The VAT reverse-charge scheme in the scrap industry

Normally, the seller of goods is the party liable to pay VAT.'Reverse charge' of VAT in the scrap industry means that when sales of certain scrap products are made, the buyer has responsibility for paying the VAT instead of the seller. 

When to use the reverse-charge scheme

 VAT must always be paid by buyers if the following requirements are met:

  • The sales transaction is for metal scrap or metal waste
  • Both the seller and the buyer are VAT-registered business enterprises
  • The sales transaction is made in Finland

Sales of goods are regarded as being carried out in Finland if the seller hands over the goods in Finnish territory or if the transportation to the buyer begins at a location in Finnish territory.

The reverse charge scheme will also apply on casual sellers of scrap metal.

Read more (in Finnish; in Swedish) The VAT reverse charge applied on the selling of scrap metal

Complete the VAT return with the required information

If you have sold and purchased goods that fall in the category of scrap metal, you must include the required information in your VAT return (formerly Periodic Tax Return).

  • Sellers must fill in the total sales of such goods under ”Sales of construction services and metal scrap”
  • Buyers must fill in the total purchases under ”Purchases of construction services and metal scrap” Buyers compute the VAT to be paid at the 24-percent rate and fill it in the ”Tax on purchases of construction services and scrap metal” line. The buyers enter the VAT they can deduct on VAT-deductible purchases in the "Tax deductible for the tax period" line.

Read more about VAT filing and paying.


If you are the seller of scrap metal, it is your responsibility to hand your customer an invoice although the buyer must file and pay the VAT.

However, the buyer may be the party that writes it up. Self-written invoices are regarded as if the seller (you) had given them if the buyer and you have agreed on the arrangement, and if you give approval to every invoice. However, as the seller, you arestill the party carrying legal responsibility for the accuracy of the invoice.

Make sure of the following information on invoices

  • The normally required invoice entries (excluding VAT rate, excluding the amount of VAT)
  • Buyer's VAT number – for domestic sales transactions, it is the Business ID of the Finnish buyer
  • A text saying that the buyer must file and pay VAT (”Reverse Charge”)
  • Reference to the grounds of the buyer’s tax liability − e.g. "provisions of § 8 d, VAT Act"  
  • The "self-billing" mention if your buyer creates self-written invoices

VAT reverse charge has no impact on the usual VAT deduction rights

If you are the buyer, you can deduct the input VAT that you have paid due to the reverse-charge scheme for a purchase of goods/services that serves your taxable business operation

Similarly, if you are the seller, you may deduct the input VAT relating to any purchases you have made that are connected with the selling operation of scrap metal even though the party paying the VAT is the buyer, not you.