Making changes to the tax period for VAT
What is meant by “tax period” is the length of time for which you must submit a tax return for VAT and also pay the VAT (the length may be a month, a calendar quarter, a calendar year). Your tax period depends on your business turnover (net sales).
The typical length of a VAT taxpayer’s period is one calendar month. However, for small businesses with modest annual sales, an extension is available if the company submits a request for it:
- If the turnover is less than €100,000 a year, the tax period for VAT can be the calendar quarter.
- If the turnover is less than €30,000 a year, the period can be the calendar quarter or the calendar year.
If you have a small company and its actual sales go over the above thresholds, please inform the Tax Administration of it as soon as you can.
Note: by way of exception, if you are an operator or agriculture or forestry or if you are a creator of works of art, you can have the calendar-yearly tax period regardless of your annual turnover. However, this rule only applies to individual primary producers, or estates or consortia operating a primary production, and creators of works of art that do not conduct any other business liable to VAT.
When you set up a company, you are expected to indicate a planned tax-period length for it. Read more about starting up business.
The tax periods for VAT and the tax periods for employer’s contributions are not interconnected. The periods can have different lengths.
How to change your tax period and how to inform the authorities of various changes
You can request changes to your tax period:
- in MyTax: First select the Taxpayer details tab, and then go to Business operations and click on the Change tax period button.
- by submitting a notice on amendments (via BIS), if you also are informing the authorities of other changes in your business operation.
The tax period must remain unchanged for at least one year. This means that you can submit an application for having the tax period changed when at least 12 months have elapsed since you started up business, or since the date when a change was last requested.
When is the date when your new tax period comes into force?
The Tax Administration sends the applicant a written decision concerning the changed tax period enclosed with information on the start date of the new tax period. Up to this start date, you must file all your VAT returns and make the payments as required under your old tax period before you get the Tax Administration’s decision. If your turnover has gone over the threshold so you are no longer entitled to an extension of the period, the Tax Administration will send you a negative decision, stating that the requested extension of the tax period cannot be granted. Correspondingly, you are not entitled to an extension of the period if you have failed to submit VAT returns on time or failed to pay your taxes.
The earliest point in time when an extended tax period can come into force is the beginning of the calendar year that follows the year when you submit the request.
Example: The company’s tax period is the calendar month. In August 2023, the company submits a request for a longer tax period, the calendar quarter. The new period will be valid from January 2024. The company must submit its first VAT return by its new, quarterly tax period by 12 May 2024. This VAT return covers the first quarter, i.e. January, February and March.
As contrasted with the above, if your tax period is changed from a longer period to a shorter one, your new period comes into force on the start date of the next short tax period following the date when you submit the request. Note: In this case, you must file a return for the months belonging to the old tax period and pay your taxes for them sooner than you would with the old tax period’s usual due date.
Example: Your tax period is the quarter. In May, you submit an application for the one-month period. The new tax period will be valid as of 1 June. In these circumstances, you must file a return for the period just before the change date (spanning the time between April 1 and May 31) by 12 July. Your VAT for June must be filed and paid by 12 August.