The changes to VAT rates — what determines the actual percentage rate?
The instruction provides examples to help determine what VAT rate should be used when the VAT rate changes due to the legislative change.The recent changes involved the standard VAT rate going up to 25.5% (1 September 2024), and the scopes of application of reduced VAT rates (1 January 2025).
Supply of goods: VAT rate depends on the date of delivery
In general, when goods are being sold, the day when they are handed over to the buyer will determine the VAT rate. This means the date of delivery to the buyer.
If it had been agreed that the seller is responsible for the transport, then the goods are only regarded as delivered when the buyer has received them. In the reverse case, if the buyer is responsible for the transport, then the goods are regarded as delivered when the transport begins.
Example: A customer of a motor dealer signed a purchase order for a new car in August 2024, and the dealer delivered it to him in September. He paid for the car on the date of delivery, in September. The standard rate of VAT rose to 25.5% as of 1 September. The date of delivery determines the rate to be applied to this supply of goods: the VAT rate is 25.5%. The points in time when the purchase order was signed, or when the contract was signed, or when the new car’s vehicle registration was finalised have no importance.
Example: A seller sent a buyer a set of spare parts on 31 August 2024. The delivery arrived at the buyer’s warehouse on 1 September. The standard rate of VAT rose to 25.5% as of 1 September. In accordance with a scenario where the seller paid for the freight all the way to the buyer’s warehouse, the VAT rate is 25.5%. In an alternative scenario, involving payment for the freight of goods by the buyer, the spare parts were seen as delivered to the buyer on 31 August 2024 when the transportation started. VAT in this scenario is the previous VAT rate 24%.
Example: A seller delivered a book on 30 December 2024 to a buyer who paid for it on 1 January 2025. The VAT rate applied on books was increased to 14% as of 1 January 2025. The previously applicable rate had been 10%. Because the date of delivery was 30 December 2024, the sale of the book is subject to 10% VAT. In an alternative scenario where the seller would not have delivered the book until 1 January 2025, the VAT rate would have been 14% instead.
Paying a sum of money in advance
“Advance” means that the seller receives payment before goods are delivered to the buyer. When VAT rates change, whether the previous or current VAT rate applies will depend on the day when the amount of money becomes available to the seller.
Example: A customer of a motor dealer signed a purchase order for a new car in August 2024, and the dealer delivered it to him in September. There was an agreement that the customer pay a partial advance to the dealer in the form of handing over his old vehicle during August. This transaction falls into the category of “advance”.
The standard rate of VAT rose to 25.5% as of 1 September 2024. Because the price was partially paid and received by the seller before delivery, and before the date when the rate change took effect, the VAT rate is 24% for the advance. The remaining part of the purchase price became available to the seller in September. For that, the VAT rate is 25.5%.
Example: The local utility company sent its invoice in 2025 for electricity, for the 1 January to 31 December 2024 period. The standard rate of VAT went up to 25.5% as of 1 September 2024. The VAT rates on the utility company’s invoice must be 24% concerning deliveries of electric power before 1 September 2024 – and 25.5% concerning later deliveries. However, if any money for deliveries effected on or after 1 September 2024 was charged in advance and received by the utility company before 1 September 2024, the VAT rate to be applied on the amount paid in advance would be 24%.
Example: On 30 August 2024, a customer of a Finnish webstore ordered a good for home delivery. When the customer finalised the order, a bank authorisation hold was placed on their bank account. This way, the amount was locked in, but no money moved from the customer’s bank to the seller’s bank yet. The good was delivered to the customer’s home on 15 September 2024, and the authorisation hold was released to finalise the payment on 15 September 2024, too. When transportation began, the good was in the territory of Finland. As a result, Finland has the right to collect VAT on this supply of goods.
The standard rate of VAT went up to 25.5% as of 1 September 2024. The authorisation hold on the webstore customer’s bank account is no payment remitted in advance. No amount moved to the seller’s account, so no amount became available to the seller. If goods are sent so that the customer pays the freight and the payment is transferred on the day when the goods are delivered, then the actual transfer of money will not constitute an advance, either. Because the date of goods delivery was 15 September 2024, the VAT rate is 25.5%.
