Refund of VAT to Finnish businesses from other EU countries

Starting 1 January 2010, a Finnish VAT liable business submits the application for refund of VAT to another EU country through the electronic portal maintained by the Finnish Tax Administration: ALVEU service. The ALVEU service was available in early January 2010.

The new electronic claim procedure applies to applications made after 31 December 2009. These applications can therefore include taxable purchases made during 2009. The application must be made no later than nine months after the end of the calendar year following the application period. If the application relates to a time period during 2009, the last date to submit the application will be 30 September 2010¹.

The current paper-based system can no longer be used as of 1 January 2010. The amendment is based on Directive 2008/9/EC.

The applicant submits the refund application through ALVEU service. The Katso ID is used for signing in. A sole trader/self-employed entrepreneur may use bank User ID and Password, or a HST card issued by the Population Register Centre to sign in to tunnistus.fi.

What qualifies for a refund

Who cannot use ALVEU service?

In connection with the submittal of the application, the Tax Administration will check that the applicant is VAT liable and will communicate the information together with the application to the other EU country. A certificate on the nature of the applicant’s business is no longer attached to the application.

If the business’ place of residence is Åland Islands, the ALVEU service cannot be used. Instead, a business from Åland can apply VAT refund from other EU countries by using the 13th Directive (86/560/EC) procedure. The application is made on the form issued by the Member State of refund.
To the application must be attached a certificate on the VAT liability and the original invoices. The certificate can be requested from the Tax Office in Mariehamn

Right to VAT refund

A taxable person registered as VAT liable in Finland who acquires goods and services in another EUcountry
may get the VAT included in the purchase prices of the goods and services refunded from
the country of purchase on application. Also VAT on import may be refunded.

Finnish taxable persons are eligible for refund for goods and services purchased in another EU country
and for VAT on imports to another EU country if the following requirements are met

• during the refund period the taxable person is not VAT registered and has no obligation to
  register for VAT in the country of purchase;
• during the refund period, the taxable person does not have a permanent establishment or a
  place of business in the country or purchase;
• during the refund period the taxable person has not supplied any goods or services deemed to
  have been supplied in the country of purchase, with the exception of the following transactions:
  • the supply of certain exempted transport services and services ancillary thereto
  • the supply of goods and services to a person who is liable for payment of VAT (reverse charge).

The VAT on the purchases refundable if

• the business that the applicant carries on in his home country would in the country of purchase be VAT liable or give the right to refund if carried on there; or
• the purchase relates to a supply of goods and services when the buyer is VAT liable.

The right to a refund corresponds to that of businesses liable for VAT in the country of purchase.

When the taxable person in Finland carries out both transactions giving rise to a right of deduction and transactions not giving rise to a right of deduction, only such proportion of the VAT which is attributed to the transactions giving rise to deduction is refunded (Article 6 Directive 2008/9/EC). For example an employee of the taxable person has been on a work trip and during that has had negotiations relating to both the taxed business (consultancy) and exempt business (health care). In such case the hotel invoice and taxi fare has to be divided into two parts in accordance how the acquisitions relates to the taxed and exempt business. This allocation should be made for each invoice.

Due to the VAT margin scheme of travel agency services, Finnish travel-service companies/travel agencies are not entitled to refunds for purchases of goods and services, for direct benefit of the passengers, made in the name of the travel-service company/travel agency from other business enterprises in other EU countries.

General on the VAT refund procedure

The application must be made no later than nine months after the end of the calendar year following the application period. The last date to submit the application is 30 September.

The smallest refundable amount for the entire calendar year is EUR 50 - and EUR 400 euro for a quarter of the year - or equivalent amounts in the currency of the Member State of refund.

The application must cover a period of at least three consecutive months within one calendar year. Please check the website of the tax authority in the Member State of refund to know any other requirements or constraints set by the tax authority of that Member State.

It is still possible to use a representative/agent. In such a case a power of attorney that specifies the representative’s competence should be attached to the application. Because the Member States of refund may have different requirements on the representative, you should familiarize yourself with any demands set by the Member State of refund.

The Member State of refund may require the applicant to submit scanned invoices with the refund application where the taxable amount on an invoice is EUR 1 000 or more (or the equivalent in national currency). Where the invoice concerns fuel, the threshold is EUR 250 (or the equivalent in national currency).

For example invoices or import documents need not to be attached to an application to Sweden and Austria.

Transport company’s (haulier) refuels paid with domestic payment card

In value added taxation the deduction is made on the basis of an invoice/a receipt issued by a VAT liable supplier.

