Distance selling of excise products to Finland

This is an unofficial translation. The official instruction is drafted in Finnish (Valmisteveron alaisten tuotteiden etämyynti Suomeen, record number VH/82/00.01.00/2020) and Swedish (Distansförsäljning av punktskattepliktiga produkter till Finland, record number VH/82/00.01.00/2020) languages.

This instruction deals with tax questions related to the distance selling of products subject to excise duty. The instruction only concerns excise taxation. The tobacco act (Tupakkalaki 549/2016) and the alcohol act (Alkoholilaki 1102/2017) provide for limitations concerning the import and selling of tobacco products and alcoholic beverages, which are not discussed in this instruction. The distance seller and the tax representative must personally make sure that the activities comply with alcohol and tobacco legislation. Where the question concerns excise duty legislation and the distance selling referred to in this instruction, the distance seller and the distance seller’s tax representative are responsible for the payment of excise duty regardless of whether the activities were prohibited under other legislation.

1 General

The seller has the obligation to pay excise duties to Finland when distance-selling products subject to excise duty to Finland. The instruction explains when the question concerns distance selling referred to in the act on excise duties (Valmisteverotuslaki 182/2010) and what actions the distance seller should take in taxation. Major changes will be introduced in the excise taxation procedure. The instruction will be updated in accordance with the amendments in legislation.

Chapter 1 explains the most relevant legislation connected with the topic. Chapter 2 describes the criteria for distance selling. The distant seller’s tax liability and excise taxation procedure are explained in Chapter 3. Chapter 4 describes how the return or destruction of products during transport affects their taxation in Finland. Chapters 5 and 6 provide a brief overview of situations where a private person purchases products subject to excise duty from another Member State through a procedure other than distance selling.

As the instruction concerns excise taxation, it does not cover questions related to value-added taxation, for example. Value-added taxation in the distance selling of products subject to excise duty is discussed in the Finnish Tax Administration’s instruction Rules and procedures regarding distance selling to non-taxable persons and VAT.

1.1 About excise duty regulation

The provisions of the excise duty act concerning distance selling are based on the Council Directive on the general arrangements for excise duty 2008/118/EC. Article 44 of the new directive laying down the general arrangements for excise duty (2020/262) also provides for distance selling. Distance selling is defined in the excise duty act in the same way as in the excise duty directive (2008/118/EC). Distance selling refers to selling where a person – other than an authorised warehouse keeper or a registered consignee or a temporarily registered consignee – established in Finland and not engaged in independent economic activities has purchased products subject to excise duty and released for consumption from another Member State, and the distance seller or another party acting on behalf of the distance seller directly or indirectly sends or transports the products to Finland (excise duty act, section 6 (11). The buyer in distance selling is thus a private person. ’Distance seller’ refers to a seller who sells products to Finland pursuant to paragraph 11 of the excise duty act (excise duty act, section 6 (12 k).

A distance seller can appoint a tax representative in Finland. A tax representative refers to a person established in Finland whom the distance seller has appointed and whom the Finnish Tax Administration has accepted for the payment of excise duties on behalf of the distance seller for products received in Finland (excise duty act, section 6 (13 k). Upon application, the Finnish Tax Administration issues an authorisation for a person to act as a tax representative. The authorisation must be valid upon commencement and during the course of the activities. (Excise duty act, section 21 (2))

Finnish excise duty is levied on products sold to Finland through distance selling. The taxpayer is the distance seller. If the distance seller has a tax representative, the latter shall be liable to pay tax instead of the distance seller. The distance seller is responsible for the excise duty payable by the tax representative as they would be for their own tax. The liability to pay excise duty arises when the products subject to excise duty are released in Finland. The excise duty must be paid according to the provisions valid on the day on which the product is released in Finland. (Excise duty act, section 79)

A private person in Finland can also purchase products subject to excise duty and taxed in another Member State in such a way that the seller is not considered to be selling the products through distance selling. In excise taxation, a private person is thereby considered to purchase products subject to excise duty through distance buying, i.e. a purchase by a private person pursuant to section 74 of the excise duty act. In distance buying, a private person purchases products subject to excise duty from another Member State for personal use in a manner other than traveller import or distance selling. In that case, the products are imported in the country either by another private person or a trader. A private person having purchased products through distance buying is liable to pay tax for them. Similarly, the party having participated in the transport of the products as well as the party in possession of the products in Finland are responsible for the tax payable by the private person as for their own tax.

