Termination of VAT-liable activities
If you terminate your business entirely, submit a notification of termination on the Business Information System website (ytj.fi). You only need to submit a single notification to have your company removed from the VAT register, the prepayment register and the register of employers.
If your company will still conduct some business, but you terminate its VAT-liable activities, you can request removal from the VAT register in MyTax.
Submit the request in MyTax (On the Activities tab, select Registrations and authorisations and click Making changes to information in VAT register, prepayment register and register of employers)
In addition, if you are self-employed or an operator of agriculture or forestry, you can inform the Tax Administration of a complete termination of your activities in MyTax. However, if your company is on the Trade Register, you must must submit the notification of termination to the Business Information System instead.
After your company has been removed from the VAT register, you will receive a letter from the Tax Administration confirming that you are no longer registered for VAT. After this, you cannot add VAT to your invoices or claim VAT deductions.
When do I have to inform the authorities of the termination of my business?
You can file the notification (or the MyTax request) as soon as you know that your VAT-liable activities will not continue.
We remove your company from the VAT register as of the date that you have indicated as the end date of the activities. Please note that you will have to file a VAT return for the month when the activities end. You can indicate that the last day of a calendar month is the end date of activities.
Example: If you no longer conduct a VAT-liable business in June, enter 31 May as the end date of activities. If you enter 1 June as the end date, you will have to file a VAT return for June.
Alternatively, you can wait until your company’s business assets have been sold. After that, you will be able to file a final VAT return. In this case, the authorities will consider that your VAT-liable activities have continued during the period when you were selling the assets.
If you had applied for VAT registration voluntarily, the Tax Administration will remove you from the register as of the date when the notice of termination is received, not earlier. In other words, if you had registered your business for VAT on a voluntary, it cannot be removed from the VAT register retroactively.
If your VAT registration had been based on your activities relating to transfer of use of real estate, the Tax Administration will not remove you from the VAT register until the circumstances that had made you liable for VAT are no longer present in any of your rented-out units.
If your VAT registration has been for a VAT taxpayer group, the Tax Administration will remove it from the register as of the date when the Tax Administration receives a notice of termination submitted jointly by the members of the group.
Remember to file final VAT returns on time
Remember to file a VAT return also for the last tax period, i.e. the one within which the end date of VAT registration falls, even if there were no activities anymore. If you have an extended tax period, i.e. you have filed your VAT return once a year or once every 3 months, you may have to file the final VAT return at an earlier date than a usual VAT return.
File a VAT return and pay the VAT by the 12th of the second month following the calendar month when you end your activities. If your tax period has been the calendar year and your activity ends in December, you should file and pay VAT as normal, by the end of February next year.
File VAT on final inventory
If some of your company’s inventory goods remain unsold to customers at the time of termination, calculate VAT for the final inventory in the same way as you would calculate VAT for own-use goods. Include the resulting amount of VAT in the VAT return that you file for your final month. When you calculate the value of your final inventory, include all the goods and services that remain when VAT liability ends.
If your company had invested in the construction of new buildings or improvements, adjustment to the values may be necessary in order to arrive at the amount of VAT to be deducted at termination.
Example: Your VAT liable operations ended on 31 March 2021. You keep a tractor for private use. The tractor’s purchase price was €50,000, including VAT. In your company’s accounting, the tractor’s remaining undepreciated value is €8,000. The tractor’s probable selling price, i.e. its fair market value, is €12,400 (which includes €2,400 of VAT).
In VAT assessment, the base of the VAT on a physical good is the purchase price or the good’s probable selling price, whichever is lower. In this case, the probable selling price is lower than the purchase price. For this reason, you must calculate the VAT on the probable selling price excluding VAT (€12,400 – €2,400 = €10,000). As a result, you must pay €2,400 of VAT for keeping the tractor. You must include this amount on the VAT return for your final VAT period (March 2020).
How bankruptcy affects VAT liability
If your company goes bankrupt, its assets and debts are transferred to the possession of a bankruptcy estate. After that, the estate can choose to either continue the VAT liability of the company until its assets have been sold or end the VAT liability as of the date when bankruptcy was declared. Alternatively, the estate can carry on with the company’s business and submit an application for VAT registration as an independent party that continues the activities of a bankrupt company.
You and the administrator of your company’s bankruptcy estate are responsible for fulfilling your bankrupt company’s reporting obligations. The reports to submit include the company’s VAT returns and, if your company had sold goods and services to other EU countries, the VAT recapitulative statements.