What tax and VAT obligations does a foreign company have in Finland?

Tax obligations for foreign companies in Finland depend on what the company does, who it sells to and what resources it has in Finland. Obligations may arise from the very first transaction, even if the company does not establish a Finnish subsidiary or branch.

The company must assess income tax, value-added tax (VAT), the required tax registrations and any employer obligations separately. Its position for one tax does not determine its obligations for another: for example, having no permanent establishment for income tax purposes does not rule out VAT obligations.

This guide focuses on business carried out in Finland directly through an existing foreign company. If a foreign company establishes a Finnish limited liability company, the new company is a separate taxpayer whose obligations must be assessed in their own right.

For a broader overview of the available ways to operate, see our guide to doing business in Finland.

Identify your tax obligations before issuing the first invoice

Tax matters should be clarified before the first VAT return is due. For example, the customer’s status, the supply chain for goods or the nature of work performed in Finland may affect how a sale must be invoiced.

The assessment requires at least the following information:

• In which country is the selling company based?
• What goods or services does the company sell, and where are they delivered or performed?
• Are the customers businesses or consumers?
• Does the company have employees, premises, stock or a representative acting on its behalf in Finland?
• How long will its activities in Finland last?
• From which country are the goods transported, and who is responsible for importing them?

Our guide How to start a business in Finland as a foreign company explains the choice of operating structure and the steps involved in starting operations.

Which Finnish tax registers does a foreign company need to join?

A foreign company may need a Finnish Business ID (Y-tunnus) and registration in the Finnish Tax Administration’s registers without establishing a Finnish company. A Business ID identifies the company, but does not in itself show that it is registered for VAT or has a permanent establishment in Finland for income tax purposes.

The Prepayment Register and work performed in Finland

The Prepayment Register is particularly relevant when a foreign company invoices for work performed in Finland. If the company is not registered, the Finnish customer may have to withhold tax at source from the payment for that work, known as non-wage compensation for work.

Tax at source does not need to be withheld if the company is entered in the Prepayment Register or presents an applicable tax-at-source card specifying a 0% rate. In some situations covered by a tax treaty, evidence that the company has no permanent establishment in Finland may also be sufficient. However, for work such as construction, installation and cleaning, that evidence alone does not replace registration or a tax-at-source card.

Entry in the Prepayment Register and advance income tax payments are separate matters. Registration does not determine the company’s final income tax liability in Finland.

The VAT Register

A company must register for VAT when its transactions require it to do so. Relevant factors include the place of supply for VAT purposes and whether the seller or the buyer is liable to account for VAT. Moving goods to Finland can also create registration and reporting obligations.

The Employer Register

If a company has employees in Finland, it must assess whether it needs to join the Employer Register and what payroll tax and reporting obligations apply. Registration in the Employer Register and the obligation to report earnings to the Incomes Register are separate matters.

When is a foreign company liable for VAT in Finland?

A foreign company’s VAT obligations are determined by its transactions. Having a Finnish customer does not, by itself, mean that a foreign seller must charge Finnish VAT.

The first step is to establish the place of supply: the country in which the sale of goods or services is taxable. The company must then determine whether the supply is taxable or exempt, whether the reverse charge mechanism applies and whether the seller needs to register for VAT.

Registration may be required, for example, where the company makes taxable supplies in Finland for which it must account for VAT itself, or where its Finnish fixed establishment for VAT purposes participates in taxable supplies. For sales to consumers, the availability of special VAT schemes must also be considered.

A permanent establishment for income tax purposes and a fixed establishment for VAT purposes are assessed separately. For VAT, relevant factors include the degree of permanence and the human and technical resources available. VAT registration alone does not create a fixed establishment.

Read more in the Finnish Tax Administration’s guidance on VAT for foreign businesses in Finland.

Is there a turnover threshold for small foreign companies?

Finland’s €20,000 small business threshold does not automatically exempt every foreign company from VAT.

A company established in another EU Member State may qualify for an exemption in Finland through the EU VAT scheme for small businesses. Conditions include Finnish turnover of no more than €20,000 and total EU turnover of no more than €100,000 in both the current and the previous calendar year. The company must register for the scheme in its home Member State, and its exemption must cover Finland.

A company established outside the EU cannot use this small business exemption in Finland. A low level of sales does not therefore, on its own, eliminate potential VAT obligations.

