VAT instructions on new means of transport

The guidance is currently being updated.

This is an unofficial translation. The official instruction is drafted in Finnish and Swedish languages.

The guidance has a number of terminology changes because of the amendments of tax rules coming into force on 1 January 2017. New terminology replaces the terms used so far because the Act on Assessment of Self-Initiated Taxes (Oma-aloitteisten verojen verotusmenettelylaki) and the Act on Tax Collection (veronkantolaki) come into force, and because the act governing the Tax Account has been repealed. The guidance has also been updated with current VAT rates.

Taxation of new means of transport

By derogation from the general rule, VAT for a new means of transport is always payable in the country where the new means of transport is being used. If you, as an individual, purchase a car in another EU state and then bring it to Finland, the seller has the right to sell the car to you without VAT, but you will have to pay VAT and Finnish car tax in Finland. Please see page of the Finnish Tax Administration for more information on such . The present page concerns purchases of new means of transport by VAT liable persons, and the supply of new means of transport.

Definition of ‘new means of transport’

In value-added taxation, ‘means of transport’ refers to the following commodities intended for transportation of passengers or goods:

• motorized land vehicles with engine displacements exceeding 48 cc or power exceeding 1,7 kilowatts
• vessels exceeding 7,5 meters in length
• aircraft with maximum take-off weight (MTOW) exceeding 1 550 kilograms.

A means of transport is ‘new’ if:

• a motorized land vehicle is supplied less than six months after the date of first entry into service or has travelled less than 6 000 kilometers
• a vessel is supplied less than three months after the date of first entry into service, or sailed for less than 100 hours
• an aircraft is supplied less than three months after the date of first entry into service or flown for less than 40 hours.

For being viewed as ‘new’, it is sufficient that either one of the alternative requirements listed above is fulfilled in each case.

Example 1: A sailboat is deemed a new means of transport if it was put into service six months ago and its accumulated sailing hours, motor-driven hours included, is 80 hrs.

Example 2: The authorities will no longer regard a car as a new means of transport if was put into service eight months ago and its kilometer reading is 10 000 kms.

Definition of ‘putting into service’

The established practice is to consider the first date of registration as the date of putting a means of transport into service.

If the legal obligation of motor vehicle registration does not concern the means of transport, the date of putting it into service will be the date of delivery by its manufacturer to its first buyer, or the date when the manufacturer started using the means of transport for display, testing and presentation purposes.

Buying a new means of transport

A VAT liable business enterprise in another EU member state is allowed to sell goods as VAT exempt to a Finnish VAT liable business enterprise. The Finnish enterprise must pay VAT for these purchases on the usual monthly due date for Finnish VAT. If the nature of purchase justifies a deduction of the input VAT, the enterprise can deduct the amount during the appropriate month.

If your VAT liable Finnish enterprise purchases a new means of transport as described above, the Tax Administration will treat this purchase as a normal intra-Community purchase with the usual VAT obligations of intra-Community trading. The rate of VAT is 24% of the purchase price of the new means of transport. For the purposes of VAT computation, the purchase price includes all the amounts of money that the seller has invoiced you. The only permitted adjustments to the purchase price are direct discounts or credits. You must pay the VAT on the usual due date of the calendar month immediately following the month of purchase. However, if you received the seller’s final invoice during the month of purchase, you must pay the VAT on the due date relating to the same month.

You should report the purchase of a new means of transport in the VAT return under ‘Purchases of goods from other EU Member States’  .

However, if the rules of the Finnish VAT Act would permit the seller to sell a boat or aircraft as VAT exempt, you do not have to pay VAT for the intra-Community purchase. Your company should only report the purchase as an intra-Community acquisition in the VAT return, without paying VAT.

It is permissible to sell boats exempt from VAT, if their maximum hull length is 10 meters or more, and if their structures are not primarily designed for recreational or sporting use. It is permissible to sell aircraft exempt from VAT, if the buyer is a business enterprise using them in international commercial air traffic.

Selling new means of transport

If you are liable for VAT in Finland and you supply a new means of transport to buyers in other EU member states, this supply is always exempt from VAT, regardless of the VAT status of the buyer.

Procedure

When selling a new means of transport, you should hand an invoice to your buyer and set out the invoice details as required in VAT taxation. Furthermore, on the invoice you should mention your own VAT number and the buyer’s VAT number if he has one.

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 kilometres. 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. Example: “This boat was put into service on ‘dd-mm-yyyy’ and it has sailed ‘x’ hours”.

In addition, you can refer to Article 2, paragraph 2a of the VAT Directive.

If you and your customer are in Finland when you hand over the means of transport to him, you must request a written proof that he indeed will export the means of transport to another EU member state. The written proof must show an exact documentation as to when and how the exportation will take place or has taken place.

Filling out VAT return

Supply to a VAT liable person of another EU member state

Report supplies of new means of transport to other member states as intra-Community supply, i.e. use the field ‘Sales of goods to other EU Member States’ in the VAT return. Include the supplies in the VAT Recapitulative Statement.

Supply to non-VAT liable person in another EU member state

On the VAT return, report supplies of new means of transport to non-VAT liable persons under ‘Sales taxable at zero VAT rate’.

In addition to the above reporting, you should file a VAT recapitulative statement relating to the supply of new means of transport. The VAT recapitulative statement is filed for each month. The due date is the 20th of the next calendar month. VAT recapitulative statement is filed electronically through Ilmoitin.fi. The Excel-file used for filing is available at the Ilmoitin.fi-site.

Regarding time periods in accounting, you should report a supply to a non-VAT taxpayer of a new means of transport in the same way as an intra-Community supply: during the calendar month immediately following the calendar month of delivery. Similarly, if you as the seller have issued an invoice to your non-VAT paying customer before that time, you should report the supply during the calendar month of delivery.

Refunds

If a VAT liable business enterprise sells a new means of transport to a buyer in another EU member state, and this means of transport was not used for VAT-deductible purposes during the seller’s holding time, the seller is entitled to a refund of the input Finnish VAT paid at the time of first purchase. An example of such a means of transport is a boat used for entertainment and representative purposes or a passenger car not used exclusively for the business of an enterprise. In addition to VAT liable enterprises, this refund can also be available for an individual, i.e. a non-VAT liable seller.

The right for this refund arises when the seller has delivered the new means of transport to the buyer. The maximum limit for the refund is the equivalent amount that the seller would have had to pay as VAT if the sale had been considered a taxable supply.

The application deadline for this refund is one year after the end of the calendar year when the right for the refund came about.

A VAT liable enterprise should submit a freely formulated written refund application to the Uusimaa Corporate Tax Office. The application should be sent to the following address:

Uusimaa Corporate Tax Office
PO Box 30
FI-00052 Vero