Distance selling of products subject to excise duty to Finland

This is an unofficial translation. The official instruction is drafted in Finnish (Valmisteveron alaisten tuotteiden etämyynti Suomeen, record number VH/5160/00.01.00/2024) and Swedish (Distansförsäljning av punktskattepliktiga produkter till Finland, record number VH/5160/00.01.00/2024) languages.

This instruction has been updated due to changes in legislation concerning excise duty assessment effective as of 1 September 2024. The updates are mostly attributable to chapters 1 and 3. In addition to the seller, the buyer of products subject to excise duty is also responsible for the excise duties in certain instances of distance selling. A new section 3.3 has also been added. This section describes the distance seller’s obligation to provide the carrier with a transport identifier.

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 (549/2016) and the Alcohol Act (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 Introduction

The seller has the obligation to pay excise duties to Finland when distance-selling products are subject to excise duty to Finland. The instruction explains when the question concerns distance selling referred to in the Excise Duty Act (182/2010) and what actions the distance seller should take in taxation.

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 Tax Administration’s instruction on value-added taxation of distance sales of goods (in Finnish and Swedish, link to Finnish).

1.1 About excise duty regulation

Article 44 of the excise duty directive (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. Distance selling refers to selling where an individual located in Finland who is not an authorised warehouse keeper or a registered recipient or a temporarily registered recipient and who is not engaged in independent economic activities has purchased products that are subject to excise duty and have been released for consumption from another Member State and that the seller or another party acting on behalf of the seller directly or indirectly sends or transports to Finland (Excise Duty Act, section 6(10)). The buyer in distance selling is thus a private person. ’Distance seller’ refers to a seller who sells products to Finland pursuant to Paragraph 10 of the Excise Duty Act (Excise Duty Act, section 6(11)).

A distance seller can appoint a tax representative in Finland. A tax representative refers to a person situated 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(12)). Upon application, the Finnish Tax Administration issues a permit for a person to act as a tax representative. The permit 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 the taxpayer, instead of the distance seller. The distance seller is responsible for the excise duty payable by the tax representative as s/he would be for his/her own tax. If the distance seller does not follow their obligations to file a return and place a guarantee as laid down in section 80 of the Excise Duty Act, the private individual who purchased the products is responsible for the tax together with the distance seller. (Excise Duty Act, section 79).

The liability to pay excise duty originates when the products subject to excise duty are released for consumption in Finland. Excise duty must be paid according to the provisions valid on the day on which the product is released for consumption in Finland. (Excise Duty Act, section 79)                 

A distance seller with no tax representative in Finland must notify the Finnish Tax Administration before dispatching products from another Member State to Finland. If the products in question are subject to harmonised excise duty, the distance seller must also place a guarantee for the payment of the excise duties.   After the distance seller has filed the return and paid the guarantee, the Tax Administration will issue them a transport identifier. The distance seller must then give the identifier to the carrier responsible for the transport of the products. The identifier must be presented to the relevant authorities upon request during the transport. If the distance seller has a tax representative in Finland, the seller must give the tax representative’s excise duty number to the carrier responsible for the transport of the products. The identifier must be presented to the relevant authorities upon request during the transport. (Excise Duty Act, section 80)

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 on them. Similarly, the party having participated in the transport of the products as well as the party in possession of the products in Finland is responsible for the tax payable by the private person as for his/her own tax.

1.2 Products subject to excise duty

When excise duty is levied on products such as alcohol and alcoholic beverages, tobacco products, soft drinks, alcohol and soft drink containers, and liquid fuels, the Excise Duty Act and the act on assessment procedure for self-assessed taxes (Laki oma-aloitteisten verojen verotusmenettelystä 768/2016) are applied. The basis for determining tax liability for products subject to excise duty and the amount of the tax are provided for in special acts concerning products subject to excise duty. Excise duty legislation includes, for example, acts on excise duty on alcohol and alcoholic beverages (Laki alkoholi- ja alkoholijuomaverosta 1471/1994), tobacco (Laki tupakkaverosta 1470/1994), soft drinks (Laki virvoitusjuomaverosta 1127/2010) and certain beverage containers (Laki eräiden juomapakkausten valmisteverosta 1037/2004).

Excise duties are either 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 alcohol and alcoholic beverage tax levied on alcoholic beverages. In addition, a national container tax is levied on alcoholic beverage containers. Also, the tobacco tax levied on cigarettes has been harmonised in the EU, while the tobacco tax levied on electronic cigarette fluids 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 involves selling products to a private person                                                                                                                               

According to the Excise Duty Act, the question is of distance selling when a private person in Finland purchases products subject to excise duty and released for consumption in another Member State that the distance seller or a party acting on behalf of the seller dispatches or transports to Finland. The seller is liable to pay excise duties on 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. The question is not of distance selling if the products were purchased by a trader, such as a limited liability company (Ltd), a limited partnership or 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. The question is of distance selling when the seller participates in the organisation of transport and the recipient of the products is a private person. When the question is of distance selling, the liability to pay tax is not transferred to the private person having ordered the products 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 or 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, the question is not distance selling under the Excise Duty Act. Possible 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 applied for 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 transportation. Pursuant to the Excise Duty Act, the question is always of distance selling when the seller participates, in one way or other, in the dispatch, transport or the organisation of transport of the products.