Example: On 30 August 2024, a customer of a Finnish webstore ordered a good for home delivery and paid for it immediately. The customer made the payment through a payment service provider company (to which the website had a link). As it happened, the money didn’t come to the seller's bank account until 1 September 2024. The good was delivered to the customer’s home on 15 September 2024. When transportation began, the good was in the territory of Finland. As a result, Finland has the right to collect VAT on this supply of goods.
The standard rate of VAT went up to 25.5% as of 1 September 2024. It should be noted that the customer’s payment arrived and became available to the seller before delivery of the goods. This means that it is considered an advance. However, because the exact date when it arrived and became available to the seller was 1 September, not before, the VAT rate in this case is 25.5%.
Contracts involving payment by instalments
An instalment contract, often called ‘hire-purchase’, means that the seller and the buyer agree that the buyer can pay for the purchased item in many instalments. For VAT purposes, the time when the seller’s obligation arises to pay VAT is the date of delivery of goods.
Example: A home appliance shop made an instalment contract to sell a customer a washing machine, and the date of delivery to the customer was in August 2024. After delivery, the customer is expected to pay for the machine by making a long series of instalments. The due date for the final instalment will be December 2025. The standard rate of VAT rose to 25.5% as of 1 Sept 2024. The VAT rate for the entire price of the washing machine is 24%, because it was delivered before the VAT rate changed.
Supplies within the VAT margin scheme – secondhand items
When the VAT margin scheme is applied, the base amount for VAT calculations is not the selling price. Instead, the retailer pays the VAT on the “margin” — the difference between selling price and purchase price. Subject to certain preconditions and restrictions, the VAT margin scheme can be applied when selling and buying secondhand goods.
Example: A seller who deals in used goods sold a used car for €4000. The buyer came to pick up the used car on 2 September 2024. The seller had purchased the car – a used motor vehicle – from a private individual in August 2024.
The seller applied the VAT margin scheme to the transactions: the base for the VAT to pay is the margin of profit, the difference between consideration and net (= ex-VAT) purchase price.
The standard rate of VAT went up to 25.5% as of 1 September 2024. Because the used car was not delivered to the buyer until 2 September 2024, the transaction is subject to 25.5% VAT, even if transactions made before 1 September 2024 would need to be included in the calculation of the margin.
The margin in this case equals €500, which results in a base amounting to €398.41 ex-VAT. The value-added tax based on this base is €101.59 (= 25.5% × €398.41).
Further information:
- VAT calculator – how to calculate VAT
- Requirements for the margin VAT procedure (detailed guide, available in Finnish and Swedish, link to Finnish)
Services — the VAT rate depends on the date of service provision
In general, when a service is supplied, the point in time when the service is complete and rendered to the buyer will determine the VAT rate to be applied. The service is considered completed when it is ready, available to the buyer. If the service is not yet completed when the VAT rate change takes effect, the rate will be the one in force on the day when the service finally becomes completed.
Example: You are a private individual. You placed an order with a cleaning service company to have your windows washed at your home. The company finished the window-washing service on 30 August 2024. Later, the company sent you its invoice in early September. You paid it on its due date in September. The standard rate of VAT rose to 25.5% as of 1 September 2024. The VAT rate on this sale (= supply) of a service is 24% because the service was completed before the new, higher VAT rate came into force.
Example: A freight company sold a private consumer a transport service of goods from Helsinki to Paris. The start date of the transportation was in August, but its end date – in September. The date when the finished service is provided to its recipient is the date when the transportation ends in Paris, the destination. The standard rate of VAT rose to 25.5% as of 1 September 2024. The VAT rate on this sale is 25.5%. The reason is the date of completion: the service was completed at a time when the new, higher VAT rate had come into force.
Example: A private consumer reserved and signed a contract for staying at a hotel for one week in December 2024. The consumer, having reserved an invoice, paid for the hotel nights in January 2025. The VAT rate applied on accommodation services was increased from 10% to 14% VAT. This took effect on 1 January 2025. However, the VAT in this case is 10%. The reason is the date of completion, in other words, the accommodation service was fully rendered to the private consumer when the 2024 calendar year was still ongoing. The fact that the consumer paid for it in 2025 has no importance.
