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Article:

Changes in reporting and accounting for VAT

07 April 2017

Miika Jokinen , Senior Tax Manager |

Rules regarding reporting and accounting for VAT and other self-assessed taxes (such as employer's contributions) were changed at the beginning of 2017 as a result of the coming into force of various amendments to the legislation. This article sets out the requirements that now apply.

Filing the VAT return

Tax returns for self-assessed taxes must be filed electronically. They can be filed via the Tax Administration's new e-service (MyTax) or via other networks. Paper tax returns are accepted only in special circumstances, for example, when electronic filing is not available. No preapproval for filing paper returns is required.

The due date for reporting VAT is the 12th day of the second month following the tax period. If a company's tax period is a calendar year, the tax returns must be filed by the end of February following the calendar year end. The due date is the same for both electronic and paper returns. The due date for accounting for the output VAT payable to the tax authorities is the same as for filing the return.

Correcting earlier VAT returns

Under the new rules, corrections to the earlier returns have to be made by filing a new return that replaces the previous return. When filing the new return, the taxable person must re-submit all the information related to the tax; they cannot simply correct the earlier incorrect information. Also, when filing a new tax return, the taxable person must provide a reason for the correction. There is a simplified procedure where the taxable person can correct a minor error (of EUR 500 or less) by reporting it on its next tax return.

Late filing penalties

If the tax return is filed late, a late filing penalty of EUR 3 per day is assessed for the first 45 days. If the tax return is filed beyond 45 days from the due date, an additional penalty of 2% for the late reported VAT (or other self-assessed tax) is assessed in addition to a late filing penalty of EUR 135 (EUR 3 x 45 days).

However, if the taxable person has filed a tax return by the due date and then makes a correction to it within 45 days after the due date, no late filing penalty is assessed. If the correction is made after 45 days from the due date, a 2% penalty fee for the late payment is assessed if the correction results in additional tax payable.

The maximum penalty charged on late reported VAT is EUR 15,000 per tax for a tax period.

Tax period

The standard tax period for reporting selfassessed taxes is a calendar month. However, if the taxable person's turnover in a calendar year is no more than EUR 100,000, they are entitled to report quarterly. If their turnover for a calendar year is no more than EUR 30,000, they can report annually. Taxable persons can apply to the Tax Authorities for a longer tax period. It should be noted that taxable persons can choose a different tax period for VAT and employer contributions.

Reporting and accounting VAT on a cash basis

Companies with a maximum turnover of EUR 500,000 during the fiscal year can opt to report the VAT on a cash basis for both supplies and purchases. This option was enacted to improve small businesses' liquidity. Accounting for VAT on a cash basis means they can report output VAT for supplies and input VAT for purchases for the month when it receives the payment for its supply and pays for purchases made. If a taxable person wants to report on a cash basis, they must do so for both supplies and purchases.

Cash basis reporting can only be applied to domestic Finnish sales and purchases. Thus, it cannot be used for reporting VAT on imports, exports, intra-Community acquisitions and supplies, or for the cross-border supplies of services where the reverse charge is applicable.

 

This article is originally published in BDO Global's Indirect Tax News, Issue 1 April 2017. Download the full publication here