Finnland

New government plans on transition to real-time economy Finland’s response to e-invoicing and the wider digitisation of its fiscal procedures has been more muted when compared to its European counterparts. However, the Finnish government has strongly hinted at the expansion of its tax infrastructure via introducing a real-time platform economy.   More specifically, this trajectory would relate to the transfer of company documents, including e-invoices, in a digital form in a secure manner.   Currently, the plans are not so fully fledged as to suggest that B2B e-invoicing will be mandated in the country, nor have any concrete timeframes been confirmed in this regard. However, it confirms that the digital transfer of e-documents is a significant preoccupation for EU Member States which is likely to heavily influence country policy and legislation.   Please refer to further information in respect of the same here:  https://valtioneuvosto.fi/documents/10184/158702198/Neuvottelutulos+hallitusohjelmasta+16.6.2023.pdf/2febf7a7-d5a1-6f17-df2d-95561de7a6de/Neuvottelutulos+hallitusohjelmasta+16.6.2023.pdf/Neuvottelutulos+hallitusohjelmasta+16.6.2023.pdf?t=1686924779616  Finland has also recently commented on its support for the VAT in the Digital Age proposal, indicating that the country is leaning towards further digitisation and automation of its wider fiscal infrastructure. 

VAT re-classifications of specific products The introduction of new VAT rates are not the only changes countries deploy as part of their fiscal strategies. Less radical measures, such as re-classifying specific goods and services under existing tax rates, also serve as an equally effective measure.   Finland is re-classifying the following good and services, in line with the following:  Goods / services now subject to 14% (up from 10%): 

• Books 
• Hotel services 
• Public transport 
• Pharmaceuticals  
• Entrance to cultural and sporting events  
• Film screenings 
• Royalties for television and public radio activities 

Goods / services now subject to 24% (up from 14%): 

• Specific feminine hygiene products  
• Specific products for baby care 

Kofax’s e-invoicing solution already accommodates all valid rates for Finland, a compliant territory, as part of our e-invoicing solution.  

Return to former VAT rate for power supplies VAT rates associated with power and gas supplies have sharply come into focus- in an era where energy prices are rising, and especially during the winter months when reliance on these elements increases. Several countries across the content have adjusted VAT rates to accommodate rising inflation. As inflation subsides, it is inevitable that countries will turn their attention to restoring previous VAT rates- which is unsurprising, as the summer months lead to less energy reliance. This also mirrors the discernible trend of countries effecting pre-covid tax rates. Finland will now restore the standard rate of 24% on electricity from 1 May 2023. This will reverse the temporary 10% rate applied to electricity from 1 December 2023. This rate was temporarily introduced in December 2022. Finland is a compliant territory for Tungsten Network and our e-invoicing solution supports all valid VAT rates in the country.

Clarification on stance on e-invoicing Finland’s support of e-invoicing has been somewhat muted in comparison to other countries. However, the tenor is changing in the country- undoubtedly sparked by the VAT in the Digital Age (ViDA) proposal.   Finland has written to the EU Parliament outlining its support for e-invoicing and more broadly, the objectives of the proposal. It still has some concerns, around support for small and medium enterprises (SMEs) but the overall tone struck is one of support.  

Zero VAT for domestic transport services From 1 January 2023 to 30 April 2023, Finland will reduce VAT on domestic transport services from 10% to 0%. Service providers may deduct VAT from their purchases.

Electricity VAT reduction Countries across Europe continue to review their fiscal tax rates considering rising inflation, and also as economies strive to pick up pace in a post-covid era.   Finland has reduced the VAT rate on electricity from 24% to 10% until 30 April 2023.   Tungsten Network offers a compliant e-invoicing solution in Finland and our Web Form solution supports all valid VAT rates in the country.  

Further extension of Covid-related VAT measures As globally we turn to what many regard a new stage in the pandemic, a post-Covid economic recovery period of sorts, several countries are still enacting VAT-related measures to strengthen their economies after a tumultuous 2 years. The Finnish Parliament has passed Bill No. 8/2022, which effectively extends the temporary VAT exemption for domestic sales of goods and intra-EU purchases of goods which are used to treat or prevent coronavirus, including testing. This extension is expected to last until June 2022.