Previously, before to the new invoicing rules which came in force on 1 January 2004 in value added taxation the refunding countries usually accepted VAT refund for a summary invoice issued by the petroleum company in the applicant’s home country and the invoice showed that the refueling had taken place in the refunding country i.e. the receipts issued by the actual supplier or receipts printed from the fuel vending machine did not have to be attached to the application. The invoicing rules that took effect in the EU countries as of 1 January 2004 changed the practice. In spite of the change many refunding countries have still continued to accept refund either with the summary invoice only, or a summary invoice to which the receipts were attached.

As of 1 January 2010 the invoices are no longer attached to the application and therefore the refunding country has no written document from which it can check in which country the purchase was made. In the refund directive 2008/9/EC is stipulated that, except in the case of importation, the VAT identification number or tax reference number of the supplier, as allocated by the Member State of refund in accordance with the provisions of Articles 239 and 240 of VAT directive 2006/112/EC has to be stated in the application.

Because of the above-mentioned in the electronic system it is not possible to apply for refund for a summary invoice issued by a Finnish petroleum company, instead you should in the application specify the receipts issued by the foreign fuel supplier or the receipts printed out from the fuel vending machine.

More information

The EU Commission has on its’ website published document “Vademecum for the electronic refund procedure to taxable persons not established in the member state of refund but established in another member state”. Click link Vademecun (http://ec.europa.eu/).

Detailed information on the refund procedure in each EU country will be available on the tax authority’s website. There is a link to the websites on www.tax.fi.

Please check the website of the tax authority in question: e.g. the language to be used in the application, currency, the codes with which the nature of the goods and services shall be described, any restrictions in the number of applications per year, the representative’s competence and if invoices need to be attached to the application.

Application for refund of value added tax

An application will be considered to have been submitted only when all the information has been given as decreed in Articles 8, 9 and 11, Directive 2008/9/EC, required by the EU country of purchase. In Article 8 it has been decreed what information should be given on the applicant and the invoices. In Article 9 it has been decreed how the purchases are described (codes). In Article 11, it has been decreed how to describe the business for which the purchases have been made.

Submitting the application through the ALVEU service

Signing in

To sign in to the service requires Katso ID with the role VAT Refund Applicant. A sole trader, who makes the application personally, can sign in through www.tunnistus.fi using his/her personal Network banking ID, or alternatively a microcip ID card. The applicant signs in to the ALVEU Welcome page.

If the tax authority in the country of refund accepts that an agent is used, the taxable person may authorize the agent to submit the application in the ALVEU service. The authorization is made in the Katso service. In the instructions of the tax authority in the country of refund one can check what are the requirements are for using an agent.

ALVEU is meant and designed as relating to the client (applicant). Therefore the clients information cannot be found under the agent’s information. Even in a case where the agent manages the submittal of the refund application on behalf of the taxable person, the taxable person’s contact details i.e. the taxable person’s e-mail address, street address, postal code and city must be entered in Client Information. It is not allowed to enter the information on the agent here.

Submitting a refund application

The submission of the application in ALEU service consists of four steps.

Step 1: Client information

Basic sign-in information is directly retrieved from the database:

• Business ID, name, country

Information based on your input in your first ALVEU session:

• E-mail address
• Street address
• Postal code
• Place (city)
• Phone number
• Line of business: Describe with NACE code² the business activity for which the goods and
  services are acquired. The business activity code can be found eg. in BIS. Leave out
  the last number from this 5 digit code.

The Information provided column will show your own client information, if you have previously submitted a VAT refund application and filled out the electronic form with your details. Press Edit to go to Specification page to make any changes or additions.

Step 2: Basic information on the application – Create New

Basic information on the application

• VAT refund period
• Selection of Country of VAT refund
• Selection of language for writing any free-text descriptions. The service provides you with
  the languages accepted by the selected country.

Description of the business activity, for purposes of which goods/services were purchased

• Description of the business activity. It is possible to specify the business activity given in step 1 Client information.
  • Here you can even more precisely specify the purpose for which the purchases were made. Choose the activity with NACE codes.
• In section ”We hereby state that during the above mentioned time period in the EU country of refund...” Choose one or two of the given alternatives.
  • If, during the refund period, the taxable person has not delivered goods or rendered taxable services, in the country of refund, tick the first box. For example, an employee of the taxable person has been on a congress, seminar or business trip in the country of refund. The invoices are usually hotel invoices, taxi fares and hire of car.
  • If the taxable person has delivered goods, or if you only have rendered services for which the buyer is liable to pay tax, tick the middle box. In these cases, the reverse charge system will apply, and the buyer has the obligation to pay the VAT instead of the seller i.e. the applicant.
  • If the taxable person only has rendered tax-exempt transport services, or services ancillary thereto in the country of refund, tick the last box. The purchase is usually fuel for longdistance lorries.

Agent information

Information is given only when an agent is used and this is accepted by the country of refund.