See the Finnish Tax Administration’s guidance on the EU VAT scheme for small businesses for the detailed conditions.

How does the reverse charge mechanism affect invoicing?

Under the reverse charge mechanism, the buyer reports and accounts for VAT instead of the seller. The seller does not charge VAT on the invoice.

For example, when a foreign company supplies consultancy services covered by the general B2B place-of-supply rule to a Finnish business, the place of supply is normally Finland if the services are supplied to the customer’s Finnish business establishment. Where the conditions for reverse charge are met, the Finnish buyer accounts for the VAT on its own VAT return.

However, the general rule does not apply to every service. Services connected with immovable property and admission to events, for example, have their own rules. For construction services, sector-specific rules must also be checked.

Reverse charge is not the same as a VAT-exempt supply. Invoice details must reflect the correct VAT treatment: a reverse charge invoice should, for example, include the wording “Reverse charge” and the required VAT identification numbers.

The Finnish Tax Administration’s guidance on VAT on international supplies of services and VAT invoice requirementshelps explain the applicable treatment.

Assess goods, stock and consumer sales separately

For transactions involving goods, the company must establish where the goods are located and how they are transported. Goods delivered to Finland from another EU country, sales from stock held in Finland and imports from outside the EU can give rise to different obligations.

For example, moving the company’s own goods from another EU country to a warehouse in Finland may create an intra-Community acquisition in Finland and a registration or reporting obligation. Such obligations can arise even if the warehouse does not constitute a permanent establishment for income tax purposes. A separate simplification may apply to certain call-off stock arrangements if its conditions are met.

For cross-border sales to consumers, the company should assess whether VAT can be reported and paid through a special scheme such as the One Stop Shop (OSS). A special scheme can replace local VAT registration for supplies covered by that scheme. It does not, however, automatically cover every transaction carried out in Finland.

For further information, see the Finnish Tax Administration’s English-language guidance on intra-Community supplies and acquisitions and VAT special schemes (OSS).

Can a foreign company recover Finnish VAT on purchases?

VAT on purchases made in Finland may be deductible or refundable where the purchases relate to activities that qualify for VAT deduction and the other conditions are met.

A company registered for VAT in Finland generally claims input VAT deductions on its Finnish VAT return. If the company is not liable for VAT on its sales in Finland and meets the conditions for a refund to a foreign business, a separate refund application may be possible.

A company established in another EU Member State generally applies through its home country’s tax authority’s online service. A different procedure applies to companies established outside the EU. Finnish VAT shown on purchase invoices is therefore not automatically claimed on the company’s domestic VAT return.

See the Finnish Tax Administration’s guidance on VAT refunds for purchases made in another country, including its instructions for foreign businesses claiming a refund from Finland.

When is a VAT representative required in Finland?

The need for a VAT representative must be assessed separately. Not every foreign company operating in Finland needs a representative under the Finnish Value Added Tax Act.

A representative established in Finland and approved by the Finnish Tax Administration may be a condition for voluntary VAT registration. According to the Tax Administration’s guidance, this requirement applies where the company has neither its domicile nor a fixed establishment in an EU Member State or Norway.

This statutory representative is different from an accounting firm authorised to handle the company’s tax affairs. Requirements concerning a representative of a Finnish branch must also be assessed separately.

The basis for VAT registration and the need for a representative should be checked together. See the Finnish Tax Administration’s guidance on starting up business in Finland.

What tax returns and payments are required?

Once the necessary registrations are in place, the company must organise ongoing filings, payments and the records supporting them.

VAT returns and EU VAT Recapitulative Statements

A company in the regular VAT Register must submit a VAT return for every tax period, including periods with no activity. The tax period is usually one calendar month. For monthly reporting, the filing and payment deadline is the 12th day of the second month following the tax period: for example, VAT for March is reported and paid in May. If the deadline falls on a weekend or public holiday, it moves to the next business day.

Certain intra-EU sales of goods and services also require an EU VAT Recapitulative Statement. Its deadline is generally the 20th day of the month following the month of sale. Returns and deadlines under OSS and other special schemes are handled separately.

Income tax returns and advance tax payments

If a foreign company has income taxable in Finland, it must meet the related income tax filing and payment obligations. A permanent establishment is one key basis for taxation, but other Finnish-source income may also be taxable in Finland.

