VAT details to set out on sales invoices
- In force until further notice
To the reader: This is an excerpt from the guidance letter of June 30th 2003 no. 1731/40/2003 by the National Board of Taxes. These notes do not cover every point that may arise but any tax office will be pleased to help you. They will also be able to give you any of the other bulletins which have been mentioned. You will find the address to your nearest tax office at the page Local Tax Offices. Please note that this English translation is unofficial and intended for guidance only.
Instructions on invoice details
Every invoice issued by a taxable person in accordance with section 209 b of the Value-Added Tax Act must set out the following particulars:
- The date of issue of the invoice,
- a sequential number, based on one or more series, which uniquely identifies the invoice,
- the VAT number (Business ID) of the taxable person who supplied the goods or services to which the invoice relates,
- the buyer’s VAT number when reverse charge is applied, and in the case of intra-Community trade,
- full names and addresses of Seller and Buyer,
- the quantity and nature of the goods supplied or the extent and nature of the services rendered,
- the date on which the goods or services were supplied or the date on which a prepayment on account was made,
- the price(s) exclusive of VAT per rate of VAT, displaying the unit price and any rebates, discounts and credits (if not included in the unit price),
- the rate of VAT chargeable,
- the VAT payable in respect of the supply of the goods or services,
- indications of any VAT exemption or reverse charge,
- if applicable, the details necessary to identify the goods as a new means of transport,
- if applicable, an indication concerning the VAT margin scheme if second-hand goods, works of art, antiquities and collectibles or certain travel agency services are being supplied,
- if applicable, an indication concerning the supply of taxable investment gold,
- if an earlier invoice is being amended, a reference to the earlier invoice.
Please note that the taxable person should only include the particulars concerning exemptions from VAT, reverse-charge mechanism, application of the margin scheme, new means of transport and taxable investment gold in cases where the taxable person actually carries out a supply of such goods, an application of such a scheme or a sale of such merchandise.
1) Date of issue of the invoice:
This date can refer to the date when the invoice is delivered to the buyer. Other possi-bilities are the date when the invoice is drafted, raised, compiled, or printed out etc.
2) Sequential number, based on one or more series, which uniquely identifies the invoice:
This requirement is based on the need to re-identify the invoice at a later stage. Another reason for this requirement is that a missing invoice will be easier to bring to light when there is a system of sequential numbering. Invoices issued during the same accounting year cannot, under any circumstances, have the same identification number. Never-theless, a taxable person can use several series of sequential identification numbers at the same time. Moreover, the sequential number does not have to consist of digits only — characters other than digits are acceptable as well.
The National Board of Taxes considers that the requirement of uninterrupted sequence must be maintained even in cases where the buyer is responsible for drafting the invoices. To reach this aim, it is required in practice that such a buyer drafts the invoices using a seller-specific series of sequential numbering. An alternative practice would be to require the seller to re-number the invoices, using the seller's own series. The seller can use either several specific series of sequential numbering for every buyer, or only one single series for all buyers.
3) VAT number of the person who supplied the goods or services to which the invoice relates:
In Finland, taxable persons entered in the VAT register are not issued a separate registration number that would exclusively be utilized for the purposes of value-added taxation. But under the Business Information Act (244/2001), every business enterprise must have a Business ID. It is required of a business always to enter the Business ID in the documents relating to the conduct of business. In domestic trade, the only VAT registration number to be used is the Business ID.
In the case of an intra-Community supply of goods, and in the cases where a service is being supplied and its place of supply is determined according to the buyer's Member State of VAT registration, the seller should not only include the Business ID but also a separate VAT number on the invoice. For this purpose, the VAT number is the seller's Business ID with the letters 'FI' added in front and with the second-to-last character —the hyphen — removed.
Such services are: Intra-Community transportation services of goods including loading and unloading as necessary, other comparable services connected with goods transportation, valuation services of movable property, work performed on movable property if the property is transported from Finland to another Member State, brokerage of intra-Community transport and related services (for more information, see VAT Act, §§ 66a, 67a, 67b and 69).
