Value Added Tax (VAT) is a general consumption tax on the consumption of goods and services. VAT is an indirect tax which is to be paid by the end consumers. Collected by businesses liable to tax, VAT is included in sales prices, and the VAT revenue is paid to the state.
VAT is levied on the value added at each stage of the production and supply chain. The level of VAT included in consumer prices is determined by the VAT rate and equals the total tax paid for value added. To avoid multiple taxation, those liable to VAT have the right to deduct input VAT from the tax levied on sales.
Value Added Tax Rates in Finland and in Other EU Member States
The general tax rate in Finland is 24 %. Two reduced tax rates are also in use (10% and 14%) as well as a zero tax rate (no taxes on sale, but sellers are reimbursed VAT on production input purchases). The tax rate is indicated as calculated from prices before taxes.
The reduced tax rate of 14% is applied to food, fodder and restaurant and catering services. The reduced tax rate of 10% is applied to books, newspaper and magazine subscriptions, medicines, sports and exercise services, passenger transport, accommodation services, TV and broadcasting operation fees, cultural and entertainment events, sale of works of art by the artist, all importation of works of art and copyright royalties received by copyright organizations.
The adoption of VAT is a prerequisite for EU membership, and a broad-based VAT system is in effect in nearly all European OECD countries. According to the EU VAT directive in force, a maximum of two reduced VAT rates are allowed.
Ministry of Finance P.O BOX 28 FIN-00023 GOVERNMENT Tel. +358 295 16001 E-mail: valtiovarainministerio@vm.fi