Finland’s value-added tax (VAT) system affects how businesses price products, sell services, and stay compliant when they operate in or sell into the Finnish market. With a standard VAT rate of 25.5%, multiple reduced rates, and different rules for domestic and foreign companies, small details can have an outsize impact on margins and compliance. Below, we’ll discuss the Finland VAT rate, who needs to register, how refunds and filings work, and how to calculate Finnish VAT.

What’s in this article?

• What is the Finland VAT rate?
  
• How does the Finland VAT rate differ for goods and services?
  
• Who needs to register for VAT in Finland?
  
• What is a Finnish VAT number?
  
• Can businesses reclaim VAT in Finland?
  
• How does VAT compliance work in Finland?
  
• How do you calculate VAT in Finland?
  
• How Stripe Tax can help
  

What is the Finland VAT rate?

Finland’s standard VAT rate is 25.5%, the second highest in Europe. This is the default rate applied to most goods and services sold in the country, including those sold by foreign businesses via ecommerce, digital services, or a local presence. If a product or service doesn’t clearly fall under a reduced rate or qualify for an exemption, expect this rate to apply.

How does the Finland VAT rate differ for goods and services?

Finland applies multiple VAT rates to balance tax revenue with affordability for essential goods and services. Each rate applies to a clearly defined category.

Here are the categories.

Standard VAT rate (25.5%)

This rate covers most taxable services, including retail goods, electronics, clothing, software, digital services, consulting, and professional services.

Reduced rate (13.5%)

The 13.5% rate applies to everyday essentials and widely used services, including:

• Food and nonalcoholic beverages

• Restaurant and catering services

• Hotel accommodations and short-term lodging

• Domestic passenger transport

• Books in both print and digital formats

• Pharmaceuticals and over-the-counter medicines

• Cultural and entertainment event tickets

• Access to sports facilities

• Children’s diapers and menstrual hygiene products

Reduced rate (10%)

This lower rate applies primarily to newspapers and magazines, including both print editions and digital subscriptions.

Zero rate

VAT is charged at 0% on certain taxable supplies, including:

• Exports of goods outside the EU

• Intra-EU sales to VAT-registered businesses

• Certain international transport services

These transactions still allow businesses to reclaim VAT on related costs.

VAT-exempt supplies

Some activities fall entirely outside the VAT system, including healthcare, education, financial services, and insurance. No VAT is charged on these supplies, but businesses cannot reclaim VAT on expenses related to exempt activities.

Who needs to register for VAT in Finland?

VAT registration in Finland depends on where a business is established, how much it sells, and what kind of transactions it makes. Businesses that make only VAT-exempt supplies in Finland, such as certain financial or educational services, generally don’t register for VAT and can’t reclaim VAT on related costs.

Here are the rules in detail:

• Finland-based businesses: A business with a fixed establishment in Finland must register for VAT once its annual turnover exceeds €20,000 in a calendar year. If the company exceeds the threshold in the middle of the year, VAT registration is required immediately from that date. Businesses with turnovers under €20,000 don’t have to register, but many do so voluntarily to reclaim VAT on expenses or to simplify working with VAT-registered customers.

• Foreign businesses that sell in Finland: Non-EU companies usually must register from the first taxable sale, with no minimum turnover threshold. This commonly affects ecommerce sellers and digital service providers.

• Small EU businesses that sell in Finland: Small EU businesses with total annual turnovers of €100,000 or less in all member states that don’t exceed the €20,000 domestic threshold are eligible for VAT exemption.

• EU businesses that sell to Finnish customers: EU-based sellers that don’t use the small business exemption can rely on the €10,000 EU-wide B2C threshold. Once that’s exceeded, VAT must be charged at the rate of the customer’s member state. These companies typically report VAT through the One Stop Shop (OSS) rather than through local Finnish registration.

• Businesses that store goods in Finland: Holding inventory in Finland, such as in a local warehouse or fulfillment center, requires immediate VAT registration regardless of sales volume.