In addition, the seller should enter his VAT number on the invoice when a distance sale of goods to the territory of another Member State is being made, and likewise, when a new means of transport to a non-VAT-liable buyer in another Member State.
4) The buyer’s VAT number, which the buyer has used in the acquisition, if the buyer is VAT-liable or in the case of intra-Community supply according to § 72a of the VAT Act.
Seller must include buyer's VAT number on the invoice if buyer is liable for VAT because of the reverse-charge mechanism, or if there is a situation of intra-Community supply. Because Finland is a country where reverse-charge supplies are more common than in many other countries, it is emphasized that Finnish purchasers should always make sure that the invoices they receive from their suppliers always include a correct version of their VAT number as necessary.
The system of reverse charge is applicable if the foreign supplier does not have a fixed establishment in Finland and he is not registered for tax purposes in Finland. However, the reverse charge is not applicable if the purchaser is a private individual or a foreign national without a fixed establishment in Finland and without registration for tax purposes in Finland. Furthermore, reverse charge is not applicable to distance sales and supplies of certain services. Examples of such services are passenger transport, teaching and scientific services, cultural services, entertainment and sports events and other comparable services and auxiliary services directly connected with them.
5) Full names and addresses of Seller and Buyer:
Name of seller must be spelled out on the invoice, and if there is more than one seller, the names of all those. The invoice must be addressed to the buyer, and if the buyers are more than one, to all of those.
The buyer is the person to whom the supply is effected under civil law. An exception of this rule is the case of commission trade (selling goods or services in the name of an agent on account of the principal), where two sales instead of one are deemed to take place (Section 19 of the VAT Act).
The invoice should set out the business entrepreneur's name, or auxiliary name, in the version entered in the Trade Register. If, for some reason, the business entrepreneur is not registered in the Trade Register, the invoice should use the name version recorded in the registers of the Tax Administration.
If a business entrepreneur is acting on behalf of someone else, i.e. acting as an intermediary, the invoice should display the actual seller's name.
If seller has several establishments, and consequently, more than one address, seller can select the most convenient address to be printed on the invoice. We recommend sellers to use the address of the main establishment in invoices, or alternatively, the address of the establishment from where the goods are being delivered or services being rendered. A coded address can substitute for the actual address text if both seller and buyer — and the Tax Administration as necessary — know how to decode the coded addresses in an unambiguous manner to identify the parties of the transaction.
6) Quantity and nature of the goods, or the extent and nature of the services:
Goods should be specified by categories, commercial names and descriptions. For services, the invoices should set out the types of services. Alternatively, the invoices can include descriptions of the goods and services in a coded format if seller, buyer and
the Tax Administration, as necessary, have a decoding key at their disposal. If the de-coding key is a separate object, it should be archived in the same way as the invoice itself.
As an alternative, the invoice can simply refer to a contract, order, or product catalog delivered to buyer — this substitutes for descriptions of quantity and nature of goods, or descriptions of extent and nature of services.
There is usually no need for an exact specification on the extent of services rendered as long as the invoice contains sufficient indications as to what is being supplied. Example: In the business of renting out goods, it is sufficient just to set out the time period when the seller rendered the service, i.e. the renting dates to be invoiced.
7) The date on which the goods or services were supplied or the date on which a prepayment on account was made, if this date can be determined, and if this date is not the same as the date of issue of the invoice
For the purposes of assigning the VAT to the correct VAT period, it is necessary to include the actual date on which the goods or services were supplied or the date on which a prepayment on account was made.
Invoices for services should at least include the month when the services were rendered if the exact date cannot be determined. If deliveries of goods or services are being made on a continuous basis, the dates of delivery or supply are of a continuous nature, and thus deemed to relate to the period specified on the invoices. Example: Continuous deliveries of electric power are made. Accordingly, the invoice should display the relevant time period, such as "Electricity for March 2004". If there is no exact date of delivery or supply of a commodity, the invoice should simply set out a time period reflecting the completion of the business transaction at hand.