• Agent’s ID and type of ID
  • Type of ID
    • VAT number: Choose this if the agent has a Finnish Business ID (Y-tunnus) and is VAT liable in Finland. This is also chosen when the agent is a foreign company and has a VAT number in its home country.
    • Taxpayer Identification Number, TIN: Choose this if the agent is a foreigner/ foreign company and has no VAT number in his home country
    • Other ID: Choose this if the agent has a Finnish Business ID (Y-tunnus) but is not VAT liable in Finland or if the agent is a private person
• Agent´s name
• Country
• Phone number
• E-mail address
• Street address
• Postal code
• Place (city)

Bank account in an EU country

The account number to which this VAT refund should to be paid is stated here.

• Name of account holder
• Role of account holder
• The applicant’s own bank account
• Agent´s bank account, when the country of refund accepts that the refund is paid to an agent
• IBAN account number
• BIC code
  • Unit of currency

Step 2: Basic information on the application – Select a previous request to make changes

In Step 2 you can make changes or additions, by selecting a previous refund application, which you have either already submitted or have not yet submitted but saved as incomplete.

The refund application consists of the specified invoices. Therefore you cannot add new invoices to a submitted application. A new application can be made for forgotten invoices. In this case, the rules on minimum refundable amounts (50 EUR/ 400 EUR) will apply, and so will the rules of the
refunding country as to whether several applications for the same time period are accepted. 

Some of the recorded data in an already submitted application may be changed. For example, you can correct the code describing the purchase. The number and the date of the invoice cannot be changed. It is also possible to delete an invoice from an already submitted application. If incorrect invoices have been recorded, they may be deleted also. Press Submit to send the edited version of the application. The tax authority in the refunding country handles the original and the versioned application according to its own procedures.

Use the following criteria with the Search feature:

• Refund period
• Country of refund
• Request number

The deadline for submitting the complete application is 30 September. If you after the deadline notice that information is missing or corrections should be made, ALVEU service allows information to be completed and corrected, but will the country of refund take them into account is decided by the country of refund.

Step 3: Specification of invoices/documents

Add invoices or other import documents

The system will automatically assign a sequential number to each invoice or other document relating to importation.

Write the following details:

• Invoice no / document no
  By Invoice number is meant the number that the foreign seller has issued to the invoice/
  receipt. You may not for example state the number of summary invoice from the Finnish petroleum company instead all receipts from the foreign fuel supplier has to be specified.
• Invoice date / document date
  If an application to Sweden concerns the year 2009 and it contains an advance invoice that is dated 2008 and refund has not been applied for it and the invoice was paid in 2009 you should enter the payment date instead of the date of the invoice.
• Description of the import document, written in the pre-selected language
  • If no sequential number exists for the import document, please give a free-text description to identify the document. Use the previously selected language.

Add specification details

The information given in the previous section is pre-filled.

The following information is given:

• Use of simplified invoice details – yes or no
• Seller’s name, VAT number or TIN, country, street address, postal code and place (city). If an application is made to Sweden you may for simplified invoices which do not show the Swedish seller’s address in section address enter “unknown”. An application for refund of VAT on toll fees for passage via the Öresund Link is submitted to Sweden irrespective of whether it is invoiced by Danish or Swedish company.
• Description of the category of goods or services purchased (with codes and sub-codes) or a free-text description. ³Use the previously selected language
  • The service only provides you with the codes used by the selected country of refund.
• Price exclusive of VAT
• Amount of VAT
• Deductible portion, expressed as a percentage
  • State the proportion of the purchase that was used for deductible transactions. If only a part of the purchase was used for deductible transactions, then this will be the only part that entitles you to refund. The proportion may be between 0,01-99,99. If the complete purchase
    has been used for deductible transactions, the section can be left empty. ALVEU will consider a blank space 100 % deductible.

• Requested amount of VAT refund (= VAT on invoice or import document x percentage
  above).
• Unit of currency

    Invoices/documents and Power of Attorney should be attached

The combined maximum size of the attachment file or several files is 5MB. If the size is exceeded, please check from the instructions issued by the tax authority in the country of refund or the above mentioned Vademecum how to proceed.

• Name of file
• Type of file
• Permitted file types: Tiff, Jpeg and Pdf. Pdf format is recommended.
• Description of file contents

Step 4: Submittal

The service has compiled a summary of the given application details. If something needs to be amended you can still go back and amend given details.

Note. An application will be considered submitted only when all the information, as decreed in Articles 8 (details on the applicant and invoices), 9 (the codes describing the purchases) and 11 (the NACE code by the nature of business for what the purchases where made is described) Directive
2008/9/EC required by the EU country of purchase has been given.

When the application is submitted to the Tax Administration, the Tax Administration will without delay send a notification on a successful reception. After this the Tax Administration will forward the application to the country of refund.