Paying a sum of money in advance
An advance means that the seller receives payment before goods are delivered or service is provided to the buyer. When VAT rates change, whether the previous or current VAT rate applies will depend on the day when the amount of money becomes available to the seller.
Example: A customer signed a purchase order for a tailored gym workout plan on 23 August 2024. The seller of this service was a personal trainer. He visited the personal trainer’s office on 2 September 2024, receiving the finished workout plan which the personal trainer presented to him.
The standard rate of VAT rose to 25.5% as of 1 September 2024. Because the service related to personal gym workouts was completed only in September 2024, the VAT for the service will be 25.5%. However, in an alternative scenario, if the customer were to send full payment, with the personal trainer receiving it fully, already during August, the supply would have been paid for in advance. This would have made the VAT remain at 24%.
Example: A customer bought a ticket for a railroad trip scheduled for January 2025. He bought it and paid for it in November 2024. The VAT rate applied on travel tickets rose to 14% as of 1 January 2025.
Because the customer paid for the ticket before it was used, i.e. before the actual train trip, the payment is an advance. The seller received the advance amount fully before 1 January 2025. As a result, the VAT rate to be applied is the one in force at the time when the advance became available to the seller — 10% VAT. In an alternative scenario, if the advance became available to the seller before the time when the customer used it but when the 2025 calendar year has started, the supply-of-service would be subjected to the 14% rate of VAT.
Example: In December 2024, a customer bought 6 voucher-type tickets to the cinema. These tickets were not for any specific movies or screenings. Instead, the customer can exchange a voucher for a movie ticket in 2025. The VAT rate applied on movie tickets rose to 14% as of 1 January 2025. If the price paid by the customer arrived and became available to the seller when the 2024 calendar year was still ongoing, VAT to be paid on this supply-of-service is 10%, i.e. the VAT that was in force before the rate change.
Example: The VAT rate applied on gym memberships rose to 14% as of 1 January 2025. A customer has a continuous membership in a gym and the fee can be paid either once a month or in advance, for several months at a time. In a situation where the customer would pay the membership fees for January–March 2025 in advance in December 2024, the payment would be deemed as an advance, subject to 10% VAT, i.e. the rate that was in force before the change.
Example: A customer bought an entrance ticket to a cultural event in December 2024 directly from the event organiser. The event was held in June 2025.
The VAT rate applied on entrance to cultural events rose to 14% as of 1 January 2025. The customer paid for the ticket in December 2024, so it was an advance payment. The seller received the advance amount fully before 1 January 2025. As a result, the VAT rate to be applied is the one in force at the time when the advance became available to the seller — 10% VAT.
Example: In December 2024, a customer went to a ticketing office (= a service company) to buy a ticket to a cultural event. The company sold the ticket in its own name on the event organiser’s behalf (i.e. on “commission” – a commercial setup where the seller sells items that do not belong to the seller). The event was held in June 2025. The customer paid the ticket office company for the ticket in December 2024 i.e., in advance.
The VAT rate applied on entrance to cultural events rose to 14% as of 1 January 2025. Because the advance was made available to the ticket office when the 2024 calendar year was still ongoing, the VAT rate applied to the ticket company’s sale is 10%, i.e. the VAT rate that was in force before the change.
Additionally, another customer signed a purchase order for a ticket in December 2024. This customer received the ticket and invoice by post in January 2025. He paid the invoice at the end of January. In this case, too, the payment is an advance payment, because the event was not held until June. However, because the advance payment was not made available to the ticket selling company until after the rate change took effect on 1 January 2025, the VAT rate applied to the ticket company’s sale is 14%.
Example: A customer bought a ticket to a concert in December 2024 through a ticketing service. The concert was held in June 2025. The ticketing service company sold the ticket in the event organiser’s name and on their behalf. In other words, the company was in the role of a broker, selling a brokerage service to event organisers. Brokerage services are subject to the general VAT rate. The event organiser was responsible for organising the concert.
The ticketing company paid the proceeds from ticket sales to the event organiser, deducting its fee. Because the tickets were sold in the event organiser’s name and on their behalf, it is deemed that the event organiser sold the tickets directly to the customers.
