VAT registration of foreigners in Finland

Validity
In force until further notice

The guidance is being updated. Changes effective from the beginning of 2017 have been made to the filing and paying of self-assessed taxes.  Read more about self-assessment

As of 1 January 2016, an upward adjustment comes into force of the threshold values of small-scale operations in VAT taxation, determining the VAT relief to be granted. This guidance contains the old thresholds.

The new threshold for a business to be liable to pay VAT is going to be €10,000 of net sales, and the new maximum threshold for VAT relief, €30 000.  

1 Introduction

This bulletin contains instructions on VAT registration. In many situations, registration is required of foreign taxable persons who conduct business in Finland. This bulletin also includes complete lists of documents that need to be submitted in various situations.

Value-added tax (VAT) is levied on the selling of goods and services in the form of business operations in Finland even if the seller is a foreign, not Finnish, business entity.

When the seller is a foreigner without a fixed establishment in Finland, the VAT on goods and services sold in Finland is usually reported and paid by the buyer (VAT reverse charge procedure).

Foreigners who conduct business through a fixed establishment in Finland are VAT liable in Finland; they are entered in the VAT register in the same way as Finnish taxable persons and the rights, obligations and other regulations pertaining to Finnish taxable persons apply to them equally.  A foreign seller may be registered, on application, as a person liable to VAT. In some situations, described in the Value Added Tax Act, a foreigner is always liable to VAT in Finland (see chapter 5 below, Foreign business with no fixed establishment in Finland).

Foreigners engaged in intra-Community acquisitions or supplies in Finland, and foreigners who pay VAT because they are buyers of construction services (see chapter 6 below), are subject to the duty of notification.  Foreigners engaged in zero-rate sales – and intra-Community sales is considered zero-rate sales – should register for VAT to become eligible for refunds of the VAT included in the purchases made in Finland.

The National Board of Patents and Registration and Finnish Tax Administration share a joint declaration procedure for business information, the Business Information System, BIS (YTJ), where you can report all your information in one single notice, including Start-up notifications (Forms Y1 to Y3), or Notification on amendments or termination of business (Forms Y4 to Y6). Forms are available for downloading on the BIS website at www.ytj.fi.

A foreign business receives a Business ID (Business Identity Code) when the authorities have entered the start-up notification in the Business Information System. The Business ID identifies the businesses, however, it does not show whether the business is entered in the VAT register or not.

When the foreign business has become VAT registered, the Tax Administration will mail it a registration letter and a set of reporting and payment instructions by post.

When a foreign business registered for VAT engages in intra-Community sales, which requires a VAT number, the business should use the VAT number derived from its Business ID.  The VAT number consist of the two-letter country code FI and the Business ID without the hyphen character. Example: If the Business ID is 1234567-8, the Finnish VAT number is FI12345678.

2 Foreign taxable person operating a trade or business

In value-added tax terminology, ‘foreigner’ means a business domiciled in another country.

The tax domicile of a corporate entity is located in the country specified in the articles of association or by-laws, or where operations are mainly conducted, or from where they are directed.

Tax domiciles of physical persons are considered to be outside Finland if they live elsewhere than Finland and do not stay in Finland continuously.  However, for tax purposes, residence may be considered continuous if its duration is six months or longer.

3 Competent tax office

VAT registration and tax control regarding foreign corporate entities is administered by Uusimaa Corporate Tax Office, and VAT registration and tax control regarding foreign companies, partnerships and self-employed individuals is administered by Helsinki Area Tax Office.

Postal addresses:

Corporate Tax Office of Uusimaa
Haapaniemenkatu 4 D, 00530 Helsinki
P.O.Box 30, 00052 VERO, Finland

Helsinki Area Tax Office
Rajatorpantie 8 A, Vantaa  
P.O. Box 400, 00052 VERO, Finland

The Finnish Tax Administration has a nationwide Telephone Service number for VAT questions, 020 697 014 (standard call rates apply).  If calling outside Finland, dial +358 29 497 014.

