requested |
|---|---|
| month | on the VAT return for the final month of the accounting period |
| quater | on the VAT return for the final quarter (October–December) of the calendar year |
| year | on the VAT return for the calendar year |
How does the relief affect the amount of tax?
When you submit VAT and relief details in MyTax, the e-service automatically deducts the relief amount from the amount of VAT payable.
If the relief amount is greater than your VAT payable for the tax period, you will receive the rest as a refund. If you have no VAT payable for the tax period, you will receive the entire relief amount as a refund.
Remember to file the relief as income on your tax return
The income you receive from a VAT relief is taxable in income taxation. This income must be recorded in the company’s accounting as income received in the accounting period that qualifies for the relief.
However, if your company uses cash-based accounting, you must record the relief as income received in the year when the Tax Administration actually pays the relief to your company. If a company that uses cash-based accounting deducts the relief from the amount of upcoming tax payable for the tax period, the relief is considered to be income received in the tax year when the VAT filed on the VAT return in question would have fallen due.
Report the relief in the year’s income tax return in the section for grants and subsidies received.
The VAT relief is considered to be received from the same income source as the income for which the relief was granted. For example, VAT relief for a business operation is considered income from a business source and VAT relief for agriculture is income from agriculture.
Frequently asked questions
The accounting period started in 2021: When the net sales qualifying for relief are between €15,000 and €30,000, the relief is calculated with the following formula:
VAT – (net sales – €15,000) × VAT
€15,000
The accounting period started before 2021: When the net sales qualifying for the relief are between €10,000 and €30,000, the relief is calculated with the following formula:
VAT – (net sales – €10,000) × VAT
€20,000
In the above formula, net sales and VAT mean only the amounts qualifying for the relief.
If the net sales qualifying for the relief are €15,000 or less (€10,000 in 2020), this formula is not used. In this case, the amount of VAT relief will be the same as the amount of VAT qualifying for the relief.
You can calculate the amount of net sales and taxes qualifying for the relief with the VAT relief calculator:
- Calculator when the accounting period started in 2021 or later
- Calculator when the accounting period started in 2020 or earlier
Examples of VAT relief calculations
Example: The sales that qualify for VAT relief: physiotherapy, including VAT-exempt and VAT-liable sales
The physiotherapist’s annual net sales consist of VAT-exempt physiotherapy (€20,000) and VAT-liable zone therapy (€15,000 without VAT). The tax-exempt sales related to physiotherapy are not included in the net sales qualifying for VAT relief. The net sales qualifying for the relief is therefore €15,000.
Example: Some of the deductible VAT relates to forestry
In the accounting period 1 January– 31 December 2021, the net sales qualifying for VAT relief is €16,900 and the VAT to be paid (24%) is €4,056. The VAT deductible for business is €4,190 in total. This amount includes €1,500 of VAT deductible for forestry. The forestry operation does not entail any VAT to be paid.
The VAT for the accounting period is €134 negative. The VAT qualifying for relief is €1,366: the VAT payable €4,056 minus the VAT deductible (excluding the VAT deductible for forestry) €2,690.
VAT relief calculation:
€1,366 – (€16,900 – €15,000) x €1,366 = €1,192.97
€15,000
The amount of the relief is €1,192.97.
Example: A company must pay VAT based on the reverse charge mechanism.
A company’s tax period is the calendar month. During the accounting period 1 January–31 December 2020, the company’s domestic net sales subject to VAT amount to €11,000 (without VAT). The VAT (24%) on these sales is €2,640. The VAT on the company’s deductible purchases is €150. Additionally, the company must pay €250 of VAT based on the reverse charge mechanism. In other words, the deductible VAT for the accounting period is €400 in total: the reverse-charged €250 and the VAT on domestic purchases €150.
The net sales that qualify for VAT relief is €11,000.
The amount of VAT that qualifies for relief is the difference between the tax payable on the domestic sales (€2,640) and the tax deductible for the accounting period (€400), i.e. €2,240.
VAT relief calculation:
€2,240 – (€11,000 – €10,000) x €2,240 = €2,128
€20,000
The amount of the relief is €2,128.
Read more about the calculation in the detailed guidance on the VAT relief for small businesses (available in Finnish and Swedish, link to Finnish).
The company's operations started in the middle of the calendar year and its first accounting period in accordance with the Accounting Act is 1 September 2022–31 December 2023. The company’s tax period is a quarter. When the VAT relief is calculated, the accounting period is considered to be a calendar year, i.e. the number of months stands for the entire calendar year.
Report the information for VAT relief for the period 1 September 2022–31 December 2022 on the VAT return for the last quarter of calendar year 2022 (October–December 2022).
In the VAT relief calculator, enter 4 to indicate the length of the accounting period in months. The calculator adjusts the net sales of the accounting period to correspond to the net sales of a 12-month accounting period.
Report the information for VAT relief for the period 1 January 2023–31 December 2023 on the VAT return for the last quarter of calendar year 2023 (October–December 2023). In the VAT relief calculator, enter 12 to indicate the number of months in the calendar year.
If the company ends its operations in the middle of the calendar year, report the information for VAT relief on the VAT return submitted for the last tax period when the company operated. Read more: Termination of VAT liable activities
The company's accounting period in accordance with the Accounting Act is 1 February 2023–31 January 2024. The company's VAT period was previously a calendar year, but starting 1 October 2023, it is a month.
File a VAT return for 1 January–30 September 2023, and report the VAT relief information for this period. Submit the return by 13 November 2023 (because the deadline is a Sunday) . In the VAT relief calculator, enter 9 to indicate the length of the accounting period in months. The calculator adjusts the net sales of the accounting period to correspond to the net sales of a 12-month accounting period.
Starting October, the company will file its VAT returns on a monthly basis. Report the information for VAT relief for 1 October 2023–31 January 2024 on the VAT return for the last month of the accounting period, i.e. January 2024. The filing deadline is 12 March 2024. In the VAT relief calculator, enter 4 to indicate the length of the accounting period in months. The calculator adjusts the net sales of the accounting period to correspond to the net sales of a 12-month accounting period.
Use the VAT relief calculator to calculate the relief.The calculator takes into account the sales and taxes that do not qualify for the relief.
For example, you are not entitled to the relief, if
- the VAT for the accounting period is negative, i.e. the amount of VAT included in purchases is greater than the amount of VAT paid on sales.
- the company’s entire net sales consist of activities that do not qualify for the VAT relief, such as sales of services outside Finland or sales of fixed assets.
- the company is regarded as a foreign resident with no permanent establishment in Finland.
In addition, income from forestry (e.g. income from timber sales), for example, does not qualify for the VAT relief. Read more about exceptions to VAT relief of agricultural and forestry operators (in Finnish or Swedish).
You can request VAT relief retroactively for 3 years from the end of the accounting period that qualifies for the relief.
If your company’s accounting period is not the calendar year and your tax period is the month, the start of the 3-year time limit is the start of the next year after the end date of your company’s accounting period qualifying for the relief.
If you submit your request retroactively, you must file the final VAT return of the accounting period or calendar year again.
Example: The company’s accounting period that qualifies for the relief is 1 January – 31 December 2018. The company’s tax period is the quarter. In the year 2020, someone at the company realises that no VAT relief had been requested the 2018 accounting period. The company corrects their error by filing a new VAT return for the year’s final tax period (October, November and December 2018). This return must be filed by 31 December 2021.
VAT relief scheme — other pages
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