The VAT rate applied on entrance to concerts rose to 14% as of 1 January 2025. Because the customer paid for the ticket in advance in December 2024, and no special arrangements relating to payment (e.g., a blocked account) were made, it is deemed that the ticket broker received payment on the event organiser’s behalf. This means that the VAT rate applied to the sale made by the event organiser is determined by reference to the time when the advance payment became available to the ticket broker. This also means the event organiser must file and pay the VAT on the supply, for the month when the organiser received the advance payment. If payment became available to the ticket broker before 31 December 2024, the supply provided by the organiser is subject to 10% VAT, i.e. the rate that was in force before the change.
Another customer signed a purchase order for a concert ticket from the same ticketing company in December 2024. This customer received the ticket and invoice by post in January 2025. He paid the invoice at the end of January. In this case, too, the payment is an advance payment because the event was not held until June. However, because payment was not available to the ticket selling company until after the rate change took effect on 1 January 2025, the VAT rate applied to the supply is 14%.
Continuous supply of goods and services
When goods are supplied or services provided on a continuous basis, the consideration paid for them depends on the time that passes. Goods supplied or services provided on a continuous basis are regarded as having been delivered or provided at the end of each period for which a payment is remitted.
Example: A customer bought a forfait-style ticket for riding public transport. Period of validity is 12 months with billing every 30 days. The customer signed the purchase order and paid the first payment in December 2024. After that, an amount of money was billed and charged once a month.
The VAT rate applied on travel tickets rose to 14% as of 1 January 2025. Day pass, weekly pass or monthly pass tickets were subject to 10% VAT up to 31 December 2024. The customer’s first payment is therefore subject to 10% VAT. After that, the VAT rate for subsequent payments is 14%.
It should be noted that no continuous supply of goods or services is in question – although payment may be effected in many instalments over time – for a purchase of a single good (often called hire-purchase) or for example, a purchase of a construction service. In the same way, no continuous supply for VAT purposes is effected when a utility company sells you electricity, gas, heating and air-conditioning, etc.
Construction services
For VAT purposes, a construction service is completed after the customer’s final inspection or after the customer gives their approval in some other way. The applied VAT rate depends on the point in time when the service is completed.
If the building is still under construction when the change takes effect, the VAT rate is the one that will be in force at the future date when the building will finally be finished. However, it is usual in the construction sector to agree upon an instalment schedule, for billing the customer during the period when the construction services are progressing. These instalments that concern an unfinished construction job are treated as advances, for which value-added-tax is determined according to the date when the seller receives the money.
Example: In summer 2024, a construction company and a customer signed a contract concerning a construction job. The plan is to add an extension to the customer’s building. The contract involves several instalments to be invoiced as the construction work progresses. The customer and the construction company agreed that the extension would be completed in 2025.
The standard rate of VAT went up to 25.5% as of 1 September 2024. If there was an instalment fully remitted to the construction company by 31 August 2024 at the latest, the VAT rate applied to that instalment would still be 24%. Correspondingly, if an instalment was paid and became available to the construction company on 1 September 2024 or later, the VAT rate would be 25.5%.
In the construction industry, the main contract often consists of a variety of jobs and services provided by subcontractors. The service sold by a subcontractor will be subject to a VAT rate either determined by the VAT rate in force on the day when the subcontracted service is finished, or alternatively determined by the dates when advances – if any – are paid to the subcontractor. The VAT rate is not determined by the ongoing stage of the main construction service, or by the main contractor’s invoicing dates.
Example: The construction company had a subcontractor build a certain part of the extension. The subcontractor completed this service in September 2024. As for invoicing and payments, no advance arrangement was made so the subcontractor sent the invoice to the construction company when the stage was reached that its sub-contract (the part of the extension) was completed. As a result, the supply of service was subject to 25.5% VAT.
Other situations and circumstances
To divert goods or services from a company (often called self-supply) means that goods/services are taken or otherwise transferred away from the company’s business purpose to be used for a changed purpose, a nonbusiness or non-VAT-taxable business activity. In these circumstances, the company is not entitled to claim a VAT deduction for the price of the good or service.
After goods or services are diverted, the VAT rate to be applied is determined by reference to the date when the diversion occurred.
Example: Being the owner of a plot of land, a self-employed individual operating a business had a construction company build a house on the land. He sold the entire real estate including the house and the land to a buyer when the house was ready, on 1 March 2025. The house is deemed to be one that an “entrepreneur had ordered the construction of, for the purpose of sale, on area of land which he holds” (§ 31, subsection 1, paragraph 1 of the Value Added Tax Act).
