VAT recovery: Finland rolls out revised invoicing rules

You don't have to be an expert in foreign VAT legislation to understand that invoicing matters when it comes to successful VAT recovery. But not just any invoicing. For businesses to successfully reclaim their VAT incurred on international expenses, they must make sure that their supplier has adhered to the specific invoicing rules and instructions of the country they're reclaiming from. 

However, catching up to speed with each country's latest VAT rules and requirements can be challenging, especially when they keep changing. Fortunately, we stay in the loop, so you don't have to. 

If you're doing (or planning on doing) business in Finland, here's what you need to know to ensure error-free VAT recovery that aligns with the latest revised invoicing rules.

In brief, according to the VAT invoice requirements published by Finnish Authorities, the current invoicing instructions will effectively replace previous instructions issued on 27 September 2019. The validity of these new requirements will be in effect from 9/1/2023 until further notice. 

The concept of an invoice

Although it may seem relatively straightforward initially, ensuring you're clear on the concept of a VAT invoice from the get-go is essential. According to the latest Finnish updates, the following was made clear regarding an invoice and what it entails for VAT purposes and to ensure it aligns with the EU VAT directive. Some key points included the following: 

• 'Invoice' includes all traditional invoices, vouchers, and documents as per the VAT Directive. Corrective invoices, vouchers, or notices with changes or references to the original invoice also fall under 'invoice.'
• Invoices may also be in paper or electronic format. However, businesses must still obtain the recipient's consent for electronic invoices. 
• Sellers may consolidate multiple goods and services into a single invoice.
  
  

When are sellers required to issue an invoice? 

Finland's revised invoicing rules also clarified certain instances where sellers are required to issue invoices. This includes both taxable sales and VAT-exempt sales. For successful compliant invoicing within the VAT recovery process, you must understand the specific rules that apply to the supplier and how it could affect the recovery process. 

For taxable supplies: 

• The seller must issue an invoice for goods/services subject to tax.
• Recipients must be a trade/business operator or non-business legal entity.
• 'Taxable sales' necessitate VAT payment per the Value Added Tax Act.
• The seller must also issue an invoice in cases where the recipient, under VAT reverse charge, pays VAT.

In particular circumstances, the seller must also issue an invoice for VAT-exempt sales. However, sellers aren't required to issue invoices meeting the Value Added Tax Act's information requirements for other domestic VAT-exempt sales. For more information on when to issue invoices for VAT-exempt sales, view the Finnish invoice guide here. 

What information must be shown on an invoice?

This is where things get more complicated, as a tiny error or insufficient data could derail the entire VAT recovery process. According to the VAT act and the latest invoicing information instructions, some of the most significant elements that each invoice should contain include: 

• Date of issue
• A unique sequential number
• Seller's VAT identification number
• Purchaser's VAT identification number if the VAT reverse charge applies or if it is a question of the intra-community supply of goods
• The names and addresses of the seller and purchaser
• The quantity and nature of the goods supplied
• The date on which the supply of goods or services was made or completed
• VAT base per VAT rate, unit price exclusive of VAT, and any discounts or rebates if they have not been taken into account in the unit price
• VAT rate
• VAT payable

This only scratches the surface, and even within each one of the touchpoints, many niche information requirements apply depending on the taxable activity. Fortunately, you don't have to navigate invoicing instructions alone. With VAT IT experts in your corner, you can rest assured that nothing stands in the way of your business and effortless VAT recovery. Stay compliant while maximizing your VAT potential and reclaiming your money, time, and freedom. 

We've got you (re)covered.