4 Foreign business operating in a fixed establishment

4.1 Fixed establishment

Pursuant to VAT Act, a fixed establishment means a permanent place of business where the company conducts some or all of its operations.

The meaning of 'place of business' covers several alternatives including an office, a production plant, a workroom, or machinery and equipment used in the company’s business operations. A place of business can also exist when a company merely occupies a given space on a permanent basis.  It can also be located inside the premises of another company.  

A place of business should be permanent; in other words, it should have a definite geographical location. Nevertheless, a place of business consisting of a plant unit, machinery and equipment etc. needs not be attached to the ground. For example, a company is considered to have a fixed establishment even if it merely sells a service consisting of scheduled transport services in Finland.

For a place of business to make up a fixed establishment, a company has to have a base through which the company operates all or part of its business. This means that the company should have employees — or other persons under the authority of the company — in the country where the fixed establishment is located and those persons should run operations at the permanent place of business.  A fixed establishment exists even if the business operations were highly automated as long as there are employees, in the country of location, seeing to technical maintenance and supervision or taking charge of a similar function.

Interruptions of the operations conducted in a permanent place of business are possible; nevertheless, the operations should be characterized by regularity.  However, it should be noted that renting out real estate and renting out movable property, and the assignment of immaterial rights do not, in themselves, make up a fixed establishment.

Construction, building and installation projects are considered fixed establishments if they last longer than nine months, either in the form of a single project or as several successive projects.  Please be advised that the point in time when the fixed establishment is formed is at the beginning of operations, it is not after nine months have elapsed since starting up.

For the purposes of VAT, a fixed establishment meeting the conditions described above includes:

  • The locations of management, branches, offices, industrial plants, workshops, retail outlets and buying or selling points;
  • Mines, quarries, peat extraction sites and other similar sites;
  • Warehouses, inventories or stocks.

The principal rule is that to transfer goods to a warehouse in Finland (consignation stocks) usually makes the foreigner liable to register either for the duty of notification or liable to register for VAT in Finland.  However, warehouses known as ‘call-off stocks’ do not make up a fixed establishment in Finland. This type of warehouse is inside the buyer’s place of business, and the goods in the warehouse are only delivered for the buyer hosting the warehouse. To transfer goods to such a warehouse in Finland (call-off stocks) does not make the foreigner liable to registration in Finland.

For the purposes of income tax, a warehouse alone does not constitute a fixed or permanent establishment.  Instead, in contrast to the rules regarding VAT, the question of existence of a permanent establishment for income tax purposes is resolved separately on the basis of applicable tax treaty provisions and the Finnish Income Tax Act.

In itself, an existing fixed establishment in Finland does not make the foreigner liable to VAT. To become VAT liable, the company should also carry out its VAT taxable operations from such an establishment. Correspondingly, in itself, VAT registration does not constitute a permanent establishment for the purposes of income tax.

It will not be regarded as a permanent establishment if the foreign business has an office in Finland that is not involved in the actual sales operations of goods and services.  However, if the foreign business has a place or location registered in the Trade Register, from which taxable transactions are carried out as a branch office in Finland, it will be regarded as a place of business and a permanent establishment.

4.2 Documents to be submitted

Any foreign business with a fixed establishment in Finland is under the obligation to register for VAT for selling goods and services in Finland. Submit the following documents:

  1. Start-up notification, and, if necessary, a power of attorney for the signature, and Form 6204 or Form 6206.  Start-up forms (Y forms) are available from local tax offices, the National Board of Patents and Registration of Finland, ELY Centres and at the BIS website at www.ytj.fi.
  2. The foreign equivalent of a trade register extract and a translation thereof in Finnish or Swedish.  It should show the business name, domicile, line of business, accounting period and the names of persons entitled to sign documents on behalf of the foreigner.
  3. Articles of association, by-laws, partnership agreement or other similar regulations or a certified copy of the regulations in question and a Finnish or Swedish translation. However, if the foreign equivalent of the trade register extract listed in item 2 above has been submitted to the Finnish Tax Administration, there will be no requirement to deliver articles of association, by-laws or partnership agreement.

