Sales to diplomats, international bodies, bodies of the European Union and the armed forces of Nato member states

This is an unofficial translation. The official instruction is drafted in Finnish and Swedish languages.

Value added tax (VAT, alv/moms in Finnish/Swedish) is levied on the sale of goods and services in Finland, unless the provisions of the VAT Act expressly grant exemption.  Representations of foreign states located in Finland, offices of career consuls in Finland, diplomats, international bodies, and bodies of the European Union are entitled to exemptions for their purchases.  In practice, these exemptions are granted in the form of tax-exempt import or tax-exempt intra-Community acquisitions, or alternatively, in the form of refunds, payable on submitted application, regarding purchases of goods and services made in the territory of Finland.

Sales of goods and services to representations and offices of career consuls located in other EU countries, to their diplomat staff, to international bodies, bodies of the European union and armed forces of NATO member states is exempt in the same extent as granted in the host state.  Furthermore, pursuant to special preconditions, exemption from VAT can be applicable to supply of goods to a diplomatic mission and to an individual diplomat located in a country outside the European Union.

Instruction has been updated on 1 January 2017 due to the new terms introduced in the Act Governing Self-assessed and the Act on Tax Collection as well as due to the changes in the VAT Act.

1. Selling goods and services to diplomats posted and international bodies located in Finland

Procedure by the seller

When a Finnish company sells goods or services to diplomats posted to Finland, the sale is taxable as a usual, domestic sale (with the exception of motor vehicle sales, exempt under § 72e, VAT Act). Any reference to ‘diplomats’ in this passage means diplomatic missions, offices of career consuls, diplomatic representatives, career consuls, international bodies and accompanying family members living in the same household.

Thus, the seller declares the amount of tax on the article sold on the Self-Assessed Tax Return form in accordance with applicable tax rates.

The invoice given to the diplomat should spell out:

• seller’s name
• seller’s address
• seller’s Business ID
• buyer’s name
• buyer’s address
• quantity and description of goods, or alternatively, if selling services instead of goods, information on the extent and nature of the services
• date of delivery of goods, or date when the services were rendered
• taxable amount, specified for each VAT rate, if several rates apply,
• rate(s) of VAT
• the amount of VAT (EUR).

Motor vehicles can be sold VAT exempt to foreign diplomatic and comparable missions, offices of career consuls, diplomatic representatives and career consuls posted in Finland. The sale of motor vehicles to the administrative and technical staff of foreign missions who are not nationals of Finland and family members of the same household is also VAT exempt, provided that they acquire the motor vehicle for their personal use when settling down in Finland.

For verification of a VAT-free sale of a motor vehicle, the buyer must provide a certificate (known as the ‘French document’) approved by the Ministry for Foreign Affairs for the seller’s bookkeeping, stating that the buyer is entitled to acquire the goods tax free.

The seller declares this sale as Turnover taxable at zero VAT rate on the Self-Assessed Tax Return.

Who is entitled to refunds?

Diplomatic and comparable missions and the offices of career consuls in Finland, diplomatic representatives, career consuls, international bodies located here, recognised as such by Finland, other than the European Union, or family members of the same household, are entitled to apply for refund, regarding the VAT included in the purchase price of goods and services purchased for official or personal use.

The VAT exemption is based on reciprocity, that is, it only applies to the missions of countries that grant a corresponding right to Finnish missions or diplomats.

The exemption from VAT covers all goods and services purchased for official or personal use, of the persons listed above, provided that the price of any single article or service is at least the equivalent of EUR 170 including VAT.

Staff other than diplomats or career consuls or staff of an international body has no right to refund. For the purposes of this rule, ‘single article’ and ‘single service’ refer to a single article or service, not to the sum total of several purchases in the same invoice.

Application

The VAT refund application should be submitted to the Ministry for Foreign Affairs. As of 1st January 2017 it is no longer required to enclose original invoices to the application.

The Ministry for Foreign Affairs will confirm the applicant’s right to a refund on the basis of reciprocity, convention establishing the body or headquarters agreement, position and intended use of the goods or services. Other conditions for the refund are controlled by the Finnish Tax Administration, which also pays out the refund.

Application forms are available at the Ministry for Foreign Affairs. The application is submitted to the Ministry for Foreign Affairs quarterly. The latest day to submit an application is within one year after the invoice was paid. For more information, go to the website www.um.fi of the Ministry for Foreign Affairs to download the publication ‘Diplomatic privileges and immunities in Finland’.

2. Selling to diplomats in other EU Member States

The selling of goods and services to diplomatic and comparable missions, offices of career consuls in other Member States, and to their staff is exempt from VAT on the same terms as apply to the exemptions and refunds granted in their country of posting.

Procedure by the seller

The buyer provides the seller with a VAT and Excise Duty Exemption Certificate serving as proof that the sale can take place without VAT. This certificate certified by the Ministry for Foreign Affairs in the country of posting serves to prove that the sale would be exempt or refundable if it took place in the country of posting. The seller must retain this document in his bookkeeping as proof of the VAT exemption of the sale. Both part (A) and part (B) of the certificate are required. Part (B) includes details on the goods or service purchased. Purchases of goods other than those approved by the Ministry for Foreign Affairs are usually taxable.

