When the Member State of consumption is Finland: returns within the special scheme and payments to Finland
The instructions below apply to circumstances where Finland is the Member State of consumption, i.e. the Finnish Tax Administration receives VAT-return information and the company’s payments of taxes as the Member State of identification sends them here.
VAT returns passed on to the Tax Administration
After the Member State of identification has received the information submitted by companies on their special-scheme returns and Finnish VAT is reported, the Member State passes the information on to the Tax Administration. The same transfer of information takes place if any corrections to Finnish VAT have been made on the returns.
If you miss the deadline, the Finnish Tax Administration imposes penalty charges for late filing. The charges are imposed even if you do not have any VAT to pay or if you report no activity on a zero return. Your summary of tax payment status will contain a message about the late charges.
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If you make corrections to a return in the Union or non-Union schemes by the deadline date of the next tax period, which follows the period concerned by your correction, the Finnish Tax Administration imposes no penalty charge. However, if you remedy an error after the deadline has passed, the Tax Administration imposes a penalty charge.
Although you make the corrections on a return submitted for a later period, the corrected entry affects the VAT amount of the period where the error occurred.
Example: A business files its special-scheme VAT return for July to September (Q3) 2023 on time, by the deadline. However, the return has an error, which the business proceeds to put right when it files the next period’s return (Q4). The business files the Q4 return on time, by 31 January 2024. No late-filing charge is imposed.
Example: A business files its VAT return for April to June (Q2) on time, by 31 July 2023 which is the deadline. However, the return has an error, which the company proceeds to put right when it submits its VAT return for the October to December period (Q4). As a result, because the company is making the corrections more than 45 days past deadline, a late-filing charge is imposed, amounting to 2% of the payable amount of tax filed late. Read more on late penalty charges
Companies are allowed to make corrections through the Member State of identification during 3 years following the deadline date for filing: the special-scheme return for July to September 2023, for example, can still be corrected on 31 October 2026.
Example: The company’s Member State of identification is France. The company is entitled to submit any corrections on a return for a later tax period, still up to 31 October 2026, in order to remedy errors on its July to September return (Q3/2023) as necessary. To remedy the errors, the company must indicate that Finland was the Member State of consumption, and indicate the amount of difference in the VAT, and indicate the tax period.
After the Member State of identification no longer accepts corrections to earlier filings, you must complete the Tax Administration’s Form 9568e — VAT special scheme claim for adjustment. You also have to complete Form 9568e to submit corrections to the Finnish Tax Administration if your business no longer uses a VAT special scheme and has already filed the final return for it.
How payments are applied on different taxes
After a Member State of identification has remitted the amounts to the Finnish Tax Administration, we apply them on taxes and other receivables in this order:
- The taxes included on the special-scheme return at hand, in the order of the due dates, from earliest to latest.
- The taxes related to the same special scheme concerned, including the overdue taxes and those that have not yet fallen due, from earliest to latest.
- Any other overdue taxes and receivables going to the Tax Administration.
At the stage when the Finnish Tax Administration has initiated recovery processes to collect the unpaid taxes from a business, we apply the recovered amounts on taxes and other receivables in this order:
- All the taxes related to the special scheme concerned, including overdue taxes and those that have not yet fallen due, from earliest to latest, plus interest.
- Any other overdue taxes and receivables going to the Tax Administration.
After all the money is used as described above, any remaining balance is refunded to the business unless other circumstances prevent refunding. If there is an intermediary representing the business, the remaining balance is refunded to the intermediary. Refunds below €10 are not paid out.
Example: The “A” company’s Member State of identification is Sweden. It has filed a return for July to September (Q3) indicating Finnish VAT as follows (check the amounts on the table below):
- the VAT for the (Q3) tax period is €200
- for April to June (Q2), the preceding period, a correction is filed: €150 more VAT must be added
- the amount to pay is €350 in total
“A” has paid the above taxes in Sweden on time, and in full amounts. Accordingly, Sweden paid €350 on to Finland.
The arriving amount is applied in Finland on different taxes in the order of their due dates: first, the taxes for Q2 (€150), and then for Q3 (€200).
Although the company remedied the error on a later tax period’s return (the Q3 return), the correction affects the original tax period’s (Q2) VAT. The due date to pay the Q2 VAT would have been 31 July. As a result, late-payment interest is charged on the difference (€150 of more VAT) starting 1 August, ending on the actual date of payment. The company has to pay the late-payment interest to Finland.
Special Scheme VAT return Q3/2023
| Tax period | Member State of consumption | Tax amount, € |
|---|---|---|
| Q3 | Finland | 200 |
Corrections to earlier tax periods
| Otsikko | Otsikko | Otsikko |
|---|---|---|
| Q2 | Finland | 150 |
| The amount, filed on the return, payable to Finland | 350 |
The “B” company has filed a return containing similar information, but “B” fails to pay tax in its Member State of identification. In this case, Finland takes action to recover the VAT. As a result, “B” must pay the unpaid amount directly to Finland. Finland sends “B” a payment reminder letter containing the bank reference number and other necessary details to facilitate payment.
After “B” has paid the owed amount plus interest, the amount is applied on the taxes within the special scheme, the related late-payment interest and other charges, in chronological order, oldest first.