Example: Goods were sold under conditions of delivery identified as 'FOB' or 'CIF'. For the purposes of VAT, the ship's departure date is considered the date of delivery.
8) The price(s) exclusive of VAT per rate of VAT, displaying the unit price and any rebates, discounts and credits, if those are not included in the unit price:
The base prices i.e. the prices exclusive of VAT should be displayed separately for every commodity, every VAT rate, and every occurrence of VAT exemption. In addition, the invoice should show the net unit prices of commodities. Examples: A turn-key contract sets out the entire contract price as the unit price. In selling electricity, the unit price is the price of electric power per kilowatt-hour.
If applicable rebates, discounts or credits are not taken into account in the amount of the unit price, the invoice should specify them. Possible methods of specification are per every commodity, as a summary amount to be subtracted from the invoice total, and if several rates of VAT are involved, the specification should include itemized rates.
If one invoice concerns the supply of both taxable and non-taxable commodities, the invoice should keep these categories on separate lines. As an alternative, two invoices can be raised, one for commodities for which VAT should be paid, the other for commodities for which no VAT is paid.
The requirement to spell out rebates, discounts and credits on the invoice only concerns actual rebates, discounts and credits given to the buyer at the point of time when the invoice is being issued. If seller gives any rebates etc. afterwards, he should issue a new invoice document or credit note.
In general, it is the point of time when the buyer becomes entitled to the rebates, discounts and credits when the seller must issue a separate invoice that includes all the conditional rebates, discounts and credits that were agreed with the buyer when the original invoice was raised.
However, the National Board of Taxes considers that sellers should not issue separate credit notes for the usual commercial cash discounts ”14 päivää –2%, 30 päivää netto / 14 dagar –2%, 30 dagar netto / 14 days –2%, 30 days net”. The amount of such a discount is usually very small, and so is its effect on the VAT of the transaction. Nevertheless, the invoice should spell out both alternative total amounts of the invoice. As a minimum, the invoice should at least show the total amount of the cash discount itself including VAT. Later, the seller's accountant who posts this sales invoice into the bookkeeping system has the option to first record it using its full amounts of price ex VAT and VAT, without subtracting the discount amounts, and then making separate entries in the system after the discount has been used, specifying both the discount and its VAT effect. Consequently, it is important that the seller ensures that the invoice and the receipt of payment can easily be traced back to one another so the amount of VAT payable is recorded correctly.
9) The rate of VAT chargeable:
The invoice must always show the rate of VAT relating to the commodity being supplied. If one invoice covers several commodities with various VAT rates, every one of them must be listed appropriately.
10) The VAT payable in euros in respect of the supply of the goods or services:
The invoice must set out the total amount of VAT that is payable. This amount does not always have to be enumerated as consisting of various VAT rates, because this information can be deduced from the other details as necessary. Nevertheless, we recommend displaying a transparent specification of the amount per every rate of VAT.
It is important not to include any amounts of VAT in the invoice that have already been shown in a previous invoice, unless the invoice is a correction, i.e. a replacement of an earlier, erroneous invoice.
Sellers of second-hand goods, works of art, antiquities and collectibles under the margin scheme are not allowed to refer to amounts of VAT on their invoices.
The concept of 'VAT payable' means the amount of VAT that seller must pay for the sales invoiced with the invoice at hand. Similarly, 'base', or 'price excluding VAT' means the base for computing the VAT. If buyer is liable for the VAT of a supply, seller is not allowed to set out the amount of VAT on the invoice, but instead, the invoice must contain a phrase stating that the buyer is liable for VAT.
Under section 80a of the VAT Act, an amount of money expressed in foreign currency should be converted into euro by applying the latest sales rate published by a commercial bank at the time when liability to pay VAT on sales arises. However, the date of the invoice or the date when the payment has accrued is the date of the exchange rate to be used, if the VAT is assigned to the month of invoicing or to the month when the payment has accrued, within the same accounting year. If, for some reason, domestic trade is being carried out using another currency instead of the euro, the seller must set out the amount of VAT payable on the invoice in euro, not in the trading currency.
