Taxation in Finland is carried out by the Finnish Tax Administration (Verohallinto in Finnish). Finland is a country with a rather high level of social security, so as a foreign company starting your business in Finland keep in mind that the taxes are rather high and the Finnish Tax Administration is known for efficient tax collection.

The Tax Administration’s website is where you can find information in English, Finnish and Swedish. Limited versions of the site are also available in Estonian, Russian, Polish and Sami.

Five legislative changes important to know

As of 2017, tax returns on self-assessed taxes such as VAT and employer’s contributions must be submitted online to the Tax Administration via e-Service called MyTax (previous Tax Account Online). MyTax makes e-filing available for an increasing number of taxpayers because it integrates almost all the important electronic resources that serve individuals and corporate entities.

1. More types of returns must be e-filed

It is mandatory for VAT taxpayers, employers and other customers liable to self-assessment to file returns electronically. The Tax Administration no longer accepts paper-printed tax returns except for special reasons.

2. Replacement of previously filed returns

As of 2017, new rules apply to the correction of a previously submitted Tax Return for Self-Assessed Taxes (formerly the Periodic Tax Return).  Corrections have to be made on a new return that replaces the previous one.

Before, taxpayers were required to submit an additional filing when they needed to make corrections. With the new law, taxpayers can simply correct a minor error on their next tax return. However, this only applies to errors with little or no economic impact.

3. Changes to the choice of tax period

The standard period for self-assessed taxes such as VAT continues to be the calendar month. However, the thresholds are raised so as to make longer periods (calendar quarter, calendar year) available to a larger number of taxpayers.

The Accounting Act defines thresholds that depend on sales per year or on similar annual revenues.

• Before, the threshold has been €50,000 a year for reporting by the calendar quarter (instead of every month). It is now raised to €100,000.
• Before, a calendar-yearly VAT period was permitted if sales stayed below €25,000 a year. This threshold is now raised to €30,000 a year.
• Starting 1 January 2017, a quarterly period is no longer allowed to employers who neither are on the Register of Employers nor pay wages regularly.
• As of 2017, reports on payroll transactions must be filed for every month of activity. However, reports are not needed for the months when there are no wage payments.

4. Simplified late-payment charges

New methods of calculation are in force for self-assessed charges: 45-day grace periods are introduced. This means that you can continue to make corrections within 45 days after the due date without late-payment charges.

The level of punitive tax increase is considerably lower than previously: it is max 50% of the tax to be debited.

5. More VAT taxpayers to use cash basis

• Companies with max. €500,000 in turnover get an option to account for their VAT on cash basis, for both selling and purchasing. To allow the cash basis offers small businesses a way to improve their liquidity. The proposed new act comes into force on 1 January 2017.
• Companies with max. €500,000 turnover per accounting period get an option to account for their VAT on cash basis. This means that a small business is able to report its VAT liability according to the actual sales and purchases of the month when it receives payment or pays another company for the goods or services it has bought.

The small business can opt for the cash basis or the invoice basis. It has also a choice of the date when it starts applying the cash basis. Those opting for VAT accounting by cash basis have to apply it on its selling and purchasing alike.

Cash basis applies only to the selling and purchasing in Finland of goods and services. This way, imports and exports and the intra-Community supplies and acquisitions fall outside its scope. Similarly, it is not allowed in the case of cross-border selling of services where the VAT reverse-charge scheme is applied.

Read full article about taxes changes from here: http://www.vero.fi/en-US/Tax_Administration/Changes2017
Original Finnish/Swedish web articles: vero.fi/muutoksia2017 (in Finnish), skatt.fi/ändringar2017 (in Swedish)

Please turn to us with questions regarding the impact on legislative changes in 2017 to your business.