Reverse charge purchases and purchases from abroad

Reverse charge acquisitions refer to purchases made from outside one’s home country that a VAT-liable entrepreneur can make as VAT 0% by notifying the vendor of their VAT ID.

A VAT-liable entrepreneur can make deductible purchases from within or outside the EU as reverse charge intra-Community acquisitions. Usually these are, for example, licenses acquired from Adobe for image editing tools or products acquired from a foreign company.

As reverse charge acquisitions, expenses are bought VAT-free – thus the VAT benefit is obtained immediately

By informing the vendor of the VAT ID, the purchased product or service is sold without VAT. You will receive a receipt, invoice or other confirmation for the purchase, which must be added to accounting using the “New expense” function.

You can find your Business ID and VAT ID on the home page by logging into your user account.

VAT ID, or VAT number, consists of the business ID in the following way:

  • The country code FI is added at the beginning of the business ID.
  • The hyphen is removed.
  • For example: 1234567-8 → FI12345678.

An example of a reverse charge receipt

an example of a receipt with the VAT IDs of a vendor and buyer and a mention of a reverse charge purchase.
  • Includes the vendor’s VAT ID
  • Product or service does not include VAT
  • Mention of reverse charge acquisition
  • Includes the buyer’s VAT ID

An intra-Community acquisition made without VAT affects your VAT return and possible threshold relief

We report deductible intra-Community acquisitions in your VAT return, in which case they both increase the amount of VAT due and reduce it.

VAT benefits are obtained when purchasing from EU countries as well as from non-EU intra-Community acquisitions. No VAT to be paid or refunded is formed in the VAT return from these.

VAT on products purchased in Finland has been paid at the time of purchase. In other words, you will not receive the VAT benefit from a domestic purchase until the time of the VAT return.

Expenses with VAT reduce threshold relief

VAT threshold relief is reduced by the VAT deducted from expenses. In the case of reverse charge intra-Community acquisitions, i.e. VAT 0% expenses purchased abroad, the VAT benefit is received when purchasing. The benefit from expenses acquired from Finland comes during the VAT return.

You do not get relief from these, otherwise you would benefit twice.

In a nutshell:

  • VAT refunds on expenses are refunds for which no more tax is paid, i.e. they are not taxable earned income.
  • VAT threshold relief is earned income for the year in which it is paid.
  • Do not use your VAT ID for private purchases.
    Reverse charge acquisitions are only used in business purchases.