If a foreign company has taxable business operations in Finland, it could be required to register for VAT purposes even if it does not have a fixed establishment in Finland. Greenstep’s experienced VAT specialists are happy to help you with any kind of questions related to VAT!
When must a foreign company register for VAT in Finland?
In Finland, Value-added tax (VAT) is levied on the selling of goods and services in the form of business operations. The current standard VAT rate is 25,5 %.
If a foreign company has taxable business operations in Finland, it could be required to register for VAT purposes even if it does not have a fixed establishment in Finland.
Below is listed the typical situations when a foreign company must register for VAT in Finland:
- Company is considered to have a fixed establishment for VAT purposes in Finland
- Acquiring goods from the other EU countries into Finland
- Transferring own goods to/from Finland from/to other EU country
- Buying construction services in Finland
- Selling goods within Finland
- Selling goods from Finland to other EU counties
- Selling goods to private persons
- Holding goods in a warehouse in Finland (including consignation stocks)
- Selling services that are according to place of supply rules sold in Finland, such as passenger transport services, services related to entry to that involve science, sports, teaching, entertainment or to events such as fairs and exhibitions.
In Finland, foreign company must apply for VAT registration from the first day of starting taxable business transactions, and there is no VAT threshold for the registration of foreign companies that does not have a fixed establishment in Finland.
Foreign business operating in a fixed establishment
A fixed establishment means a permanent place of business where the company conducts some or all of its operations. Fixed establishment for VAT purposes could be:
- The locations of management, branches, offices, industrial plants, workshops, retail outlets and buying or selling points
- Mines, quarries, peat extraction sites and other similar sites
- Warehouses, inventories, or stocks
- Construction, building, and installation projects are considered fixed establishments if they last longer than nine months
VAT registration and VAT compliance
Foreign company that is involved in intra-Community trade or is a taxable buyer of construction services in Finland must notify the Finnish tax authorities of its activities. Even if the company does not have to register for VAT (for example, because the reverse charge applies to its sales), it must still notify the Finnish tax authorities of the fact that it has begun activities.
Foreign businesses with the duty of notification should observe the said duty in Finland. This means that, they must file VAT returns and/or EU VAT recapitulative statements. In other respects, they are treated as foreigners, not liable to VAT in Finland.
Alternatively, a foreign business may opt to register for VAT. If a foreign business opts to register for VAT, it may recover Finnish input tax more quickly through its VAT returns.
In Finland all taxable persons must file a VAT return via electronic MyTax Portal by the 12th day of the second month following the tax period (month, quarter, year). Finnish VAT returns in paper form are only accepted in exceptional cases. In order to be able to make electronic filings, taxable persons should set up Suomi.fi credentials. The setting up of an e-filing procedure is rather complex, so the most convenient way is to appoint a representative who can acquire the e-authorizations and carry out the tax formalities on behalf of the foreign company.
How can we help you?
If your company is planning to start business operations in Finland, Greenstep’s experienced VAT specialists are happy to help you with any kind of questions related to VAT, such as evaluating whether your company is required to register for VAT purposes in Finland, VAT registration process and VAT compliance.