The seller declares this sale as Turnover taxable at zero VAT rate on the Self-Assessed Tax Return.

3. Selling to diplomatic missions located outside the European Union

Selling to diplomatic missions outside the EU is VAT exempt if the usual requirements of exportation are fulfilled. The selling to diplomatic missions located in non-EU states is exempt also, provided that the seller delivers the goods to the Courier Services Office of the Ministry for Foreign Affairs for delivery to their final destination by the diplomatic courier. The seller must request for a stamp of the Courier Services Office for his sales invoice, and retain the stamped invoice in his bookkeeping as proof of the VAT exemption of the sale.

The selling to diplomatic missions’ staff is VAT exempt only as exports. For more information see our guidance 'VAT in export trade (in Finnish or in Swedish)’.

The seller declares this sale as Turnover taxable at zero VAT rate on the Self-Assessed Tax Return.

4. Selling to international organizations located in other EU Member States

The selling of goods and services to international bodies and their staff in other Member States is exempt from VAT within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements. It is required that the international body is recognised as such by the public authorities in the host Member State.

Procedure by the seller

The buyer provides the seller with a VAT and Excise Duty Exemption Certificate serving as proof that the sale can take place without VAT. The certificate also serves as a written confirmation from the relevant authority in the organisation’s country of tax domicile stating that, under the agreement on the organisation’s founding or domicile, the sale would be exempt or refundable if it took place in the organisation’s country of domicile. Both part (A) and part (B) of the certificate are required. Part (B) includes details on the goods or service purchased.

The seller declares this sale as Turnover taxable at zero VAT rate on the Self-Assessed Tax Return.

5. Selling to bodies of the European Union

The bodies of the European Union include the Council of the European Union, the European Parliament, the European Commission, the Economic and Social Committee, the Committee of the Regions, the Court of Justice of the European Union, the European Court of Auditors, the European Ombudsman, the European Central Bank, the European Investment Bank and the European Data Protection Supervisor.

5.1 Selling to an EU body located in Finland

Procedure by the seller

Sale to EU bodies in Finland is taxable as a usual domestic sale. The single exception from the rule is the selling of motor vehicles, exempt under § 72 e, VAT Act. Thus, the seller usually issues invoices with the necessary VAT details, and declares the taxes on the Self-Assessed Tax Return in accordance with applicable tax rates.

Selling motor vehicles to EU bodies in Finland is exempt.

Regarding motor vehicles, the EU body itself is expected to provide the seller with written confirmation of its right to VAT exempt purchases. The seller declares this sale as Turnover taxable at zero VAT rate on the Self-Assessed Tax Return.

Refund procedure

EU bodies are entitled to refunds of VAT included in the goods and services purchased for official use. Selling to an EU body located in Finland is taxable. Within the refund procedure, the EU body submits applications for refund, and is paid a VAT refund quarterly.

It is further required that the public or private corporation that made the purchase cannot otherwise deduct the paid VAT or receive other refunds for it. Furthermore, for the purposes of refund, the price of goods or services must at least be the equivalent of EUR 80 including VAT.

The EU body is expected to deliver a refund application with copies of invoices from the sellers of goods or services to Finnish Tax Administration, which will refund the paid VAT within six months of receipt of application.

5.2 Selling to an EU body located in another EU country

Selling goods and services to EU bodies and staff located in other EU countries is exempt from VAT under the rules laid down by the public authorities in the host Member State.

Procedure by the seller

The buyer provides the seller with a VAT and Excise Duty Exemption Certificate serving as proof that the sale can take place without VAT. The certificate also serves as a written confirmation from the relevant authority in the host Member State of the EU body stating that the sale would be exempt or refundable if it took place in the host Member State. The seller must retain this document in his bookkeeping as proof of the VAT exemption of the sale. Both part (A) and part (B) of the certificate are required. Part (B) includes details on the goods or service purchased.

The seller declares this sale as Turnover taxable at zero VAT rate on the Self-Assessed Tax Return.

6. Selling to the armed forces of NATO member countries

The sale of goods or services for use by armed forces involved in the joint defence of NATO countries in another EU country or the civilian staff of the forces or for use in the forces’ dining rooms or canteens is exempt from VAT under the same terms as in the destination country. The exemption does not apply to the defence forces of the destination country.

Procedure by the seller

The buyer provides the seller with a written confirmation from the relevant authority in the destination country, stating that the sale would be exempt or refundable if it took place in the destination country. The seller must retain this document in his bookkeeping as proof of the VAT exemption of the sale.  Both part (A) and part (B) of the certificate are required. Part (B) includes details on the goods or service purchased.

The seller declares this sale as Turnover taxable at zero VAT rate on the Self-Assessed Tax Return.