Sellers who are not registered for VAT are not allowed to include amounts of VAT or rates of VAT in their sales invoices. Nevertheless, if the relevant authorities are currently processing the seller's application for VAT registration, the seller is entitled to include the amount and rate of VAT in the sales invoice on condition that he also spells out the fact that VAT registration has been applied for and is currently pending. The phrase to be used for this purpose is ”alv-rekisteröinti vireillä / momsregistreringen anhängig / VAT registration pending”. In this case, buyer must first make sure that seller is actually successful in getting the VAT registration. Buyers can check this by consulting the Bis Search on the Finnish Business Information System´s website www.ytj.fi or by contacting any tax office.
If the seller fails to obtain a VAT registration, he must issue corrective invoices to replace the invoices issued to his buyers. Even if the seller appeals against the decision not to register him for VAT, he must issue the replacement invoices.
11) If the supply of goods or services is tax-exempt or if the buyer is liable for VAT under the reverse-charge mechanism, or sections 2a, 8a or 9 of the VAT Act, the reason for exemption or buyer's liability for VAT should be set out on the invoice, or alternatively a reference to the appropriate provision of the VAT Act or the Sixth Directive of the Council of the European Community (77/388/EEC):
If the supply of goods or services is tax-exempt, the invoice must display the reason why this is so. Likewise, if the liability for VAT for the sale lies on the buyer, the invoice must contain a statement of this fact. The National Board of Taxes recommends the following phrases to be used for these purposes. The instructions and recommendations show the phrases in three languages, in the following order: Finnish, Swedish and English:
Supply under zero rate of VAT : ”Alv 0 % / Moms 0 % / VAT 0%”. In addition, a description of the commodity sold must be included such as ”Newspaper, subscribed”, or alternatively, the invoice should refer to the relevant provision of the VAT Act: This is spelled out in the following way: ”AVL 55 § / MomsL 55 § / VAT Act, § 55”.
The phrase used to denote export sales is:
”Alv 0 % veroton myynti Yhteisön ulkopuolelle / Moms 0 % skattefri försäljning utanför gemenskapen / VAT 0%, Tax-exempt sale outside the EU”.
For supplies of goods within the Internal market of the European Community, both seller's and buyer's VAT numbers should be set out in the invoice. Possible phrases for displaying the fact that a sale is exempt from tax are: ”Alv 0 % yhteisömyynti / Moms 0 % gemenskapsintern försäljning / VAT 0 % Intra-Community supply”.
In connection with triangulation schemes within the Internal market, the first seller drafts invoices in the usual way with his VAT number, the buyer's VAT number and a reference to selling goods within the Community. After that, the first buyer i.e. the second seller must set out not only his own VAT number and the VAT number of the second buyer but also a reference to the triangulated situation such as ”Kolmikantakauppa / Trepartshandel / Triangulation”. In this scheme, the second buyer is liable for VAT for the supply effected by the first buyer (See Section 2a of the VAT Act).
If goods are transported out of the European Community, and the transport entrepreneur issues an invoice for his services, the fact that this service is exempt from tax can be stated using the phrase ”Alv 0% Tavaran kuljetus Yhteisön ulkopuolelle / Moms 0% Varutransport utanför gemenskapen / VAT 0%, Transport of goods outside the Community”.
If a business entrepreneur is taking over an entire business or a part of it, the previous owner can sell the goods and services involved to the new owner tax-free, because of the transfer of title. Another example of a special tax-free transfer is selling off goods and services of a business to a bankruptcy estate. The transfers are tax-free only if the new entrepreneur actually does continue to use the goods and services for the purpose entitling him for the exemption, so a transfer of real property or buildings within the meaning of Section 33 of VAT Act is not taking place. For drafting the invoice, this type of transfer would necessitate a reference to the special transfer, e.g. ”Alv 0 % AVL 62 §:ssä tarkoitettu myynti / Moms 0 %, i MomsL 62 § avsedd försäljning / VAT 0%, supply referred to in § 62, VAT Act”.
