Value Added Tax (VAT) is an essential part of doing business in Finland, but it is not required to be paid in all situations. Many new entrepreneurs and sole proprietors wonder: "When do I not have to pay VAT?" There are important exceptions and conditions to this question that are good to understand.
This article discusses when VAT does not have to be paid , what the small activity threshold means , and other exceptional situations in which VAT liability does not apply to a company or entrepreneur in 2025.
What is VAT and Who Pays It?
Value Added Tax (VAT) is a consumption tax, whichis a consumption tax levied on products and services. In Finland, the general VAT rate is 24% , but reduced tax rates (14% or 10%) apply to some products and services.
Generally speaking, a company is liable for VAT if its business is continuous and its annual turnover exceeds EUR 15,000 . A VAT-registered company collects the tax from the customer and pays it to the Tax Administration.Milloin ei tarvitse maksaa alv
1. Minor Activity Limit – Turnover Below €15,000
In 2025 , if your company's turnover is less than 15,000 euros in a financial year, you will not be liable to pay VAT . This is called the minor activity threshold .
Example:
If a sole proprietor earns €12,000 during a year by selling handmade products, he is not liable for VAT and does not need to add VAT to his prices.
???? Note: Althoughno ,Although VAT liability is not mandatory, you can voluntarily register for VAT if you wish.on purchases transaction, allowing you to deduct VAT on purchases in business.
2. VAT-Exempt Industries
There are industries whose services are completely VAT-exempt for reasons specified in the law . These include:
Health and medical services
Educational services (e.g. private tutoring, when conditions are met)
Financial and insurance services
Certain cultural services
Residential rental
If your company operates in these sectors and meets the legal requirements, you will not collect or pay VAT on these services.
3. Temporary or Occasional Activity
If your activity is not continuous and does not have a profit-making purpose, the Tax Administration may consider it to be occasional and not subject to VAT. This applies, for example, to hobby activities or individual sales events (e.g. flea market sales).
Criteria:
The activity is not performed regularly.
The purpose is not to generate ongoing income
No advertising or organized business
4. Foreign operations and Reverse Tax Liability
In some international business situations , VAT does not normally need to be paid or collected , such as:
Sales to another EU company (intra-EU trade)
Reverse charge : the buyer pays the VAT , not the seller (e.g. in the construction industry)
the In these cases, the company can operate without invoicing VAT , but the correct VAT indication on the invoice is important .
5. Sales of Tax-Free Products
Certain products and services may be exempt from VAT under specific laws , such as:
Postage stamps
Certain securities
Certain charitable products
In this case, the tax is not added to the sales price and the buyer does not pay it.
Summary: When Do You Not Need to Pay VAT?
| Situation | VAT liability |
|---|---|
| Turnover below | No |
| VAT-free | No |
| Satunnainen tai harrastetoiminta | No |
| International | No (certain) |
| Free | I |
Finally
VAT liability does not apply to all entrepreneurs or businesses.small It is important to know your own situation and assess whether your company is liable to pay VAT. The de minimis threshold in 2025 provides relief for small businesses, but there are also many sector-specific exemptions that can exempt you from paying VAT .Milloin ei tarvitse maksaa alv
If you are unsure, check your situation in the Finnish Tax Administration's MyTax service or contact an accountant for detailed advice.