The documents should be delivered to:

PRH-Verohallinto
Business Information System
PO Box 2000
FI-00231 HELSINKI FINLAND

or alternatively, to any local office of the Finnish Tax Administration, the National Board of Patents and Registration and ELY Centre.

4.3 Branch in Finland

A branch means any part of a foreign corporate entity, foundation or trust that carries on a continuous business in Finland, from a permanent or fixed establishment, in the name and for the benefit of the foreigner.

To register its branch in Finland, the foreigner should file a Y1 Start-up form and the Trade Register appendix 3 before the branch commences its operations. Forms and additional information are available on the National Board of Patents and Registration website www.prh.fi. If the foreigner is from a country outside the European Economic Area, also enclose a certified copy of the permit issued by the Finnish Ministry of Employment and the Economy. The European Economic Area consists of EU Member States and Norway, Iceland and Liechtenstein.

Enclose the following documents with the start-up form:

  1. Explanation of opening the branch (e.g. minutes of the relevant board meeting).
  2. Documents showing the appointment of a representative, within the meaning of § 6.3, Trade Act, (e.g. minutes of the board meeting).
  3. List of persons authorized to represent the foreigner, either in the form of a statutory body, or as members of such a body, and explanation of granting the right to sign the business name as well as the manner in which it should be signed.
  4. Foreign equivalent of a trade register extract or other document confirming the legal existence of the foreign corporate body.
  5. Finnish or Swedish-language copy or a legally valid translation of the charter, articles of association, by-laws, rules or other corresponding documents.
  6. For foreigners from outside the European Economic Area, confirmation the Ministry of Employment and the Economy of Finland has issued a permit to set up a branch.
  7. If a physical person is reported for entry in the register, who has no Finnish personal identity code, and whose name has not been included in the foreign equivalent of a trade register extract, the documentation should include proof of identity of this physical person (e.g. a certified copy of his or her passport).

A copy of the minutes of a board meeting of the foreign corporate body usually serves as the evidence of opening the branch, of the appointment of a representative and of granting of the right to sign for the company. The laws of the company’s home country determine how corporations issue the right to sign their corporate name. As for the board of directors or other administrative body representing the company under law, sufficient details are usually included in trade register extract issued by the authority of the company’s home country.

When submitting documents in foreign languages, please enclose Finnish or Swedish translations.

If a foreigner starts a VAT taxable business from a branch that has been entered in the trade register previously, the Finnish authorities should be informed. Use the amendment and termination form (Y4 to Y6).

Regarding the branch, the Finnish Tax Administration makes the relevant decisions concerning VAT and income taxation. The National Board of Patents and Registration handles the issues dealing with the setup and registration matters of the branch.  The Trade Register Office of the National Board of Patents and Registration can be contacted at (09) 693 9500, if calling outside Finland, dial + 358 9 693 9500.

More information, including fees to be collected, is available on the National Board of Patents and Registration website at www.prh.fi.

The documents should be delivered to:

PRH-Verohallinto
Business Information System
PO Box 2000
FI-00231 HELSINKI FINLAND,

or alternatively, to any local office of the Finnish Tax Administration, the National Board of Patents and Registration and ELY Centre.

5 Foreign business with no fixed establishment in Finland

5.1 Registration for VAT liability (standard procedure); registration for VAT on application

Value added tax is levied on the selling of goods and services in the form of business operations in Finland even if the seller is a foreigner and the selling is not conducted from a fixed establishment in Finland. The threshold for VAT liability, €8,500, is not applicable to foreigners with no fixed establishment in Finland.

