Recent changes to Finnish VAT law have restricted the option to apply for a simplified registration (known as notification duty) which can be used by foreign companies.
Now, the notification duty will no longer be applicable to foreign businesses that in addition to undertaking intra-community trade that involves Finland:
- Buy construction services or other services in Finland to which the VAT reverse-charge scheme can be applied; or
- Make imports into Finland.
Under the notification duty system, the foreign business only reports the value of the transactions it performs. This is because the application of the reverse charge or acquisition tax means there is no VAT due to the tax authority. However, the foreign business is not allowed to recover via the VAT return any VAT incurred on costs. Instead, they must submit any VAT refund claims via the applicable VAT refund procedure system.
As of 1st May 2019, foreign business involved with the supplies set out above are required to register for VAT in Finland under the general VAT registration provisions.
If a company that is involved in intra-community trade also makes imports or purchases goods or buys services subject to the mandatory reverse charge in Finland, and it has previously only been registered for the notification duty, it needs to switch over to the general VAT registration system, now.
Contact our VAT experts now and find out how this change could affect your business.