If the seller has an agreement with the party organising transport about the transport of the products ordered by a private person, the question is of 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 transport 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 question is actually of co-operation between the seller and the carrier or a logistics company.

2.3.2 The seller participates in the organisation of product transport

The question is also of distance selling when 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, e.g. 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. 

The question is also of distance selling if the seller establishes a contact between the buyer and the carrier e.g. 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 when announcing the carrier’s freight prices on its online store or website when the private person agrees on transport with the operator concerned separately.

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. The question is then of 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 not of relevance either 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 with his actions.

If the aforementioned conditions are fulfilled, the question is thus not of distance selling even if the seller listed possible carriers on his 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 place a guarantee for the payment of excise duties. Among others, the alcohol and alcoholic beverage tax as well as the tobacco tax levied on cigarettes are excise duties harmonised within the EU for which an advance notification must be filed and a guarantee placed. For some products subject to Finland’s national excise duty (e.g. beverage containers and electronic cigarette liquids), no guarantee is provided but an advance notification is filed. The distance seller can report all products being delivered to Finland in the same transport on the same tax-type-specific advance notice and pay only one guarantee, even if there are multiple recipients. The distance seller can file an advance notification and place a guarantee electronically in MyTax or on the Tax Administration Form 1350 (available in Finnish and Swedish, link to Finnish). In order to use the e-service, the distance seller needs a UID and a Suomi.fi authorisation.

A distance seller with no tax representative in Finland is a casual taxpayer for purposes of excise taxation. The distance seller files a tax return and pays the tax by the 12 day of the calendar month following the tax period. Your company’s tax period is the calendar month. The distance seller files the products received in Finland during the tax period on their tax return. If the distance seller has delivered more than one consignment to Finland during the same calendar month, they file all the products on the same tax-type-specific tax return. The above filing and payment period does not apply if the distance seller has not submitted an advance notification or placed a guarantee for products subject to harmonised excise duty before the products were dispatched to Finland. In that case, the obligation to file and pay the excise duties arises as the products arrive in Finland.

The distance seller must submit a tax return even though they have filed an advance notification of the products and placed a one-off guarantee for products subject to harmonised excise duty. The tax return can be filed electronically in MyTax or with the tax return forms regarding the tax concerned and found on the vero.fi website. There are separate tax return forms for different excise duties. On the tax return, the distance seller declares the product volumes received in Finland according to product category. More information about advance notifications and about filing and paying tax  is available in the instructions for filing and paying excise duties.

The distance seller must also keep records on the release of products. Accounts must contain detailed information on the products sold to Finland as well as their numbers and delivery dates specific to the buyer. If it turns out in an audit or otherwise that the distance seller has not filed an excise duty return at all or has filed an incomplete return, the Finnish Tax Administration will impose any unfiled or unpaid taxes. When the taxes are imposed, the distance seller will also have to pay a punitive tax increase and late-payment interest.

In certain instances of distance selling, the Finnish Tax Administration will impose excise duties on the individual who purchased the products as well as on the distance seller. The duty will be imposed on the buyer if it becomes apparent that the distance seller has not filed the advance notice before sending the products subject to excise duty to Finland and that the seller has not paid the guarantee for products subject to harmonised excise duty. In these situations, the Finnish Tax Administration will issue a tax decision where the distance seller and the private individual who purchased the products are jointly and severally liable for the imposed excise duty. However, even in these situations, the buyer does not file advance notices or excise duty returns for the products sold to Finland as distance sales. The obligation to file still rests with the distance seller.

3.2 Distance seller’s tax representative

When the distance seller repeatedly and regularly delivers products subject to excise duty to Finland, they can simplify the tax procedure by appointing a tax representative in Finland. A tax representative refers to a person situated 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 for them, though 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 his own tax. The private individual who purchased the products subject to excise duty is not responsible for paying the excise duties if the products are purchased from a distance seller that has named a tax representative in Finland.

If the distance seller has a tax representative in Finland, the distance seller does not file the advance notices or pay the consignment-specific one-time guarantees. Further, the distance seller does not file casual taxpayer’s tax returns. Instead, the distance seller’s tax representative is treated as a regular taxpayer for the purposes of excise taxation.The tax representative files the products subject to excise duty received in Finland during the tax period on the tax return they file for the tax period and pays the tax.