1.2 Products subject to excise duty

The excise duty act is applied when levying excise duty on, for example, alcohol and alcoholic beverages, tobacco products, soft drinks, alcohol and soft drink containers as well as liquid fuels. The basis for determining tax for products subject to excise duty and the amount of the tax are provided for in special acts concerning products subject to excise duty. Acts concerning excise duty include the act on excise duty on alcohol and alcoholic beverages (Laki alkoholi- ja alkoholijuomaverosta 1471/1994), act on excise duty on tobacco (Laki tupakkaverosta 1470/1994), act on excise duty on soft drinks (Laki virvoitusjuomaverosta 1127/2010) and act on excise duty on certain beverage containers (Laki eräiden juomapakkausten valmisteverosta 1037/2004).

Excise duties either are harmonised through directives or are national taxes. Harmonisation means not only the harmonisation of the procedures used in the transfer of products subject to excise duty, but also that the products are subject to excise duty throughout the EU and that a minimum tax rate has been set for them. Harmonised taxes include the excise duty on alcohol and alcoholic beverages. In addition, a national tax is levied on alcoholic beverage containers. Also, the excise duty on tobacco levied on cigarettes has been harmonised in the EU, whereas the excise duty on tobacco levied on electronic cigarette liquids and cigarette paper is a national tax. Provisions concerning distance selling are applied when levying both harmonised and national excise duties. It should be noted, however, that some of the procedural rules related to harmonised taxes do not concern products subject to a national excise duty. The procedures are discussed in more detail in Chapter 3.

2 Distance selling in excise taxation

2.1 Distance selling is selling products to a private person

According to the excise duty act, it is considered distance selling if a private person in Finland purchases products subject to excise duty and released for consumption in another Member State and the distance seller or a party acting on behalf of the seller sends or transports the products to Finland. The seller is liable to pay excise duties for the products it has delivered to Finland through distance selling. Regulations concerning distance selling comply with the generally applicable principle of the country of consumption, according to which excise duties are levied in the Member State where the products are consumed. Excise duties are levied in Finland, i.e. the products’ Member State of destination, on products sold to Finland through distance selling.

In distance selling, the buyer of the products is always a private person who orders products as a consumer for their own use. Clubs or associations, for instance, are not treated as a private person. A private person can order products subject to excise duty from a distance seller through an online store, by email or by phone, for example. It is not considered distance selling if the products were purchased by a trader, such as a limited liability company, a limited partnership or a private trader. In that case, the buyer of the products is liable to pay tax for the products that the buyer has received in Finland (excise duty act, sections 75 and 78). As a rule, the purchase of products subject to excise duty is considered performed in the capacity of a trader if the order was placed using a VAT number or business ID.

In practice, it is possible, for instance, that products are sold to Finland through distance selling and products are ordered through distance buying or as commercial purchases by companies through the same online store. It is considered distance selling if the seller participates in the organisation of transport and the recipient of the products is a private person. In the case of distance selling, the liability to pay tax is not transferred to the private person who has ordered the products, not even if the transfer of liability was mentioned in the online store’s terms of order or delivery. Pursuant to excise duty legislation, the distance seller and the distance seller’s tax representative are liable to pay excise duties regardless of whether their activities were allowed or prohibited under the alcohol act or the tobacco act, for example.

2.2 Products taxed in another Member State

Only products released for consumption in another Member State can be sold to Finland through distance selling. If products are ordered directly from outside of the EU, it is not distance selling under the excise duty act. Any excise duties of the Member State of dispatch, i.e. the excise duties of the state from where the products are sent to Finland, must have been paid for products released for consumption in another Member State.

The excise duty directive allows the refund of excise duties paid in the Member State of dispatch under some conditions. The purpose of the refund procedure is to avoid double taxation. However, the preconditions and deadlines of the refunds vary according to Member State. The distance seller must contact the tax authorities of the Member State of dispatch for information on the preconditions under which the excise duties paid can be refunded when excise duties for products delivered to Finland have been paid in Finland. The Finnish Tax Administration does not refund an excise duty paid to another Member State, nor can such refund be requested through it.