The self-employed individual had to pay VAT on the grounds of diverting a construction service to private use, because for purposes of value-added taxation, it is deemed to be a diversion when a business operator that own land signs a contract to build, or builds, a building intended for selling to a customer.
The self-employed individual bought the entire construction service from a subcontractor. The standard rate of VAT went up to 25.5% as of 1 September 2024. If you provide construction services in the course of your business but you build an object and divert it to private use, the 25.5% rate will be applicable for the part of the diverted construction for which the date of completion is 1 September 2024 or later. For the part – if any – of the diverted construction that your subcontractor completed before 31 August 2024, the applicable rate would be 24% VAT.
Example: A business operator had ordered a construction company to build a cottage for offering accommodation for tourists. The idea was to build the cottage on a plot of land that the business operator owned. However, on 15 September 2024, the business operator sold the land and the cottage unfinished, with the construction work interrupted because he had run into financial difficulty.
Because the business operator’s activity involved construction services in general, and because the sale of the land and the cottage was made at a time when the new unit of real estate was still not placed into service, the business operator must pay VAT because he had diverted construction services to private use (§ 33 of the Value Added Tax Act).
The standard rate of VAT went up to 25.5% as of 1 September 2024. Due to the date of the sales transaction 15 September 2024, the diversion of the land and the unfinished cottage to private use is subject to 25.5% VAT.
The standard rate of VAT went up to 25.5% as of 1 September 2024. If you purchase a good from a seller in the EU, and the correct month for VAT reporting is September 2024 or a later month, you need to apply the new VAT rate.
The calendar month for VAT reporting of purchases from other EU countries – intra-Community acquisitions – is the month following the month when you received i.e., took delivery of the goods. However, if the supplier provides you with a final invoice for the purchase during the month when goods are delivered, the intra-Community acquisition must also be reported during that month.
If goods bought from other EU countries are delivered as a continuous supply, and deliveries go on for more than one month, the dates when the buyer is deemed as having received the goods are the end dates of each calendar month.
The reporting month for VAT purposes remains the same even if a part of the price had been paid in advance.
Example: A company bought a machine from a Swedish seller in July 2024. The company paid a part of the machine’s purchase price in advance, in July 2024. Delivery took place in August 2024. The seller billed the remainder of the purchase price in September 2024.
The standard rate of VAT went up to 25.5% as of 1 September 2024. The date when this intra-Community acquisition took place was August 2024, but the date when VAT on it was reported was September 2024. The VAT rate on the intra-Community acquisition is 25.5%. In an alternative scenario, if both delivery and invoice for this machine had come to the company in August, the VAT reporting month for the intra-Community acquisition would have been August 2024. In such a scenario, the 24-percent rate would apply both to the paid advance and to the intra-Community acquisition.
Example: A company bought a user’s guide for technology, related to the company’s industrial production, from a Swedish seller. The company paid for it in December 2024 when it had received the invoice. Delivery of the user’s guide took place in December 2024.
The VAT rate applied on books rose to 14% as of 1 January 2025. Because both delivery and billing took place while the 2024 calendar year was still ongoing, this intra-Community acquisition must be recorded for December for purposes of VAT, and the VAT rate to be applied is 10%. However, if the invoice had been presented in January 2025, the intra-Community acquisition would have to be recorded for January and the VAT rate to be applied would be 14%.
The VAT reverse charge mechanism means that the party paying VAT in Finland on a supply is the Finnish buyer of the service, not the foreign seller.
The reverse charge mechanism, which concerns the buyer, is applied in all EU countries when a business sells a service governed by the VAT general provision to a business established in another EU country. The VAT general provision is applied on any supply of a service in situations where no special VAT rule or provision would concern the service being supplied. The reverse charge mechanism is also applied in Finland on many services that are not governed by the VAT general provision.
In general, when a service is supplied, the point in time when the service is complete and rendered to the buyer will determine the VAT rate to be applied, and this rule is also in force when the buyer of a service pays VAT instead of the seller. If any consideration is paid in advance and the amount becomes available to the seller before the service is completed, the date when the advance payment became available will determine the VAT rate to be applied.
