VAT Guide for Freelancers in Finland

Finland’s VAT policy is based on the "destination principle" of the European Union VAT system. This means that VAT, or arvonlisävero in Finnish, is payable to the country's government where the product or services are consumed, regardless of where you're supplying them from. So, if you have clients in Finland, you have to comply with Finnish VAT rules. VAT is administered by The Finnish Tax Administration, a government agency steered by the Ministry of Finance.

The standard VAT rate in Finland is 24%, with reduced rates of 14%, 10%, and 0% applied based on the products you sell. This guide includes everything you, as a freelancer, need to know about VAT in Finland in a nutshell. Let's get started!

What are the VAT Rates in Finland?

The Finnish government levies four different VAT rates, and freelancers must charge the amount that applies to their products and services.

  • The Standard Rate - Unless the items or services you offer are in the reduced rate or zero-rated category, you should charge the standard VAT rate of 24%.
  • The Reduced Rate of 14% - The reduced rate of 14% applies to items such as food (excluding live animals), some agricultural supplies; restaurants and catering services (excluding alcoholic beverages), soft drinks, take-away food, cut flowers and plants for food production, and so on.
  • The Reduced Rate of 10% - The Reduced rate of 10% applies to items like pharmaceutical products, domestic passenger transport, books (including e-books), newspapers, admission to cultural events and amusement parks, hotel accommodation, admission to sports events, use of sports facilities, domestic transport, and so on.
  • The Zero Rate - When items are zero-rated, they are still VAT-taxable, but the rate of VAT you must charge your consumers is 0%. This rate applies to printing services for publications of non-profitmaking organizations, intra-community and international transport, certain works of art, collector’s items and antiques, and so on. Although there are no charges on zero rates, you should record sales of goods and services and create a report based on your returns.

 

Here is a list of services that are usually exempt from VAT.

When should you register for VAT?

Starting 1st January 2021, Finland increased the VAT threshold from €10,000 to €15,000, which means that your taxable sales revenue exceeds €15,000 before you need to register for VAT. If your sales revenue is currently below €15,000, registering for VAT is optional. This threshold does not apply to foreign, non-resident traders with Finnish VAT registration. Their threshold is nil. 

You can register for VAT as soon as you start making purchases or start selling/providing your services. If you register voluntarily, you have the option of registering at the same time as you start your business, or later. 

Registration takes approximately 3 weeks.

How to register for VAT in Finland

You can file your start-up/freelance notification online using the service at ytj.fi, if you are at least 18 years old, have a Finnish personal identity code, and have your own personal internet banking codes/mobile certificate/electronic identity card (HST card). You will need to provide the following information (in Finnish or in Swedish):

  • personal details;
  • your proposal for the company name, and a maximum of two alternative names;
  • address and contact details.

You can then register for VAT and manage all your tax information with the Tax Administration through the MyTax system.

You can also register using the Mini One-Stop Shop, an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return. This scheme is optional but convenient and especially useful if you have customers in multiple countries within the EU, including Finland. MOSS allows you to avoid registering in each Member State of consumption. To learn more, click here.

Lastly, you can hire an accountant (or agency) to handle your VAT returns and dealings with the Finnish Tax Administration. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

VAT Guide for Expat Freelancers in Finland

VAT registration and tax control regarding foreign companies, partnerships, and self-employed individuals are administered by Helsinki Area Tax Office. Here is a list of documents you need to submit in order to register for VAT. 

As a foreign self-employed individual, you have to send the Finnish Tax Administration an account describing the work you do in Finland. Each time you get a new assignment or job, you should submit such an account again. If you stay in Finland for no longer than 6 months, you are considered a non-resident taxpayer; whereas, if you stay in Finland for longer than 6 months, you are treated as a Finnish tax resident. To know more, click here. 

Xolo can help you register as a freelancer in Finland and handle all the necessary paperwork on your behalf. With Xolo Go, you can use a slice of our company as a legal framework to invoice your clients whether they're across town or across an ocean. 

Financial Obligations of VAT Registered Freelancers in Finland

After registering for VAT, you must make sure to:

  • Charge the correct VAT rate
  • Pay any VAT owed to the tax office
  • File VAT returns
  • Maintain VAT invoices and a VAT account

 

VAT invoices are the official record of how much tax you charge and collect, and therefore the official proof of how much tax you owe the government. In order to completely comply with VAT laws, you must make sure to include the following in your Finnish VAT invoices:

  • Your business name and address
  • Your business VAT number
  • Invoice date
  • Invoice sequencing number
  • Description of the goods or services
  • Rate of VAT applied to each item
  • Total amount including VAT


The invoices must be issued within six months of delivering your product or service. You must then store these invoices electronically for ten years.

Does that sound excessive? Xolo can help! We automatically generate, send, and store all your invoices digitally, so you won’t have to worry about misplacing them over the next decade.

How Xolo Can Help?

The tax registration process can be tricky at times, but we hope this guide has helped clear your doubts! If you’re still confused about the different schemes and numbers and paperwork, Xolo offers a range of solutions that handle all the hassle while you focus on your core competencies. 

With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC. 

  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.
  • Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!
  • We offer different tiers of service depending on the solopreneur’s, or as we call them, Xolopreneur's, individual needs.
  • Once you get your business set up, you can run it from anywhere in the world! So whether you’re looking to gain access to the EU market or a digital nomad - this is the place for you! 

 

Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Finland in no time!