A foreign corporate entity’s income tax return is generally due within four months of the end of the calendar month in which its accounting period ends. A company carrying out business in Finland may need to submit tax return 6U and a statement on Form 80 even if it considers that it has no permanent establishment in Finland. Tax payment liability and filing obligations must therefore be assessed separately.

For detailed instructions, see the Finnish Tax Administration’s guidance on filing VAT returns, paying VAT and income taxation of foreign companies.

What if the company has employees in Finland?

Having employees working in Finland can create obligations relating to payroll, withholding tax, social insurance and reporting to the Incomes Register.

If a foreign employer has a permanent establishment in Finland for income tax purposes, its employer obligations generally correspond to those of a Finnish employer. Even without a permanent establishment, the employer must report earnings to the Incomes Register in certain circumstances, including cases involving employees insured in Finland or staying in Finland for more than six months.

The company’s income tax position, the employee’s taxation and social security coverage are assessed separately. An A1 certificate, for example, determines the applicable social security legislation; it does not, on its own, determine how the employee’s salary is taxed.

See the Incomes Register’s guidance on the obligations of foreign employers.

Tax obligations for foreign companies in Finland: a practical checklist

1. Identify the activities carried out in Finland. Document sales, supply chains, personnel, premises and the planned duration of operations.
2. Assess income tax and VAT separately. Review the permanent establishment rules for income tax, the fixed establishment rules for VAT and any other grounds for obligations.
3. Complete the necessary registrations. Check the need for a Business ID, tax registrations and a VAT representative.
4. Confirm the invoicing treatment before sales begin. Check the place of supply, the party liable to account for VAT, the VAT rate and invoice requirements.
5. Organise filings and payments. Agree how records will be provided, set deadlines and assign responsibilities.
6. Arrange authorisations for online services. Ensure that the company or its authorised service provider can manage Finnish tax matters in practice.
7. Monitor changes. A new warehouse, employee, customer group or extended project can change the original assessment. Notify the Finnish Tax Administration of material changes and arrange deregistration when operations end.

Support with tax and VAT obligations in Finland

A foreign company’s Finnish tax affairs should be organised so that registrations, invoicing, financial administration and statutory reporting all rely on the same up-to-date information about its activities.

Leinonen Finland helps foreign companies identify the obligations arising from their Finnish operations and arrange how they are managed in practice. Services include corporate tax advisory, accounting, payroll and, within the agreed scope of the engagement, statutory filings and payments. Services are available in Finnish and English.

Does your company need help identifying its Finnish tax and VAT obligations? Explore Leinonen Finland’s tax services.

Frequently asked questions about tax and VAT obligations for foreign companies

Can a foreign company have VAT obligations without a permanent establishment in Finland?

Yes. Certain supplies made in Finland and movements of goods, for example, can create registration or reporting obligations. The absence of a permanent establishment for income tax purposes does not determine the VAT treatment.

Is a foreign company’s home-country VAT number sufficient in Finland?

Not in every situation. A home-country VAT number can be used in many cross-border transactions, but the company may still need to register in Finland. The requirement depends on its transactions.

Does having a Finnish Business ID mean the company is registered for VAT?

No. A Business ID and VAT registration are separate matters. The company’s current registrations must be checked separately.

Can a foreign company always invoice a Finnish business without VAT?

No. The treatment depends on factors such as the goods or services supplied, the place of supply, the customer’s status and whether the conditions for reverse charge are met. The foreign seller’s Finnish establishment and the basis for its VAT registration may also affect the treatment.

Does the €20,000 VAT threshold apply to foreign companies?

The threshold does not automatically apply to every foreign company. A company established in another EU Member State may use it if the conditions of the EU VAT scheme for small businesses are met. A company established outside the EU cannot use this exemption in Finland.

Must a VAT return be filed if there have been no sales in Finland?

A company in the regular VAT Register must file a return for every tax period, including periods with no activity. If operations will not continue, the necessary termination notifications must be submitted separately.

Does every foreign company need a VAT representative in Finland?

No. The need for a representative under the Finnish Value Added Tax Act depends on factors such as the company’s country of establishment and the basis for registration. Authorising an accounting firm to handle tax matters is different from appointing such a representative.

Is an income tax return required even if the company has no income tax to pay in Finland?

A filing obligation may arise even if no tax is payable. For example, a foreign corporate entity operating in Finland may need to submit a tax return and a statement of its activities even if it considers that it has no permanent establishment in Finland.