Example: A Swedish company sold a consultancy service to a Finnish company. Finland has the VAT taxing rights on the supply of service. The service was provided to the Finnish company in August 2024, and the Swedish company billed it in September 2024.
The standard rate of VAT went up to 25.5% as of 1 September 2024. Because the data of service completion was August 2024, the supply is subject to the 24-percent rate, which was in force until the VAT rate change took effect. The Finnish company – the buyer of the service – paid VAT in accordance with the reverse charge mechanism. The Finnish company then reported this VAT on its VAT return for August 2024.
In the case of value-added tax on importation, the VAT rate to apply is the one that was in force when the obligation to pay VAT arose. The obligation arises on the date when the Customs acknowledges receipt of the import declaration.
The calendar month for reporting VAT on imports – payable to the Tax Administration – is the month when Customs issued its decision on customs clearance.
Example: A company having a Finnish VAT registration imported a set of spare parts from Norway to Finland on 31 August 2024. Finnish Customs acknowledged receipt of the import declaration on 31 August 2024, and issued its decision on release for free circulation on 1 September 2024.
The standard rate of VAT went up to 25.5% as of 1 September 2024. The date when the Customs acknowledges receipt of the import declaration determines the VAT rate. Because that date was 31 August 2024, the importation is subjected to the 24-percent VAT rate effective at that date.
Because the date of issue of the Customs clearance decision was 1 September 2024, the company had to file the information concerning the imported spare parts set to the Tax Administration on the company’s VAT return for September 2024.
Tax border between Åland and Mainland Finland – imports of goods
The rate of VAT to be applied on imports between Åland and mainland Finland is determined by the date indicated on the decision on the first customs clearance of the goods.
However, VAT taxpayers need to submit the information on import VAT on the VAT return for the tax period during which the decision on customs clearance was issued.
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When you include any discounts you have granted, writeoffs of bad debts, etc. in your VAT reporting, you must use the VAT rate that was in force when the goods were delivered or when the service was completed and provided to the buyer. This rule extends to situations where an accounting adjustment is made and the tax period where the adjustment entry should be placed is a period after the VAT rate change took effect.
It is possible that deliveries or service-provisions – both before and after a VAT rate change – are later adjusted because of giving customers various discounts afterwards. When this has happened, the impact of the discounts should be spread out, reflecting the passing of time and reflecting the old and the new VAT rates.
Example: A company sold office supplies during 2024. The company decided to give one of its customers an annual discount based on the customer’s total purchases during the year 2024. As a result, €5,000 (ex-VAT) was subtracted from the customer’s 2024 purchase prices.
Because the company gave no detailed facts concerning the selling, the related VAT had to be divided in proportion to the passing of time. In other words, 8/12 of the discount (for January–August) was booked against sales at 24% VAT, and the remaining 4/12 (for September–December) against sales at 25.5% VAT. Accordingly, after the company reduced its VAT base by €5,000, the adjustment to VAT payable was 8/12 × €5,000 × 0.24 = €800 for the first eight months, and for the remaining months 4/12 × €5,000 × €0.255 = €425, which makes €1,225. The company had to determine the reportable tax period for entering this VAT adjustment on to company books in accordance with good accounting practices.
If a writeoff for a bad debt had been on the books, but it turns out that the customer pays the amount later, the seller must report and pay VAT using the VAT rate that was in force when the original supply was made.
Example: A company is a seller of home appliances. No payment arrived from a customer for a sold appliance that was delivered to a customer on 15 June 2024. The date when an entry to the company’s books should be made to write off a bad debt – in accordance with good accounting practices – is the day when it became apparent that no payment will likely be received. The home-appliances company entered a writeoff entry for December 2024.
The 24% VAT rate is applied on the bad debt and on its writeoff, because delivery took place in June 2024. The VAT return submitted by the company for December contained the related VAT adjustment.
The company received payment for the appliance delivered 15 June 2024 as the customer finally paid for it in January 2025. As a consequence, the company must pay VAT on the supply of the good for which it had submitted a VAT adjustment on grounds of a bad-debt writeoff. The 24% VAT rate is still applied although payment comes late, because this was the VAT rate applied on the supply originally. After the amount was received, the company included the VAT of this supply in its VAT return for January 2025.