2.3 The seller organises or participates in the organisation of transport

2.3.1 The seller or a party acting on behalf of the seller transports or dispatches the products

In distance selling, the seller or a party acting on behalf of the seller dispatches or transports the products to a private person in Finland. The distance seller can transport or dispatch the products to Finland independently or assign the delivery to a carrier for transport. Pursuant to the excise duty act, it is always considered distance selling if the seller participates, in one way or other, in the dispatch or transport of the products or the organisation of transport.

If the seller has an agreement with the party organising transport about the transport of the products ordered by a private person, this is distance selling. In that case, the carrier transports the products specifically on behalf of the seller, not the customer. Transport is also organised on behalf of the seller if there is a framework agreement between the seller and the carrier even if the private person agreed on the transport separately with the said carrier.  Whether the transport or logistics company is some other than the seller of the products is insignificant when the co-operation actually takes place between the seller and the carrier or a logistics company.

2.3.2 The seller participates in the organisation of product transport

It is also considered distance selling if the seller participates in the organisation of transport for products subject to excise duty. The seller is considered to participate in transport arrangements when

• the seller directs the buyer on its website to use a particular carrier or
• otherwise establishes an actual contact between the buyer and the carrier.

The seller is deemed to have directed the user to use a specific carrier, for example, in cases where the seller visibly advertises only a single carrier on its website. The seller is also considered to have established a contact between the buyer and the carrier if the online store or order confirmation contains a link to the carrier's website so that the possibility to agree on transport opens directly from the link. The seller participates in the organisation of transport by directing the buyer to use a specific carrier, and the buyer consequently does very little to organise the transport. 

Further, it is considered distance selling if the seller establishes a contact between the buyer and the carrier, for example by taking care of monetary transactions related to the transport or by providing the carrier with information needed for delivering the order. Information of this kind includes order and/or address data related to the delivery. The seller is also considered to establish a contact between the buyer and the carrier if it announces the carrier’s freight prices on its online store or website, even though  the private person separately agrees on transport with the operator concerned.

When the seller actively participates in the organisation of transport or directs the buyer to use a specific carrier by actually establishing a contact between the parties, the seller acts as a distance seller. This is distance selling, even if the buyer could pay for the products and transport on separate invoices and to different companies. When the buyer ends up using the carrier to which they were directed by the seller, it is also irrelevant whether the buyer had the possibility to choose a carrier other than the one proposed by the seller or to pick up the products directly from the warehouse.

2.3.3 Information on transport alternatives on the seller’s website

The information presented on the online store or on the seller’s website about transport alternatives or links to carrier websites do not necessarily lead to a situation where the seller is considered to participate in the organisation of transport for the products it has sold. The seller’s activities are not considered distance selling if

• the seller indicates more than one carrier on its website,
• there is no contractual arrangement between the seller and the carrier concerning the transport of the sold products and
• the seller does not actually establish contact between the buyer and the carrier through its actions.

If the aforementioned conditions are fulfilled, this is not distance selling, not even if the seller listed possible carriers on its online store. The Finnish Tax Administration assesses these situations, too, based on the facts of each individual case.

3 Distance seller’s liability to pay tax and procedure in excise taxation

3.1 Distance seller with no tax representative in Finland

A distance seller with no tax representative in Finland must, before dispatching products subject to the harmonised excise duty from another Member State to Finland, notify the Finnish Tax Administration of the products and provide a guarantee for the payment of excise duties. The excise duty on alcohol and alcoholic beverages and, for example, the excise duty on tobacco levied on cigarettes are excise duties harmonised within the EU, for which an advance notification must be filed and a guarantee provided. No guarantee is provided for Finland’s national excise duties (e.g. excise duties on beverage containers and electronic cigarette liquids). The distance seller can file an advance notification and provide a guaratee by filling out the Finnish Tax Administration’s form 1350. The distance seller needs a Finnish business ID for providing the guarantee. The seller obtains a business ID when registering for liability to pay value-added tax in Finland, for example.

The distance seller must file a tax return to the Finnish Tax Administration within four business days and pay the excise duty within ten business days from the receipt of the products in Finland, including the day of receipt. A Saturday is not considered a business day. The day of receipt refers to the date on which the products subject to excise duty are delivered to the recipient. The notification period of four business days is not applied if the distance seller has not filed an advance notification and provided a guarantee before the dispatch of the products subject to the harmonised excise duty to Finland. In that case, the obligation to pay tax arises as the products arrive in Finland.

