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VAT rates

Updated

Value-added tax, or VAT, is added to almost all sales in Finland. From an entrepreneur's point of view, the most important thing is to know which tax rate applies to which product or service, so that invoicing is done correctly. There are four different VAT rates in Finland, each with its own purpose.

25,5 % - General tax rate

  • most goods and services
  • tools and supplies

13,5 % - Meals and exercise services

  • foodstuffs
  • restaurant and café services
  • catering services
  • animal feed and food ingredients
  • exercise services
  • passenger transport, e.g. taxis

10 % - Reduced tax rate

  • Public broadcasting activities

0 % - Other tax rate

  • performance fees
  • international shipping work
  • work related to vessels
  • outside the scope of VAT (e.g. tips)
  • sales of goods and services related to international trade

Reverse VAT liability in the construction industry

The construction industry has a special VAT practice called reverse VAT liability. It may sound complicated, but the idea is actually fairly simple: the seller — meaning you (the invoicer) — doesn't add VAT to the invoice; instead, the buyer (your client) calculates it and reports it on their own VAT return.

In which situations does reverse VAT liability apply?

Reverse VAT liability applies when the matter concerns construction services or the hiring out of labour for construction services. For example:

  • construction of buildings and structures
  • repair and renovation work
  • installation of building services (electrical, HVAC, ventilation)
  • earthworks
  • construction cleaning, if related to construction

In which situations does reverse VAT liability not apply?

Reverse VAT liability does not apply when:

  • The work is done for a consumer (e.g. a renovation done at home)
  • The buyer does not sell construction services and is not part of the construction contract chain
  • The service is not a construction service
  • It concerns the sale of construction materials without labour

You can find more information and the exact scope in the Finnish Tax Administration's guidance.

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