VAT payment

Value-added tax (VAT) is a consumption tax levied on almost all goods and services. It is primarily targeted at consumers, and VAT-registered businesses are required to include it in their pricing. However, businesses can deduct the VAT paid on their purchases. For self-employed light entrepreneurs (kevytyrittäjät), the relationship with VAT is different. Read more about VAT obligations for light entrepreneurs.

What is VAT?

VAT, or value-added tax, is a consumption tax applied to nearly all sold goods and services, which you have likely paid yourself as a consumer. When selling to consumers, VAT is included in the sales price, but on the receipt, it is itemized as a separate line.

From a business perspective, VAT works differently because it is designed to tax consumers, not businesses. VAT-registered businesses must add VAT to the prices of the products and services they sell and remit the collected tax to the state. The amount of VAT charged is based on the applicable VAT rate, which varies depending on the product or service.

However, businesses can deduct the VAT they have paid on their purchases from the VAT they owe to the state. This means that the VAT collected from their sales is reduced by the VAT on their own deductible purchases and expenses.

VAT Payment

VAT is an indirect consumption tax designed to target consumers. Businesses selling products and services must add VAT to their prices according to the applicable VAT rate in their field and remit the collected tax to the tax authority.

For light entrepreneurs, VAT is made extremely simple, as invoicing services like Eezy Kevytyrittäjät handle it on their behalf.

VAT liability

Starting from the beginning of 2025, companies with an annual turnover of less than €20,000 will not be required to register for VAT liability or charge VAT from their customers. Previously, the turnover threshold was €15,000. However, a company may voluntarily join the VAT register before this and immediately include VAT in the pricing of its products.

It is quite profitable for businesses in Finland to join the VAT register on time because VAT can also be collected retroactively if you exceed the EUR 20,000 revenue limit.

For businesses, joining the VAT register also allows them to claim VAT deductions from their purchases subject to VAT.

Light entrepreneur’s VAT liability

Light entrepreneurs who invoice their work through Eezy or another light entrepreneur service and do not own a business ID are in a special position with regard to VAT, which we will explain next.

A light entrepreneur cannot be liable to VAT because they do not own a business ID. Nonetheless, light entrepreneurs must add VAT to their invoiced prices in accordance with the VAT rate used in their industry.

The position of light entrepreneurs is also different from that of ordinary entrepreneurs in that VAT must be charged to customers from the first euro invoiced. The EUR 20,000 limit for invoicing VAT does not apply to light entrepreneurs, as invoicing takes place with the business ID of the light entrepreneur service. As a result, the VAT limit is always met because the annual invoicing of all light entrepreneurs using the service is included in the revenue.

Payment of VAT

VAT is paid either once a month, quarterly or annually. Annual and quarterly VAT payments are longer tax periods that are especially intended for small entrepreneurs.

Businesses with an annual revenue of less than EUR 100,000 can apply to pay VAT quarterly, and businesses with an annual revenue of less than EUR 30,000 can apply to pay VAT once a year.

By default, the VAT accounting period is one calendar month. The aforementioned shorter tax periods must be applied for separately.

In the normal monthly VAT tax period, the VAT must be declared and paid no later than the 12th day of the second month following the end of the tax period. For example, the VAT for January must be paid by 12 March.

VAT-liable entrepreneurs with a business ID file VAT in the Tax Administration’s online service MyTax and pay VAT through the same service.

Payment of VAT as a light entrepreneur

This means that the light entrepreneur service, which is liable for VAT, takes care of the payment of the VAT collected by you to the tax authorities.

You do not have to worry about paying VAT on time or filing a VAT return and sending it to the tax authorities. The downside, on the other hand, is that you cannot take advantage of VAT deductions on purchases made for your business.