The distance seller must file a tax return and pay excise duties for each consignment that it has delivered to Finland and that contains products subject to excise duty. The tax return must be filed even if an advance notification was filed and a guarantee paid for the products beforehand. The tax return can be filed electronically through the excise duty return service or by using the  tax return forms for the excise duty concerned, found on the tax.fi website. There are separate tax return forms for different excise duties. On its tax return, the distance seller reports the number of products received in Finland by product category. The Finnish Tax Administration confirms in the tax decision the amount of the excise duty to be paid on the basis of the tax return. For additional information on the guarantee and tax return procedure, see the instructions for filing and payment of excise duties.

The distance seller must also keep records on the release of products subject to excise duty pursuant to the accounting provisions of the excise duty act. Accounts must contain buyer-specific information on the products sold to Finland as well as their numbers and delivery dates. If it turns out in an audit or otherwise that the distance seller has not filed a tax return at all or has filed an incomplete tax return, the Finnish Tax Administration will carry out a reassessment and debit the tax not imposed earlier. In addition, a surtax and a punitive tax increase must be paid.

3.2 Distance seller’s tax representative

When the distance seller repeatedly and regularly delivers products subject to excise duty to Finland, it can simplify the tax procedure by appointing a tax representative in Finland. A tax representative refers to a person established in Finland whom the distance seller has appointed and whom the Finnish Tax Administration has accepted for the payment of excise duties on behalf of the distance seller for products received in Finland. The distance seller may appoint a tax representative, although this is not obligatory. If the distance seller has a tax representative, the latter shall be the taxpayer, instead of the distance seller. However, the distance seller is responsible for the excise duty payable by the tax representative as for its own tax.

If the distance seller has a tax representative in Finland, the distance seller does not provide any consignment-specific one-off guarantees or file consignment-specific tax returns. The distance seller’s tax representative reports all products received in Finland and subject to excise duty on a tax period filer’s tax return filed once a month.

The tax representative needs an authorisation granted by the Finnish Tax Administration for its activities. The tax representative’s authorisation can be granted to a natural or legal person. In connection with the grant of the authorisation, the tax representative provides a fixed guarantee for the Finnish Tax Administration for the payment of excise duties. The tax representative reports all the products delivered to Finland through distance selling by the distance seller it represents on the tax return of each tax period. The tax period is the calendar month. Such a tax period filer must file a tax return for each tax period to the Finnish Tax Administration no later than the 18th day of the calendar month following the tax period, and pay the excise duty no later than the 27th day of the calendar month following the tax period. The tax representative must keep accounts in accordance with the provisions of the excise duty act concerning accounting. The accounts must contain buyer-specific information on the products and product volumes sold by the distance seller to Finland, as well as the delivery dates.

For additional information on the preconditions for a tax representative’s authorisation, see the Finnish Tax Administration’s website at: Tax representative in excise taxation (available in Finnish and Swedish). Granting a tax representative’s authorisation does not mean that the activities were permitted under the alcohol or tobacco legislation. The tax representative has the obligation to request information on all legislation concerning its activities.

4 Destruction or return of products in distance selling

4.1 Destruction of products during transport

Excise duty is not levied in Finland if the excise products released for consumption are completely destroyed or lost when being transported from another Member State to Finland. Tax exemption requires that such destruction or loss be due to

• a cause relating to the nature of the products, such as ageing, evaporation or a comparable cause connected with the properties of the product,
• Force majeure or an unforeseeable event, such as fire, breakage or a corresponding other event, or
• the destruction of the products in a manner approved by a competent authority.

The products are considered completely destroyed or lost if they cannot be used as products subject to excise duty (excise duty act, section 81). Excise duties must be paid to Finland if the products can still be used as products subject to excise duty or their destruction was due to some other cause than one set out above. 

If the products subject to excise duty are completely destroyed or they are completely lost in Finland and this is noticed in Finland, the destruction or loss of the products must be satisfactorily proven to a competent authority. If the products are destroyed or lost or their destruction or loss is noticed in another Member State, such destruction or loss must be satisfactorily proven to the Member State’s competent authorities.