How refunds are applied on different taxes
After a business enterprise makes corrections to a special-scheme return, it may be that the amount of VAT payable to Finland is reduced. The result of the correction may be a tax refund if the business has made a full payment of its VAT in accordance with the special-scheme return that it had filed originally. Refunds are used on Finnish taxes in the following order:
- All the taxes related to the special scheme concerned, including overdue taxes and those that have not yet fallen due, from earliest to latest, plus interest.
- Any other overdue taxes and receivables going to the Tax Administration.
If any further balance remains after the above balances were settled, the Finnish Tax Administration proceeds to send it to the business (unless there are other reasons that prevent refunds). If the amount that would be refunded is below €10 in total, we do not send it. Instead, it can be applied on the settlement of any unpaid taxes later. You can receive “credit interest” on a refund.
If an intermediary represents you, we send the refund to the intermediary.
Example: The “A” company filed its January to March return (Q1) with an error in the Finnish VAT: the amount was €1,000 while it should have been €800.
The company submits its April to July return (Q2) reporting €2,000 of VAT, and also making the necessary correction (–€200) to its January to March return (Q1).
By this time, the “A” company already paid the original amount in full. As a result, a refund of €200 for the Q1 period is recorded. The Finnish Tax Administration applies the refundable amount on value-added taxes that relate to the same special scheme. In this case, the amount is applied on VAT for Q2.
Special Scheme VAT return Q2/2023
| Tax period | Member State of consumption | Tax amount, € |
|---|---|---|
| Q2 | Finland | 2 000 |
Corrections to earlier tax periods
| Tax period | Member State of consumption | Tax amount, € |
|---|---|---|
| Q1 | Finland | - 200 (this had been 1 000) |
| The amount, filed on the return, payable to Finland | 1 800 |
The “B” company has filed a return containing similar information, but “B” fails to pay its tax for Q1. In these circumstances, after the error is remedied the Q1 amount diminishes by €200. However, no refund is recorded because the originally filed amount has still not been paid.
The company is only able to pay the Member State of identification the Q2 return’s sum total, €1,800. As a result, a balance of €200 is left unpaid of the filed VAT for Q2. Finland takes action to recover this amount from “B”. An unpaid €800 from Q1 still remains. Finnish authorities continue to recover this amount as well.
What methods does the Finnish Tax Administration rely on when recovering taxes?
If a business enterprise has not paid a VAT amount that Finland should receive, making the payment in the Member State of identification in full, the Finnish Tax Administration takes action to recover the outstanding amount. The Tax Administration sends one reminder letter. After this, the business can no longer pay the tax in the Member State of identification. However, the Finnish Tax Administration refrains from sending the reminder if the amount is less than €10.
The reminder letter is part of the summary document. The information on the summary of tax payment status additionally contains the details that the bank requires for transferring the payment, i.e. the reference number and the bank account number. Summaries are sent at the end of the sixth month following the due date. Read more about the summary
If an intermediary represents the business, the Tax Administration sends the summaries to the intermediary. If any VAT in special schemes remains unpaid, the intermediary receives a summary that contains a collective reminder text, concerning all the companies the intermediary represents. The Tax Administration provides separate bank reference numbers for each seller. The intermediary must quote the reference numbers when paying. If any VAT remains unpaid when an intermediary is in charge of filing and payment, joint-and-several responsibility lies with the intermediary and the represented business entities until the special-scheme VAT is paid in full.
If no payment is made by the due date indicated on the summary’s reminder letter, the Finnish Tax Administration may reassign the recovery process to enforcement authorities or make a request for international administrative assistance to the domicile country of the business enterprise. If the business cannot pay the tax by the due date on the reminder, a payment arrangement with the Tax Administration can be applied for in order to extend the due date. If an intermediary represents you, only the intermediary can submit an application for a payment arrangement. For such an arrangement to be made, a set of conditions must be fulfilled. Read more about payment arrangements.
The Tax Administration charges interest for late payment starting the day after the period’s due date up to the actual date when the VAT is paid. If the due date is a Saturday, Sunday or other holiday, the counting of time towards the interest begins the next business day. You can use our interest rate calculator to check the amount of interest.
Example: The due date for the Q1 value-added taxes is 30 April. The company submitted its VAT return on time.
The company submitted its VAT return before the deadline for Q1, but the company has not paid the VAT declared. The Member State of identification sends a reminder to a company on 10 May. However, the company still does not pay. On 31 October, Finland sends a summary of tax payment status containing a reminder letter to the company, thus taking action to recover the unpaid amount. The company is additionally required to pay interest for late payment starting 2 May (because 1 May is a legal holiday, it is not included in the interest calculation).
If the company does not settle this debt by the date indicated on the summary of tax payment status, the Tax Administration can assign the recovery process to an enforcement authority or send a recovery request to the domicile country of the company or its intermediary.
Example: The due date for the Q1 value-added taxes is 30 April. The VAT return was submitted late.
The company submitted its Q1 return on 3 May, i.e. after the deadline, and the company has not paid the VAT declared. The Member State of identification sends a reminder to a company on 10 May. However, the company still does not pay.
A late-filing penalty charge is imposed on the company, because the VAT return was submitted late. On 30 November, Finland sends a summary of tax payment status containing a reminder letter to the company, thus taking action to recover the unpaid amount. The company is additionally required to pay interest for late payment starting 2 May (because 1 May is a legal holiday, it is not included in the interest calculation).
If the company does not settle this debt by the date indicated on the summary of tax payment status, the Tax Administration can transfer the recovery process to an enforcement authority or send a recovery request to the domicile country of the company or its intermediary.