• Location-specific services: Services tied to a physical location in Finland, such as event admissions and certain on-site services, typically require VAT registration even in the absence of any other Finnish presence.

• Activities that don’t require registration: Businesses that make only VAT-exempt supplies don’t register for VAT and can’t reclaim VAT on related costs.

What is a Finnish VAT number?

A Finnish VAT number identifies a business for VAT purposes and is required on invoices, filings, and many cross-border transactions. Both Finnish and foreign businesses that register for VAT in Finland are issued VAT numbers in the same format.

Here’s what it includes:

• Format: The number starts with the country code “FI,” followed by eight digits.

• Connection to the Business ID: For a Finnish company, the VAT number is based on its Business ID (“Y-tunnus” in Finnish). The hyphen is removed from the Business ID and the FI prefix is added.

• Verification: Numbers can be checked through the EU’s VAT Information Exchange System (VIES) to confirm valid registration.

Can businesses reclaim VAT in Finland?

VAT-registered businesses in Finland can reclaim VAT on expenses by deducting it on their VAT returns. If input VAT exceeds output VAT, the excess is automatically refunded. Refunds are issued after the VAT return is processed instead of being carried forward to future periods.

VAT is usually reclaimable on costs such as inventory, equipment, office rent, and professional services, as long as they support taxable activity. VAT that’s linked to exempt activities, which are common in sectors such as financial services, insurance, healthcare, and education, generally can’t be reclaimed.

EU companies that incur Finnish VAT but aren’t required to register can apply for refunds through their home countries’ electronic VAT refund portals. Companies based outside the EU can reclaim Finnish VAT under Finland’s non-EU refund scheme. Finland doesn’t require reciprocity, which means refunds are available even if the home country doesn’t offer similar relief.

How does VAT compliance work in Finland?

The VAT system in Finland comes with fairly standard obligations. Mainly, it requires businesses to file returns even when there’s nothing to report.

Here’s how to stay compliant:

• Filing frequency: VAT-registered businesses usually file VAT returns monthly. Smaller businesses can apply to file quarterly or annually, subject to approval by the Finnish Tax Administration.

• Deadlines: VAT returns and payments are due on the 12th day of the second month following the reporting period. January VAT is due by March 12, for example.

• Filing process: Returns are filed electronically through Finland’s MyTax portal, which is available in English. A return is required for every period, even if no VAT was charged or reclaimed.

• Payments and refunds: If you collect more VAT than you pay on expenses, you must pay the difference by the deadline. If you’ve paid more VAT than you’ve collected, refunds are issued automatically after returns are processed.

• Invoicing requirements: VAT invoices must include the seller’s details, Finnish VAT number, invoice date and number, a description of the goods or services, the VAT rate applied, and the VAT amount in euros.

• Recordkeeping: VAT-related records must be kept for at least six years after the end of the accounting year. Clear documentation is necessary in case of audits or follow-up questions.

• Penalties and interest: Late filings or payments carry automatic penalties and interest. Even small delays can accumulate over time, so consistency matters.

Many businesses rely on tools to minimize manual work and errors. Stripe’s tax features can automatically calculate Finnish VAT at checkout, apply the correct rate based on the product and customer’s location, and generate reports that support accurate VAT filings.

How do you calculate VAT in Finland?

Here’s how to calculate VAT in Finland:

• Add VAT to a net price: Multiply the net amount by the applicable VAT rate and add it to the original price.

• Extract VAT from a gross price: Divide the VAT-inclusive price by one plus the VAT rate to find the net amount. A €125.50 price that includes 25.5% VAT consists of €100 net and €25.50 VAT.

Most goods and services use the 25.5% rate, while specific categories apply 13.5%, 10%, or 0% VAT. Using the wrong rate leads to under- or overcollection. Tools like Stripe Tax can automatically apply the correct Finnish VAT rate at checkout and generate accurate records for reporting.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, VAT, and goods and services tax (GST) on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful application programming interface (API).

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.