Buyers of goods and services are liable to pay VAT (reverse charge) when the seller is a foreign business with no fixed establishment in Finland and has not applied for VAT registration in Finland. Nevertheless, as an exception, if the State of Finland is the buyer, the reverse charge procedure does not apply.

Reverse charge procedure for VAT is not applicable in the following situations. Instead, the seller always has to register for VAT in Finland:

  1. The buyer is a foreigner with no fixed establishment and no VAT registration in Finland. (Exception: reverse-charge procedure in the building sector, see 6 below.)
  2. The buyer is a private individual. (Nevertheless, in the case of buying a new means of transport from another EU member state, even individual buyers are liable for VAT.)
  3. Distance sales of goods from another EU member state are taking place to private individuals or comparable buyers in Finland. (See VAT regulations concerning distance selling to Finland)
  4. The services being sold are passenger transport services.
  5. The services being sold involve: entrance permission granted to a business to attend educational-, scientific-, cultural-, recreational-, and athletic events, fairs and exhibitions, or other similar activities; as well as services related directly to the entrance, provided the event is carried out in Finland. Consumer services related to educational-, scientific-, cultural-, recreational-, athletic events, fairs and exhibitions, or other similar activities, as well as organization of these events; provided the activity is carried out in Finland.

Pursuant to VAT Act, a foreign business can become liable to VAT for sales in Finland on the basis of an application subject to the conditions laid down in the Act. Thus, the foreign business may apply for registration as a VAT taxable person, when reverse charge can be applied to the sales; in other words, the buyer (not the seller) would be liable to VAT for the goods and services that the foreign business has sold in Finland.

If the foreign business has no tax domicile and no fixed establishment in any EU country, to qualify for VAT liability there has to be a representative approved by Finnish Tax Administration. The representative should be domiciled in Finland and prepared to take care of the administrative obligations regarding VAT on behalf of the foreign business. Furthermore, Finnish Tax Administration may require a guarantee against payment of the tax. Bank guarantees are usually considered appropriate for the purpose.

The earliest possible time for applicants to be entered in the VAT register is the date on which the Tax Administration receives the application. From this day on, the same rights and obligations will apply to the applicant and other taxable persons alike. Applicants for VAT liability may later terminate their liability by submitting an amendment/termination form to the Finnish Tax Administration. The Tax Administration will remove the taxable person from the register as of the date when the Tax Administration receives the notification, not earlier.

The arrival date of the form is the date of ‘arrived’ stamp, or the date of entry in the register of arrived letters at the Tax Administration, the National Board of Patents and Registration of Finland, ELY Centre, local register office or the letterbox of the Business Information System.

5.2 Documents to be submitted

Regardless of whether the foreign business requests entry in the form of registration for VAT liability (standard procedure), or alternatively, in the form of registration for VAT on application, the following documents are to be submitted to the Tax Administration.

  1. Start-up notification (basic declaration) and a power of attorney issued for the signature if necessary, and Form 6204 or Form 6206.  Start-up notification forms (Y forms) are available from local tax offices, the National Board of Patents and Registration of Finland, ELY Centres, local register offices, and at www.ytj.fi.
  2. The foreign equivalent of a trade register extract and a Finnish or Swedish translation showing the name, domicile, line of business, accounting period and the names of persons entitled to sign documents on behalf of the foreigner.
  3. Articles of association, by-laws, partnership agreement or other similar regulations or a certified copy of the regulations and a Finnish or Swedish translation. However, if the foreign equivalent of the trade register extract has been submitted to the Finnish Tax Administration, there will be no requirement to deliver articles of association, by-laws or partnership agreement.

In the case of VAT registration on application, if the foreign business has no domicile or fixed establishment in an EU country, also the documents listed below under 5.3 are to be submitted.

The documents should be delivered to:

PRH-Verohallinto
Business Information System
PO Box 2000
FI-00231 HELSINKI   FINLAND,

or alternatively, to any local office of the Finnish Tax Administration, the National Board of Patents and Registration and ELY Centre.

