Import VAT when importing from outside the EU
The scope of Customs competence regarding value added tax on importation changed on 1 January 2018. The value added taxation was transferred from Customs to the Tax Administration in situations where the importer is included in the register of VAT payers. The change concerns the importation of goods to Finland from outside the customs territory and fiscal territory of the EU, or from the customs territory of the EU but outside its’ fiscal territory, for example from the Canary Islands. Customs is responsible for the value added taxation upon import if the party liable to pay tax is not included in the register of VAT payers at the time when the obligation to pay tax arises.
According to the Value Added Tax Act, the declarant referred to in Article 5(15) of the Union Customs Code is liable to pay tax when importing goods. In cases of indirect representation, the person liable to pay tax is the client. In certain situations of unlawful introduction as referred to in the union customs code, the person liable to pay VAT is the one who has neglected their responsibility or requirement as laid down in the Customs Code.
These regulations regarding tax liability are also applied on the person who acts as an indirect representative of the client, when goods are imported from the customs territory of the Union but outside its’ fiscal territory to the fiscal territory of the EU (e.g. from the Canary Islands to Mainland Finland).
In a case of VAT on importation levied by Customs, the person responsible for paying the customs debt is also jointly liable for the payment of VAT According to section 86 b subsection 2 of the Value Added Tax Act.
It is important to remember that in cases, where Customs as competent authority levies the VAT on importation, and direct representation or direct representation with the responsibility of a guarantor has been used, a direct representative is jointly and severally liable for paying the customs debt if they were aware, or should have been aware that the information provided in the declaration was incorrect. If indirect representation has been used, the person who has acted as an indirect representative and the client, are jointly and severally responsible for paying the taxes.
Example 1. The client does not have a Finnish business ID and indirect representation is used. In this case, the indirect representative is also responsible for the VAT on importation and any subsequent taxation.
Example 2. The company has a Finnish business ID and according to the stock records, alcohol has disappeared from the company’s customs warehouse. The warehouse keeper who has a Finnish business ID should pay the excise duties and VAT. Despite of the VAT registration, the taxes are levied by Customs, not the Tax Administration.
More information: Payment of Customs invoices
The taxes on goods bought at a customs auction are paid by the buyer.
What is considered importation in Finland?
Concerning value added taxation, a Member State and the Community means a VAT territory of the EU as defined by the legislation of the European Communities. List of Member States and territories of the EU that belong to the VAT territory.
Regulations for the Province of Åland regarding value added tax and excise duty legislation are laid down in a separate Act (1266/1996). (in Finnish)
- Special status of Åland (in Finnish)
- Updated legislation on Value Added Tax (in Finnish and Swedish)
Value added tax payable on the importation of goods which takes place in Finland
VAT is payable on the importation of goods which takes place in Finland.
The importation of goods means bringing in goods into the EU. The importation of goods takes place in Finland if the goods are in Finland when they are brought into the EU. This is the main rule when importing goods from outside the customs territory and the fiscal territory of the EU, for example from China directly to Finland. Importation is also bringing in goods from the EU customs territory, but from outside the EU fiscal territory, for example the Canary Islands to Finland.
The importation is also regarded as taking place in Finland, when goods that are imported into the customs territory of the European Union are place under one of the following procedures, and the goods are in Finland when they cease to be under the procedure:
- temporary storage (Union Customs Code, Article 144)
- storage procedure as defined in the Union Customs Code, Article 237
- inward processing procedure (Union Customs Code, Article 256)
- temporary admission procedure with total relief from customs duty (Union Customs Code, Article 250)
- external transit procedure (Union Customs Code, Article 226)
- internal transit procedure (Union Customs Code, Article 227) or some other abovementioned procedure when goods are brought in from the customs territory of the EU but outside the fiscal territory of the EU. If, for example goods brought in from the Canary Island to Finland are in Finland when the internal transit procedure ends, the importation takes place in Finland.
When Union goods, placed under the internal transit procedure in another EU Member State (customs and fiscal territory), are imported to Finland via a territory outside the customs and fiscal territory of the EU, the importation is not considered import as defined in the Value Added Tax Act. Union goods are goods manufactured within the customs territory of the EU or goods brought into the customs territory and fiscal territory of the EU, and cleared to free consumption.
Legislation applied for value added taxation on importation
The national Value Added Tax Act (1501/1993) and the customs legislation are both applied for VAT purposes regarding imports.
According to the Value Added Tax Act, the provisions regarding value added taxation on import by Customs apply in respect of the following procedures, unless otherwise provided for in the customs legislation:
- importation of goods, payment of tax, refund and recovery of tax as well as other procedures
- deferment of the tax payment
- tax increase
- penalty charge
- tax reassessment
- confidentiality of data and disclosure and obtainment of confidential data.
When bringing in goods from the customs territory of the EU, but from outside the fiscal territory of the EU and into the EU fiscal territory, Customs Code regulations are implemented during the following procedures:
- formalities regarding goods brought into the customs territory of the European Union
- temporary storage
- placing goods under the procedure for customs warehousing or free zone procedure
- placing goods under the inward processing procedure
- placing goods under the temporary admission procedure with total relief from customs duty.
Customs regulations applied for customs taxation:
Links to the regulations: Customs legislation
The Act on exceptions for the Province of Åland regarding value added tax and excise duty legislation (1266/1996), the Value Added Tax Act on importation and the customs legislation, are applied when goods are imported to the Province of Åland from Mainland Finland (and vice versa), from another Member State or from outside the fiscal territory of the EU.