The acceptability of the destruction or loss is assessed on a case by case basis. However, the products are not considered completely destroyed or lost if they have been stolen during transport and the theft is noticed in Finland. The products are not considered destroyed during transport, either, if a competent authority in Finland has seized the products in order to secure outstanding taxes pursuant to section 103 of the excise duty act.

In order that the products could be considered completely destroyed or lost and therefore exempted from tax, reliable documentation of the events must be available in the distance seller’s accounting records. An account of the destruction of the products can include photographs of broken products, credit notes or other corresponding documents. However, providing a written account will not exempt from the payment of tax if the destruction or loss was not due to an cause mentioned above.

4.2 Return of products to the seller

Excise duty is not paid to Finland for products returned to the seller due to the buyer not having received them. The one-off guarantee provided for the transfer of returned products is returned to the distance seller if there is reliable documentation of their return in the distance seller's accounting records.

4.3 Procedure upon the destruction or return of products

The one-off guarantee provided by the distance seller is released if the products sold to Finland through distance selling from another Member State were destroyed during transport, or the consignment was returned to the seller. If the entire batch has been destroyed during transport and this is noticed in Finland, the distance seller must submit a free-form written request for the return of the guarantee. The seller must also submit such a free-form request if the products were returned to the seller due to the buyer not having received them. The guarantee return request must contain a reliable account of the destruction or return of the products. If all the products were returned to the seller or destroyed in a manner referred to in law, the distance seller need not file a tax return.

The guarantee return request is sent to the address:

Finnish Tax Administration
P.O. Box 20
FI-00052 VERO, FINLAND

If only part of the batch was destroyed or returned, the distance seller files a tax return only for the products received in Finland. In that case, the excess part of the guarantee will be returned. The distance seller must include an account of the destruction or return of the products in its excise duty accounting records. However, the account need not be appended to the tax return to be filed. If the distance seller has filed a tax return and received a tax decision before the destruction or return of the products was noticed, the seller can claim for adjustment of the tax decision in accordance with the appeal instructions. A reliable account of the event must be appended to the claim for adjustment.

5 A private person organises the transport of products − distance buying

It is not considered distance selling if a private person purchases, for their own use, products released for consumption from another Member State and organises their transport to Finland without the seller participating in the organisation of transport in any way. This is considered distance buying as referred to in section 74 of the excise duty act. Also in these cases, excise duties are levied in Finland, but the taxpayer is the person having purchased the products. The private person then finds out possible transport methods, selects the transport method as well as the carrier, and takes care of all measures related to organising the transport without the seller’s involvement. Thus, it is not distance selling if the seller only collects and packages the products but does not otherwise participate in their dispatch or transport or the organisation of their transport to Finland. Section 2.3 of this instruction discusses cases where the seller is considered to organise or participate in the organisation of transport. 

It is considered  distance buying if, for example, a private person purchases products from another Member State through an online store and organises their transport to Finland without the seller or a party acting on behalf of the seller participating in the organisation of their transport. A fundamental difference with regard to distance selling is that the seller or a party acting on behalf of the seller does not participate in the transport or organisation of transport of the products in any way. If, however, the seller directs the buyer on its website to use specific carriers, this is considered distance selling and the distance seller or the tax representative appointed by the distance seller is liable to pay excise duty in the Member State of destination.

In distance buying, the party having participated in the transport of the products and holding the products in its possession in Finland is responsible for the tax payable by the private person as for its own tax. When  considering the tax responsibility of the parties involved in the transport and possession, the Tax Administration takes account of their awareness of the type of the products imported or possessed and of the purpose of their import.

6 A private person transports products for themselves− traveller imports

It it not considered distance selling if a private person orders products subject to excise duty for personal use from an online store but collects the products from another Member State by themselves and brings them to Finland. In that case, the imports are assessed as a private person’s imports, or traveller imports, according to section 72 of the excise duty act. Excise duty is not levied in Finland for such products released for consumption in another Member State that a private person purchases for their own use and brings to Finland. Thus the taxation of traveller imports essentially differs from both distance selling and distance buying, in which the products imported to Finland are always taxed in Finland.

Chief Tax Specialist Mika Jokinen

Tax Specialist Laura Koivuniemi