5.3 Representative

If the foreign business has no domicile or fixed establishment in an EU country, registration for VAT on application requires that a representative be appointed. The representative’s tax domicile has to be Finland. Finnish Tax Administration approves the representatives.  They should have sufficient skills and expertise to perform the functions of a representative. As a rule, representatives should be entered in the Trade Register. Physical persons are only approved as representatives in exceptional circumstances.

For registration for VAT on application, submit the following additional documents:

  1. If the signature authorizing the Start-up form has originated from the foreign business itself, a commitment letter will be required of the Finnish representative to act as the representative referred to in VAT Act.
  2. Power of attorney duly issued by the foreign business to the representative to act as stipulated in VAT Act, and in this capacity to sign the tax returns and notices required by VAT Act, and a Finnish or Swedish translation of this power of attorney.
  3. The name, address, business ID code and contact information of the representative. If the representative’s line of business is related to something other than accounting and bookkeeping services, proof that the representative is competent to handle the duties of a representative in compliance with VAT Act.

Representatives are responsible for the administrative obligations arising from a foreigner’s VAT liability.  Thus, they should be able to handle the bookkeeping and related tasks themselves. They should keep records of the operations and transactions of the foreign business so as to provide the essential information needed for determining the amounts of VAT. Such records are to be kept safe in Finland for the period defined in the recordkeeping rules of the Finnish Accounting Act.

On request by Finnish Tax Administration, the representative should provide the bookkeeping material of his principal for examination. Representatives are not responsible for payment of taxes levied on foreign businesses.

The representative can be changed. The procedure is to notify the Tax Administration in advance and to present the documents listed above for the new representative.  The Tax Administration should approve the new representatives. If the foreigner or the representative has informed the tax office that the duties of the representative have been terminated, but despite official reminders, the foreigner has not appointed a new representative approved by the Tax Administration, its VAT liability will be deemed ended.

5.4 Foreign business engaging in zero-rate operations in Finland

Business operations with the zero rate of VAT — this means sales of goods and services, exempt from VAT, and involving the right to deduct VAT from relevant purchases. The most frequently occurring situations of zero-rate sales are intra-Community supply (see 5.5 and 5.5.2 below) and export supply.

Other situations involving zero-rate VAT:

  • Subscribed newspapers and periodicals, minimum subscription being one month (§ 55, VAT Act);
  • Sale of an edition of a membership newspaper or periodical to a corporation for promoting the public good (§ 56, VAT Act);
  • VAT-exempt vessels — sale, renting out, chartering and work performed on such vessels (§ 58, VAT Act);
  • Sale of gold to central banks (§ 59.4, VAT Act);
  • Tax-free sales of goods and services within international trade (§ 70 to § 72, VAT Act).

If foreign businesses with operations involving the zero rate in Finland have taxable purchases in Finland, they should register for VAT in Finland in order to receive refunds on the VAT included in the purchases. In this connection, they are not entitled to the special refund to foreigners because they are engaged in zero-rate sales. In these situations, registration for VAT takes place according to the standard procedure, so no representative needs to be appointed.

5.5 Notification duty

The duty of notification – the requirement to submit written notices and information – concerns foreign businesses engaged in intra-Community supply (selling) in Finland, or engaged in intra-Community acquisitions (buying) in Finland, or is a VAT taxable buyer of construction services  with no previous VAT registration (see 6 below). They should be entered in the VAT register for the purposes of this duty.

Since those concerned by the notification duty and VAT taxable persons are treated differently in certain cases, it is vital for the foreign business to specify whether the Start-up form concerns normal VAT registration, registration only for the purposes of notification duty for intra-Community supply and acquisitions, or registration as a buyer of construction services (see 6 below).  When registering for notification duty only, please tick the appropriate box on the form ‘only for a notification duty'.

