Tax Officer Fox Enlightens a Confused Hare about Value-Added Tax

The Finnish government has decided to increase the general VAT rate from 1.9.2024 onwards. 

The VAT change has a direct impact on the invoicing of your sole proprietorship business.

24% and 25.5% VAT will be used in invoicing and accounting for months. This situation requires careful invoicing and accounting.

Here is summary of different VAT situations for sole traders from autumn 2024.

1. Selling or buying goods with your sole proprietorship - what is the correct VAT rate?

The time of delivery of the goods determines the correct VAT rate:

  • If the goods are delivered to the customer before 1.9.2024, the 24% rate applies, even if payment is made later
  • If the goods are delivered on or after 1.9.2024, the 25.5% rate applies

You receive a prepayment for goods to your sole proprietorship or pay a prepayment:

  • The 24% rate applies to prepayments received by 31.8.2024
  • The 25.5% rate applies to prepayments received on or after 1.9.2024

You sell or buy goods by installment:

  • The entire transaction is subject to the VAT rate applicable at the time of delivery

2. Selling or buying services with your sole proprietorship - which VAT rate do you choose?

The time of performance of the service determines the correct amount of VAT:

  • If the service is performed before 1.9.2024, the 24% rate applies
  • If the service is performed on or after 1.9.2024, the 25.5% rate applies

Continuous sales and purchases of sole proprietorships:

  • The VAT rate is determined by the end date of the accounting period

If the delivery of a sole trader's service is in progress when the VAT rate changes:

  • Services that are in progress on 1.9.2024 are subject to the VAT rate applicable at the time of completion of the service

3. How do you treat 24% and 25.5% VAT in your VAT return?

There is a new line in the self-assessment tax return (VAT return) for 25.5% tax:

  • The return for tax period 3/2024 (July-September) shows both VAT rates
  • Calendar year declarers will see 25.5% tax for the whole of 2024

A new version of the paper form will be available from 1.1.2025

Other points to note:

  • Reduced VAT rates (10% and 14%) will not increase on 1.9.2024

Get your own accountant and tax advisor for your sole proprietorship!

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