If the taxable person’s VAT liability was not in force during the refund period the Tax Administration will not forward the application to the other EU country and the applicant will be sent a notification on this. Furthermore the Tax Administration will send a decision by letter. This decision can be appealed against.

What else in ALVEU service?

Step 1: Page Client information – Messages link – Here you will find notifications on receipt and decisions on applications if the country of refund sends them electronically to the Finnish Tax Administration. Because many countries of refund send the notification of receipt and some countries also the decision so that it is only to be displayed in the portal in the country of establishment, it is worth while to check incoming messages. This ensures that time to lodge an appeal is not lost.

Steps 2 and 3 – on the bottom of the page you will find Save and Quit. You can interrupt and save the application as incomplete and return later and continue. When you return to ALVEU service to continue to complete the application you will find the incomplete application by going via step 1 bottom of page Amend earlier application to step 2 Basic information on the application – Choose application to be amended. For example, if you enter the EU country as search key, you will see all the incomplete applications that you have made to this EU country.

You can browse and view already submitted applications. Please be careful that you do not submit or save them as incomplete by mistake. To browse already submitted applications, press Change a previous request on the bottom of page Step 1 - Client information. All the applications submitted to that date will be shown. Press Edit to view an application. The page Step 2: Basic information of the application will open Press Go to Specification of invoices/documents, at the bottom, to view the invoices recorded in an application. The invoices are listed.

Almost all pages can be printed out on paper by pressing Print version.

Processing of the application in the country of refund

The country of refund receives the refund application and sends a notification of receipt. The way by which the tax authority in the refunding country notifies that it has received the application varies. The tax authority can send the notification or receipt by e-mail to the e-mail address stated in the application, electronically via the Finnish Tax Administration or by letter. It is also possible that the tax authority sends an e-mail and an electronic message in which case there will be two notifications. If the tax authority of the refunding country sends the notification of receipt electronically to the Tax Administration, the Tax Administration will place the notification in ALVEU service. If the notification of receipt is delayed please contact the tax authority in the refunding country.

The processing time is 4-8 months of the receipt of the application. If the tax authority considers that it does not need any additional information it should make the decision within four months. If additional information is requested, the decision should be made in 6-8 months. If the tax authority
in country of refund does not observe the given deadlines, interest will be due to the applicant.It is possible for the tax authority in the country of refund to make a partial decision. In this case the refund is paid in parts.

Information on the VAT refund procedure

Information on the refund procedure may be obtained from Uusimaa Corporate Tax Office

Visiting address: Opastinsilta 12 C, 00520 Helsinki
Postal address: P.O.Box 34, 00052 VERO
www.tax.fi/alveu
Phone +358 20 697 063
Telefax +358 9 7311 4895

Because the procedure and legislation in the different EU countries differ you will find instructions on the website of the tax authority in each country of refund.

Links to other tax authorities websites are available on www.tax.fi.

Furthermore the EU Commission has published document “Vademecum for the electronic refund procedure to taxable persons not established in the member state of refund but established in another member state” on its website. The Commission has collected information from the EU countries on the refund procedure and the contact details of the refund authority. Here is a link to website Vademecun (http://ec.europa.eu/).

The EU Commission as also published document “Value added taxation in the Member States of the European Community”, where is information on the rule on simplified invoices in each EU country.

Enclosure

Frequently asked questions (FAQ) about ALVEU service

Q: We are a VAT reclaim agent and we have customers all over the world. We now need to register for access to the Finnish Portal so that we can submit electronic claims on behalf of our Finnish customers. Please could you advise if we need to go through a different registration process for online access?

A: It is possible for a Finnish applicant to use a foreign representative/agent if the refunding country has approved the use of a representative/agent. To be able to use the ALVEU service a Katso ID is needed. Please, contact the Uusimaa Corporate Tax by phone +358 20 697 063 or by submitting a support request in the ALVEU service and they will send you information. ALVEU can be found www.tax.fi/alveu.

Q: Does the ALVEU service have any ability to import invoices into the system. My business has a lot of invoices and manual input is very difficult?

A: The ALVEU service is built in a way that only through a manual input of the invoices will the application have the correct form. If the invoices are not typed in separately, the program will send an application where the applied refund is 0 (zero) EUR. When entering data, please remember to save the draft every now and then if you have many invoices. The possibility to upload files has been discussed but unfortunately this, if possible at all, cannot be realized in the near future.

¹The deadline for application relating to 2009 postponed to 31 March 2011.

²TOL 2008 is based on the European Union’s classification of economic activities, NACE Rev.2.

³The Commission Regulation (EC) No 1174/2009 contains the list of the codes which are used to describe the
purchases.