Foreign businesses with the duty of notification should observe the said duty in Finland, that is, they should file Periodic Tax Returns and/or recapitulative statements. In other respects, they are treated as foreigners, not liable to VAT in Finland.  Fulfilling the notification duty is a precondition for the tax exemption of intra-Community acquisitions and supplies, and also a precondition for VAT deductions associated with purchases of construction services. For more information on the construction sector, see 6 below.

5.5.1 Making intra-Community acquisitions

Foreign businesses making purchases or carrying out transfers of goods in Finland, which are considered intra-Community acquisitions, should observe the notification duty and be registered for this duty in Finland. However, the reverse charge procedure can be applicable to the sales in Finland of this foreign business. For example, reverse charge arises when goods are being resold to Finnish VAT liable companies. Persons with the notification duty, engaged in intra-Community acquisitions, are entitled to refund of the VAT included in purchases made in Finland in the form of the special refund to foreigners (for more information on the conditions for refund of VAT, see Refund of value added tax to foreign businesses established outside the EU and Refund of VAT to foreign business established in another EU country as of 1 January 2010).

5.5.2 Engaging in intra-Community sales

Foreign businesses engaged in intra-Community supplies in Finland are taxed at the zero rate of VAT, and are thus always subject to notification duty. However, foreign businesses having other zero-rated supplies in Finland than intra-Community supplies are not subject to notification duty.

If foreign businesses with operations involving the zero rate in Finland have taxable purchases in Finland, they should register for VAT in Finland in order to receive refunds on the VAT included in the purchases. In this connection, they are not entitled to the special refund to foreigners because they are engaged in zero-rate sales. In these situations, registration for VAT takes place according to the standard procedure, so no representative needs to be appointed.

5.5.3 Documents to be submitted

Before start of operations, those concerned by the notification duty are expected to submit the following documents:

  1. Start-up form and, if necessary, a power of attorney to sign it, and Form 6204e or Form 6206e. Forms (Y forms) are available from tax offices, the National Board of Patents and Registration of Finland, ELY Centres, local register offices and at www.ytj.fi. Those concerned by the notification duty should tick the appropriate box concerning intra-Community sales and acquisitions.

    6206e, Explanation of business conducted in Finland by self-employed individual
  2. The foreign equivalent of a trade register extract, and its Finnish or Swedish translation, including the name, domicile, line of business, accounting period and the names of persons entitled to sign documents on behalf of the foreign business.

The documents should be delivered to:

PRH-Verohallinto
Business Information System
PO Box 2000
FI-00231 HELSINKI FINLAND,

or alternatively, to any local office of the Finnish Tax Administration, the National Board of Patents and Registration and ELY Centre.

5.6 Distance selling

Foreign businesses engaged in distance selling to Finland are expected to submit the documents listed above in 5.2 to Finnish Tax Administration, if their sales to Finland exceed the amount of €35,000 per calendar year. If total sales have not amounted to more than €35,000 during the calendar year and the preceding year, and the distance seller opts for taxation of distance selling in Finland, he should also submit a written decision by the authorities — or a photocopy of the request submitted to the authorities — of the country of departure to have the distance selling taxed in the country of destination rather than the country of departure. (See VAT regulations concerning distance selling to Finland).

6.1 General remarks

Starting 1 April 2011, construction work and related employee-leasing services are almost always subject to reverse-charge VAT.

Reverse charge will apply if the following two conditions are met:

  1. The service has the characteristics of construction services (rakentamispalvelu; byggnadsservice), or the characteristics of employee leasing (työvoiman vuokraus; uthyrning av arbetskraft) for purposes of building.  If any structure is being built, to be located in a unit of real property, it is a construction service, and this also includes improvement work on a built structure and any deliveries or conveyance of goods to be installed in the structure.
  2. The buyer is a business that usually sells construction services or usually rents out workforce as leased employees, and the business performs these operations on a ongoing basis, not merely as an exception from its other operations in other sectors.  Reverse charge will also apply if the buyer is a business that is erecting a building, or paying another business to erect it on a piece of land in its possession in order to sell the building.  Furthermore, reverse charge will also apply if the buyer is a business that will convey the building to another owner, just before the building has been taken into use after it has technically been completed (built).  In this context, reverse charge will also apply if the buyer is a broker i.e. a business that will resell the service to another business, which will perform the operations described above.