The tax representative needs a permit granted by the Finnish Tax Administration for its activities. The tax representative’s permit can be granted to a natural or legal person. In connection with the granting of the permit, the tax representative places a permanent guarantee for the Finnish Tax Administration for the payment of excise duties. The tax representative declares 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 representative must file the excise duty returns and pay the duties for each tax period by the 12th day of the second calendar month following the tax period. The tax representative must keep accounts. The accounts must contain detailed information on the products sold by the distance seller to Finland, their numbers as well as delivery dates according to buyer.

For additional information on the preconditions for a tax representative’s permit, see the Finnish Tax Administration’s website at Tax representative in excise taxation. Granting a tax representative’s permit 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.

3.3 Transport identifier

In instances of distance selling where products subject to excise duty are transported to Finland, the transport must include an identifier. The identifier is the excise duty number that the Finnish Tax Administration issues for the distance seller or for the seller’s tax representative. In distance selling, the seller is responsible for giving the identifier to the carrier responsible for transporting the products.

If the distance seller does not have a tax representative in Finland, the seller receives the excise duty number from the Finnish Tax Administration after they have filed the advance notice. If the products in question are subject to harmonised excise duty, the seller must also pay the required guarantee before receiving the excise duty number. The distance seller can check the excise duty number in MyTax. The excise duty number identifies a specific transport, i.e. each advance notice is connected to a different excise duty number. For example, separate advance notices must be filed for alcoholic beverages and for their containers. Therefore, if the consignment contains alcoholic beverages, it includes two excise duty numbers, i.e. two identifiers.

The distance seller’s tax representative receives the excise duty number from the Finnish Tax Administration when the representative’s permit is granted. The tax representative’s excise duty number will remain the same as long as the representative’s permit is in force. A distance seller with a tax representative in Finland must identify any consignments and transports to Finland with their representative’s excise duty number.  

The distance seller must give the identifier assigned for the transport to the carrier responsible for the transport of the products. The distance seller and the carrier can freely choose the method by which the identifier is communicated to the carrier. The carrier responsible for the transport of the products must be prepared to present the identifier during the transport. The identifier must be presented to Finnish Customs or the Finnish Tax Administration upon request.

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 products subject to excise duty and released for consumption are completely destroyed or lost when being transported to Finland from another Member State. In order for the destruction or loss of the products to be considered exempted from tax, such destruction or loss must be due to

• spoilage, 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.

The precondition for considering the complete destruction or loss of the products to be exempted from tax is the availability of reliable documentation of the events in the distance seller’s accounts. 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 aforementioned cause.

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-time guarantee placed on the transfer of returned products is returned to the distance seller if there is reliable documentation of their return in the distance seller’s accounts.

4.3 Procedure upon the destruction or return of products

The one-time guarantee placed by the distance seller for the payment of excise duties 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 the destruction is noticed in Finland, the distance seller must request in writing that the guarantee should be returned to them. The request can be made in MyTax or by submitting Tax Administration Form 1482 (available in Finnish and Swedish, link to Finnish).  The seller must also submit a request for the return of the guarantee if the products were returned to the seller due to the buyer not having received them. The 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 does not need to include these products on their tax return.

If only part of the batch was destroyed or returned, the distance seller only files a tax return for products received in Finland. The distance seller must include an account of the destruction or return of the products in its excise duty accounts. However, the account need not be appended to the tax return to be filed. If the distance seller had filed a tax return before the destruction or return of the products was noticed, the distance seller must correct their tax return on their own initiative by filing a replacement return.

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

The question is not of distance selling if a private person purchases, for his/her 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. In that case, the question is of distance buying in accordance with section 74 of the Excise Duty Act. Also in these cases, excise duties are levied in Finland, though 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 solely without the seller’s involvement. In these cases, the private person is also responsible for presenting their selected transport company or carrier with the excise duty number identifying the transport.

Thus, the question is not of distance selling if the seller only collects and packs the products but does not otherwise participate in their dispatch or transport or the organisation of their transport to Finland. Section 2.3 of the instruction discusses cases where the seller is considered to organise or participate in the organisation of transport. 

The question is of distance buying in a case, for example, where 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 his website to use specific carriers, the question is of distance selling, in which case 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 their possession in Finland is responsible for the tax payable by the private person as for his/her own tax. When the Finnish Tax Administration assesses the tax responsibility of the parties involved in the transport and possession, account is taken of their awareness of the quality of the products imported or possessed as well as the purpose of their import.

6 A private person brings the products him/herself − travellers’ imports

Neither does the question concern 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 and brings them to Finland. In that case, the imports is assessed as private person’s imports, or travellers’ 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 travellers’ imports essentially differs from both distance selling and distance buying in which the products imported to Finland are always taxed in Finland.