Government proposal
Changes to value added taxation in e-commerce

The proposal would remove the tax exemption of small imported online purchases. In future, value added tax would also be collected for shipments valued EUR 22 or less that are imported from outside the EU. Changes would also be made to distance selling within the EU. The government proposal would also reduce the administrative burden on companies regarding value added tax.

These legislative changes are being made in Finland to comply with EU regulations. The government submitted its proposal for the amendments on Thursday, 25 February.

Fair competition with EU outsiders

Value added tax has not been collected for shipments valued EUR 22 or less if the goods were imported to the EU. At the same time, value added tax has been collected for small purchases made within the EU.

The tax exemption of shipments from outside the EU would be removed by the amendment, which would improve the competitive position of companies establishedin the EU by making the conditions of competition equal. 

In online shops where the seller uses the new special scheme for shopping valued EUR 150 or less, customers would pay value added tax as part of a product’s price. This would make the import exempted, and the seller would declare and pay taxes on their sales to the respective Member States through the Member State in which they are registered. This change would reduce the administrative burden on private persons and companies.

In the case of online shops not using the special scheme for imports, the transportercould pay the value added tax to Finnish Customs on behalf of the recipient on a monthly basis by using a new simplified special scheme.

Changes to distance selling within the EU

The tax for distance-sold goods would be collected in the shipment’s target Member State regardless of the volume of distance sales in said Member State. The annual limit of EUR 35,000 for determining the taxing Member State would be abolished. As a country with high taxation, Finland would benefit from this change.

The previous limit of EUR 35,000 would be replaced with an EU-wide limit of EUR 10,000 for distance selling and the sale of certain services. This would reduce the administrative burden on small companies. For sales under this limit, tax would be collected in the Member State where the seller is establishedor where transportation starts.

Businesses that enable the sale of goods online, such as marketplaces, would be liable to pay taxes on sales to consumers upon certain conditions. In addition, marketplaces would be obligated to keep records of the sale of goods and services. The aim of this is to ensure effective tax collection.

Reduced administrative costs

The administrative costs of companies could be significantly reduced if the current single point of contact reporting and payment systems were expanded. For now, these systems are used for radio and television broadcast services, electronic services, and telecommunication services. The proposal would include all other services sold to consumers in the special systems. In addition, the EU special system would be expanded to include the intra-EU distance selling of goods. 
 
These changes are intended to take effect on 1 July.

Additional information:

Suvi Anttila, legislative counsellor, tel. +358 2 9553 0201, suvi.anttila(at)vm.fi
Risto Sakki, ministerial adviser, tel. +358 2 9553 0294, risto.sakki(at)vm.fi