When tax authorities appraise the characteristics of the buyer as to whether it is involved in construction-related operations on ongoing basis or not, not only the Finland-based operation of the buyer's business will be examined. Instead, the entire operations will be taken into account.

Reverse charge will apply if 1 April 2011, or any later date, is the date of the transaction that legally gives rise to the liability to pay VAT 1.4.2011.  From this follows that reverse charge will not be applicable if the rendering of the service had been started before 1 April 2011 and it was in progress on that date. It should be noted that for the purposes of the above rule, each subcontractor's services are examined separately.

For more information, see .

6.2 Foreign business with a fixed establishment in Finland

Liability to pay VAT to all selling in Finland will concern a foreign business that has a fixed establishment.  The Tax Administration will enter such a foreigner in the VAT register similarly as any Finnish businesses, and consequently, the rights and obligations will be the same.

Such a foreigner is expected to apply VAT reverse charge to any selling in Finland of construction services if the conditions listed above are met.

6.3 Foreign business with no fixed establishment in Finland

6.3.1 Selling

The provisions of § 9, subsection 1, Value Added Tax Act will be applicable, and the Finnish buyer of construction services will be the taxpayer regardless of whether the buyer is involved in construction-related sales operations on ongoing basis or not.

It should be noted that a foreign business with a fixed establishment will be viewed as a Finnish business.  Similarly, a foreign business with VAT registration in Finland will be viewed as a Finnish business.

Under the general rule, no reverse charge will be applicable if the buyer is a foreigner that does not have a fixed establishment or VAT registration.  In this case, the seller has the obligation to become registered as a VAT taxpayer in Finland.  However, an exception from the registration obligation is made when two foreign businesses are selling construction services to one another.  This situation would always involve VAT payment by the buyer, if the buyer is a business selling construction services on a ongoing basis.  In other words, it is the buyer that has the obligation to become registered as a VAT taxpayer in Finland.

Subject to usual refund rules, the input VAT in connection with any purchases made in Finnish territory can be refunded to the foreign seller as a VAT refund for foreigners.

If the buyer does not meet the conditions for VAT reverse charge, the seller will be liable to pay VAT, and the obligation will lie on the seller to become registered as a VAT taxpayer in Finland.  For more information, see 5.1 above.

6.3.2 Buying

Reverse charge will be applied to the transaction if a Finnish or foreign business is selling a construction service to a foreign business with ongoing construction-related sales operations.  Such a foreign buyer, who has no fixed establishment and VAT registration in Finland, will have the obligation to become registered for the VAT notification duty.

To issue notices to authorities is an obligation that only covers the construction-related lines of the Periodic tax return form.  Thus, the filer of the form will only have to report the VAT in respect of its construction-related purchases.  For any other purchases made in Finnish territory — subject to usual refund rules, the input VAT can be refunded to the foreign seller as a VAT refund for foreigners.

6.3.3 Applying for entry in the Finnish VAT register

A foreign business having no fixed establishment in Finland can file an application for entry in the Finnish register of VAT taxpayers, if it sells goods or services in this country.  Similarly, a foreign business only engaging in the sales of construction services can file an application for entry in the Finnish register of VAT taxpayers.  The reverse-charge mechanism will be applicable to the sales made, as based on § 8 c, VAT Act, if the buyer is a business that sells construction services on a regular basis.

After the foreign business has been registered as a VAT-liable business in Finland, it should comply with the obligation to regularly file Periodic tax returns.  The filing and reporting obligation covers all VAT on sales, and similarly, all input VAT of purchases made.  Having become such a VAT taxpayer in Finland, the foreign business is no longer treated as a foreigner entitled to a certain form of VAT refund.