If the seller is rendering services ordered by a local municipality, relating to tax-exempt health care, medical care and social welfare, the invoice should contain the words ”Veroton AVL 130a §:ssä tarkoitettu myynti / Momsfri i MomsL 130a § avsedd försäljning / Exempt supply referred to in § 130, VAT Act”.
In situations where the liability for VAT lies with the buyer, the seller must state this fact using the words: ”Ostaja verovelvollinen / Köparen momsskyldig / Reverse charge ”.
If taxable investment gold is being supplied, the buyer, not the seller, is liable for VAT. This also concerns supplies of matter containing at least 325 thousandths of gold and semi-finished products, if the buyer is registered for VAT (See § 8a of the VAT Act). The invoices must spell out the fact that the buyer is liable for VAT. For more information on selling investment gold, see the bulletin no 16/1999 of the National Board of Taxes called 'Sijoituskullan sekä kulta-aineksen ja kultapuolivalmisteen arvonlisäverotus / Moms på investeringsguld, guldmaterial och halvfärdiga guldprodukter'.
Goods or services entitling for a partial deduction only because of their use: When goods/services of this category are being sold to someone, VAT is payable proportionally, i.e. only for the part that has not qualified for deduction. Such an invoice must spell out the amount of VAT to be paid, and the words ”Osittain vähennyskelvottomassa käytössä ollut tavara/palvelu / Varan/tjänsten har delvis varit i bruk som inte berättigar till avdrag / Goods/services were used partially for purposes not qualifying for deduction”.
12) The details necessary to identify the goods as a new means of transport, if supplied to a buyer in another Member State, to furnish sufficient information as referred to in § 26 d, paragraph 1 of the VAT Act:
This provision of the VAT Act refers to means of transport such as motorized land vehicles intended for passenger or goods transport, with engine displacements exceeding 48 cc, or power exceeding 7.2 kilowatts, vessels exceeding 7.5 meters in length, and aircraft with maximum permissible take-off weight exceeding 1.550 Kg.
For more information on the concept of 'new means of transport' as defined for the purposes of the VAT and as intended for intra-Community supplies or acquisitions, please see the bulletins no. 179 and 180 of the National Board of Taxes. The names of these Finnish/Swedish bulletins are, respectively "Ohje arvonlisäverovelvollisille uusien kuljetusvälineiden arvonlisäverosta / Anvisning för momsskyldiga om momsen på nya transportmedel" and "Ohje yksityishenkilöille EU-maista ostettujen uusien kuljetusvälineiden arvonlisäverosta (autot, veneet ja lentokoneet) / Anvisning till privatpersoner om moms på nya transportmedel (bilar, båtar och flygplan) som köpts i andra EU-länder.
The sales invoice of a new means of transport should contain the following facts: Date of supply, date of putting the means of transport into service, displacement of the engine, or power of the engine, and accumulated kilometers. If a vessel is being sold, the required facts are: Date of supply, date of putting the means of transport into service, accumulated hours of sailing. Correspondingly, for aircraft: Date of supply, date of putting the means of transport into service, accumulated hours of flying.
13) If certain goods are being supplied and the supply is governed by § 79 a of the VAT Act, a reference to the application of this procedure or to the relevant Article of the Sixth Directive should be included in the invoice:
If seller is supplying second-hand goods, works of art, antiquities or collectibles and the margin scheme is being applied, the invoice must contain a reference to the margin scheme. Moreover, no amounts of VAT are to be spelled out on the invoice.
For more information on the margin scheme, see the bulletin tavaroiden sekä taide-, keräily- ja antiikkiesineiden marginaaliverotus / Marginalbeskattning av begagnade varor samt konstverk, samlarföremål och antikviteter som tillämpas i momsbeskattningen.
Please note that if seller is applying the procedure of § 79a of the VAT Act, buyer is under no circumstances entitled to deduct the VAT that seller pays because of his margin.