Allocation of VAT to tax periods of the taxpayer’s VAT returns
Although the VAT rate to be applied will depend on the point in time when the obligation to pay VAT arises, that point in time does not determine the reportable tax period for the VAT. Instead, the periods are determined by the provisions on the allocation of VAT to reporting periods.
In other words, even if you allocate VAT on the basis of payment dates or invoice dates when completing the VAT return, the applicable VAT rate is still determined by reference to your obligation to pay the VAT.
Because of the provisions on the allocation of VAT, you may have to declare a supply subject to a VAT rate in force before the rate change took effect, although the VAT return’s tax period is occurring after the rate change took effect, and vice versa.
Examples of period allocation, cash basis: Your company’s VAT period is the calendar month. You file and pay VAT on a cash basis. This means that your company reports the VAT that it pays on its sales – or deducts from its purchases – always for the month when it received payment for the sale, or made payment for the purchase.
Example: The standard rate of VAT rose to 25.5% as of 1 September 2024. Your company delivered goods to a buyer on 30 August 2024 and received payment on 1 September 2024. The VAT would in this case be 24%. Because of your company’s cash-basis VAT reporting, the date of payment is important so you must include the VAT for this sale in your September VAT return, under: “VAT on domestic sales by tax rate 25.5% VAT”.
Example: The VAT rate applied on books was increased to 14% as of 1 January 2025. Another company delivered a book to a customer on 30 December 2024 and received payment on 1 January 2025. The VAT rate to be applied on this supply is 10%. Because of the company’s cash-basis VAT reporting, the date of payment is important so the company must include the VAT in its January VAT return, under: “VAT on domestic sales by tax rate 10% VAT”.
Examples of period allocation, accrual basis: Your company’s VAT period is the calendar month. You file and pay VAT on accrual basis. Accrual basis means that your company reports each sale for the period when you billed your customer(s) for the goods or services they bought.
Example: The standard rate of VAT rose to 25.5% as of 1 September 2024. Your company sent an invoice dated 30 August 2024 to a buyer but you delivered the goods on 1 September 2024. The buyer paid the invoice in September at the due date. The VAT rate on supply of goods is 25.5%. Because of your company’s accrual-basis VAT reporting, the billing is important so the company must include the VAT in its August VAT return, in accordance with the invoice date, under: “VAT on domestic sales by tax rate 24% VAT”.
Example: The VAT rate applied on books was increased to 14% as of 1 January 2025. Your company sells a book to a customer. You send the invoice, dated 30 December 2024. The book is delivered on 2 January 2025. The customer paid the invoice in January at the due date. The supply of the book is subject to 14% VAT. Your company must include the VAT in its December VAT return, in accordance with the invoice date, under: “VAT on domestic sales by tax rate 14% VAT”.
The VAT rate change of 1 Sept 2024 that affected the standard rate
How to submit VAT returns in MyTax, through other e-services, and on paper forms:
The Tax Administration updated the MyTax pages for the VAT return, because the standard rate of VAT rose to 25.5% as of 1 September 2024.
Accordingly, VAT taxpayers are expected to fill in the following spaces for VAT on supplies of both 24% and 25.5% VAT:
- Monthly VAT reporting: starting at period 9/2024 – “VAT on domestic sales by tax rate 25.5% VAT”.
- Quarterly VAT reporting: starting at 3/2024 (July, Aug, Sept) – “VAT on domestic sales by tax rate 25.5% VAT”.
- Reporting VAT once a year: the 2024 calendar year’s VAT return and later – “VAT on domestic sales by tax rate: 25.5% VAT”.
Whenever the VAT rate is the standard rate, you will need to fill in the spaces as explained above also when using other e-services (www.ilmoitin.fi and the API interface).
As for paper-based VAT reporting, you can use the paper forms marked “2025” for sending a VAT return (or making corrections) relating to the 1/2025 VAT period and all subsequent periods. When you declare information regarding VAT periods that ended on or before 31 December 2024, use a “2024” paper form.
Note: The VAT reduced-rate changes to 10% and 14% VAT rates effective from 1 January 2025 caused no changes to how VAT returns in MyTax, through other e-services, or on a paper form are completed and submitted.