Tax-free tourist sales in Finland

Bulletin for travellers from other countries and for Finnish citizens living outside the EU

Introduction

As a consumer, you normally pay VAT for the goods and services that you intend to consume. You pay the VAT in the country where you are, i.e. in the country of consumption. As a result, when you purchase goods in Finland, their prices usually include the Finnish VAT. Under this general rule, selling goods and services to all consumers, including tourists is taxable.
Nevertheless, if a tourist purchases goods in Finland and intends to use them outside the EU, he does not necessarily have to pay VAT in Finland. Tax-free sales of goods to tourists can be organized in several ways: Using the normal procedure of exports of goods, as tourist sales, and as airport sales. Please note: Special rules apply to tourists from Norway. See section D.

A. Export of goods

The most typical procedure of exports of goods entails that the seller submits an exports declaration to the authorities, transports the goods himself, or lets a third party transport the goods, to the buyer who is based outside the EU customs borders. These kinds of exports are always exempt from tax. Buyer does not take possession of the goods within the territory of Finland. Furthermore, buyer’s nationality is not significant from the point of view of taxation. Because the sales transaction is exempt from tax, buyer only pays the price without VAT. The Value Added Tax Act contains rules on the export procedure in various situations.

B. Sales of goods to tourist, i.e. 'Tax Free' sales

In accordance with international practice, special tourist sales can be arranged to sell goods to tourists without tax. Tax-free selling lets buyers to take possession of the goods immediately, take them along with their personal luggage and export them from the country where they were purchased. Buyer pays VAT at the time of purchase but receives a VAT refund later.

Requirements of tax free tourist sales

The first requirement is that the buyer must be a tourist domiciled outside the EU and Norway. The buyer is considered domiciled outside the EU and Norway if he does not live or continuously reside/stay in an EU Member State or Norway. If the duration of stay in a certain country or area is at least six months, the stay is considered continuous.
If a Finnish citizen is a permanent resident of a country outside the EU or Norway, he is entitled to make tax free tourist purchases in Finland. Even in situations where a Finnish citizen is moving to a country outside the EU or Norway, he can purchase goods tax-free during the last two weeks preceding his departure from Finland. Such purchases will be permitted if the Finnish citizen is moving away for at least six months and if he can show the seller a valid work permit or a residence permit for a country outside the EU or Norway. Furthermore, a Finnish citizen residing in such a country can make tax free tourist purchases during his holiday or vacation trips to Finland.
To qualify as tax-free tourist selling, the minimum value of the purchase is 40 euros, and the goods must be exported from the EU territory as new, unused, within three months after the sale.

Sales of goods in retail outlets in Finland

If a tax-free tourist sale is taking place in a retail company in Finland, the seller must make a check as to where the buyer lives by asking to see his passport including any sojourn permits or work permits as necessary. If the buyer is a Finnish citizen living in an other country for longer than six months, he must show the seller the sojourn permit or work permit. These permits are usually entered into the pages of the Finnish passport.
Seller sells goods to buyer with the VAT included in the price, puts them into a package, and seals them before handing them over to buyer. Because the goods are now in a sealed package, the Customs official or the Cash Refund Office will see that the goods have not been used at the time of export out of the EU territory.

Refunding VAT to buyer

The retail companies selling goods to tourists can use several methods of VAT refund. They can take care of the necessary documentation themselves or use authorized VAT refund service companies. While these two alternative methods do not involve any differences as to the legal requirements of tax-free selling, the two procedures are slightly different.
If seller opts to take care of the VAT refund himself, he must issue buyer an invoice with special itemizations concerning tax-free sales. When buyer leaves the EU territory, he must request a stamp at the Customs office and then send the stamped copy of the invoice back to seller. If buyer is a tourist who will not be leaving the EU territory immediately when leaving Finland (he is travelling to some other EU Member State) he must request a stamp at the Customs office of the last EU country where he travels before leaving the EU territory. When seller receives this invoice copy i.e. evidence of actual export of the goods out of the EU, he will refund the VAT to buyer’s bank account.

Sellers using the services of a VAT refund company should do the following: When selling goods to buyer, seller fills out a document called ”the Tax Free Cheque”. Buyer pays seller the full price including VAT. Seller hands over the goods in a sealed package and the buyer’s copy of the Cheque. When buyer leaves the country, he should visit the office of the VAT refund company at the border station, at the port or the airport departure hall. After checking buyer’s passport, the goods and the Cheque, the VAT refund company issues a written affirmation that the goods are exported from the country as new and unused. The VAT refund company will then refund the VAT amount minus its service charges to buyer.

If the tourist is going to another EU Member State, i.e. not leaving the EU at the same time when he leaves Finland, his departure from the EU territory cannot be affirmed and the VAT cannot be refunded until he is leaving the other Member State, and presenting his documents at the VAT refund office of that country. In other words, the tourist must request the VAT refund from the VAT refund service company of the last EU Member State in his itinerary when he leaves the EU. In all other respects, the procedure is no different from that of requesting the office of the VAT refund company at the Finnish border station to pay a VAT refund.

In situations where the VAT refund company has not set up a branch office at the border station, the buyer should do the following: He must always make sure that he obtains an exit stamp on the Tax Free Cheque at the Customs office upon leaving the EU. After this, he can mail the VAT refund company the stamped copy of the Cheque, photocopies of his passport and visa, his name, address and telephone number. Now the VAT refund company can refund the VAT to buyer’s bank account. In addition, another procedure is available to buyer: Any office of the VAT refund company will refund him the tax if he presents the stamped Tax Free Cheque within five months of the date of purchase. The goods must have been exported from Finland within three months of the date when the Cheque was written.

C. Sales of goods at airports

Tourists travelling out of the territory of the EU can purchase goods without tax at the airport departure hall. The tourist should show the shopkeeper his boarding pass, displaying the fact that his flight is scheduled to leave for a country outside the European Union.

D. Selling goods to permanent residents of Norway

The regulations governing tax-free sales do not concern sales to tourists domiciled in Norway. Consequently, sales to these tourists are normally taxable.
If a person’s permanent residence is Norway, sellers can sell goods to him tax-free on the condition that he takes the goods along with his luggage immediately to Norway, and pays the VAT in connection with the import of goods. The price ex VAT of the goods sold should be at least 170 euros.

In addition, tax-exempt sales at airport departure halls of alcoholic beverages, tobacco, chocolate, sweets and candy, perfumes, cosmetics and toiletries are permitted.

The instruction in Russian: Беспошлинная продажа товаров и услуг финляндским и иностранным туристам, посещающим Финляндию