14) When supplying travel agency services governed by § 80 of the VAT Act, a reference to the application of this procedure or to the relevant Article of the Sixth Directive should be included in the invoice:
If seller applies the special scheme for travel agents and tour operators within the meaning of § 80 of the VAT Act, seller must refer to the use of the scheme on the invoice. The National Board of Taxes recommends this indication: ”Matkatoimistopalvelu, AVL 80 § / Resebyråtjänst, MomsL 80 § / Travel agency services, § 80, VAT Act”.
When seller applies the procedure referred to in § 80 of the VAT Act, buyer is entitled to deduct the VAT paid by seller off the margin, on condition that the procurement is being made for the purposes of taxable business activity.
15) If seller of investment gold opts for taxation of the sale within the meaning of § 43 c of the VAT Act, the invoice must display this accordingly:
For more information on sales of investment gold, see bulletin 16/1999 of the National Board of Taxes called 'Sijoituskullan sekä kulta-aineksen ja kultapuolivalmisteen arvonlisäverotus / Moms på investeringsguld, guldmaterial och halvfärdiga guldprodukter'. See section 7 of the bulletin for details concerning invoices.
16) If an earlier invoice is being amended, a reference to the earlier invoice:
If seller issues a new invoice to make changes, corrections or amendments to an earlier invoice, seller must include an unmistakable reference to the earlier invoice in the new invoice. This requirement concerns all situations of amending an earlier invoice. It is important that the reference shown on the new invoice is as unambiguous as possible.
The reference can simply consist of the invoice number. If the new invoice concerns the supplies made during a certain period of time, the reference can spell out the time period concerned. This method is recommended for corrective invoices used for the purpose of granting a yearly rebate.
If a business entrepreneur issues an invoice to grant a credit for returned packages, containers, wrappings or some other type of tare, which originated from the business entrepreneur himself, the invoice must make reference to the original invoice(s).
From the point of view of the buyer, this reference is very important because it helps identify the deductions made that are now affected because a new, corrective invoice is processed.
Simplified arrangements for issuing invoices
Subject to certain restrictions, the Value-added tax Act allows invoices to be issued under simplified arrangements i.e. without the express requirement to set out all of the above details on the invoice or receipt. Simplified arrangements are applicable to smaller invoice amounts and situations where conventions of a particular sector or technical requirements make for difficulty in taking account of all the required details.
However, the simplified arrangements are never applicable to intra-Community supply of goods (see Section 72a of the VAT Act), resales carried out by a taxable person who has made intra-Community acquisitions (see Section 79g, paragraph 3 of the VAT Act), distance sales of goods (see Section 63a) and supplies of goods to be transported from Finland to another Member State for installation or assembly by the seller.
For supplies other than those listed above, the simplified arrangements apply, involving a smaller amount of detailed specification on the invoices when the total amount of the invoice is no more than € 1,000. As of 1 January 2006, this limit will be € 250.
In addition, the simplified requirements also concern retail sales and other similar sales where almost all the buyers are private individuals. Under these circumstances, the simplified arrangements can be in force even if the total amount of the invoice (total amount incl. VAT) exceeds €1,000 (€250 as of 2006). Examples of sales activities comparable to retail trading are kiosk sales, hairdresser's services or the services of an undertaker's office (funeral home).
Furthermore, the simplified arrangements are sufficient for invoices for catering services and passenger transport services, unless the services are being supplied resale.
Similarly, the simplified arrangements are considered sufficient in respect of printed receipts from various vending machines and parking meters.
Description of Simplified Arrangements
When invoices are issued under simplified arrangements, they should include the following particulars:
- the date of issue,
- the seller’s name and VAT number (Business ID),
- identification of the type of goods (including quantity) and services supplied,
- the VAT due, specified by the rates of VAT chargeable, or alternatively, the price(s) exclusive of VAT per rate of VAT.
In other words, the simplified arrangements make it possible to set out the prices including the VAT on the invoices, leaving out the net amounts, on condition that the amounts of VAT due are duly spelled out. It is not necessary to mention the price without VAT.
Other requirements of setting out detailed information in reports and memorial vouchers
Not only invoices but also other documents that bear significance on the VAT position of a taxable person must include a sufficient amount of detailed information under the provisions of the Value-added tax Act.