Legal Alert – Finnish Rules on VAT Invoices Change as From 1 January 2013
Finnish Value Added Tax Act was amended on 29 June 2012 based on the Directive (2010/45/EU) on the common system of value added tax as regards the rules on invoicing (Directive). On 18 October 2012, the Finnish Tax Administration published guidelines concerning the rules on invoicing in value added taxation. The amendments will enter into force on 1 January 2013 and their main content is as follows.
The maximum amount for invoices issued under simplified arrangements will be increased from 250 EUR to 400 EUR. Simplified arrangements do not, however, apply to intra-Community supply or resale by an intra-Community acquirer.
The law includes also a provision requiring ensuring that neither the authenticity of origin nor the integrity of the content of either paper or electronic invoices has been altered. The method of ensuring above said may be conducted by using any business controls chosen by the person carrying business however, said person would be obliged to store the receipts and information used in controlling. Said person would have the freedom to choose whether to store the invoices and other receipts in electronic or paper form also in future.
Following the amendments the Value Added Tax Act also states when invoicing is subject to Finnish rules. Further, advance payments on intra-Community supply of goods would not be under the obligation to provide an invoice.
The law specifies invoicing requirements concerning reverse charges, marginal taxation system and circumstances, where the buyer issues the invoice. For example, in cases of reverse charges, the invoice has to be labeled with Reverse charge. The basis for VAT in each goods and service line must be included in the invoice. If the sale is not subject to tax, the invoice must include a similar remark on its exemption from VAT. Alternatively, the invoice may refer to the relevant section of the Value Added Tax Act or Directive.
With reference to international situations, it is positive that when changing the foreign currency into euros the exchange rate published by the European Central Bank may be used. Generally, the amount of tax is reported in the currency of the member state of the place of supply.
The invoice must be given on the 15. day of the month following the delivery of the goods or performance of service for such intra-Community sales of goods and services to other EU countries, where the buyer is liable to VAT.
It is important to remember that in practice, it may often be recommendable to issue invoices which are more informative than the minimum requirements set forth in law. For example, the Tax Administration recommends that despite the basis for the tax need not be explicitly mentioned any longer they are still preferred to be included in the invoice. Namely, a service which is VAT exempt in Finland may be subject to tax in the country of the invoice recipient and vice versa.