Tax exemption on import

A customs declaration must be submitted to Finnish Customs for imports. The customs procedure codes (e.g. 42xx, 63xx, 45xx) and national procedure codes related to tax exemptions must also be provided in the import declaration. Customs won’t confirm the VAT exemption with a customs clearance decision if the trader is registered for VAT and files VAT on their own initiative to the Finnish Tax Administration.

Imports are usually taxable, but in some cases it’s possible to apply for exemption from customs duty for the goods. Duty exemption or a duty that is lower than the general customs duty can be applied for on the basis of the Duty Relief Regulation, the origin of the goods or the commodity code. You can view commodity codes in the Fintaric service.

Exemption from customs duty doesn’t necessarily mean that the import of goods would be exempt from VAT. The grounds for VAT-exempt imports have been specified separately in the Value Added Tax Act (VAT Act). No VAT is levied e.g. on investment gold, mother’s milk or dental prostheses (section 4.4 in the instruction, available in Finnish and Swedish, link to Finnish) (sections 94–96 and 72 h VAT Act).

VAT-exempt imports on the basis of the VAT Act:

Imports are exempt from VAT, when the imported goods are transferred to the tax warehousing procedure referred to in the VAT Act. Goods that can be placed under the tax warehousing procedure are listed in section 72 of the VAT Act. The tax warehousing procedure is subject to authorisation by the Finnish Tax Administration.

Goods under the tax warehousing procedure refer to goods in a tax warehouse that are not under the temporary storage procedure or the customs warehousing procedure referred to in the Union Customs Code. Excise goods are considered to be under the tax warehousing procedure when they are in a warehouse referred to in section 6(4) of the Act on Excise Duty (182/2010).

More information:

If you are transferring products other than excise products under the tax warehousing procedure, provide the following details in the customs declaration:

  • customs procedure 45xx
  • additional procedure “659 – Transfer to a VAT warehouse”
  • the VAT warehouse ID is provided with the additional information code “FIALV – Identification of VAT warehouse”.

If you are transferring excise products under a duty suspension arrangement, see the instructions on declaring excise products in import declarations.   

According to section 94 b of the VAT Act, import is exempt from VAT, when the goods are transported immediately after the import to another Member State, the importer is an entrepreneur and the import is followed by intra-Community supply.

When the import is followed by intra-Community supply (section 72 b(1) or (6) of the VAT Act), exemption from tax upon import also requires that

  • the importer has a VAT number issued in Finland
  • the buyer’s or importer’s VAT number issued in the EU Member State where the transport ends has been provided in the customs declaration
  • on request, the importer provides proof that the imported goods are going to be dispatched or transported to another Member State.

Example 1:

A Finnish company buys goods from Norway and sells and transports them immediately to Latvia as intra-Community supply. The import is exempt from VAT if the following requirements are met:

  1. The Finnish importer is a VAT-registered entrepreneur who provides in the customs declaration the VAT number issued to them in Finland.
  2. The buyer’s VAT number issued in another Member State (Latvia) has been provided in the customs declaration.
  3. On request, the importer provides proof that the imported goods are going to be dispatched or transported to another Member State.
  4. The importer of the goods must have proof of the intra-Community supply of the goods (section 72 b(1 and 6) of the VAT Act).

Example 2:

A German company is VAT-registered both in Germany and in Finland. The company buys goods from Norway, declares them in Finland and transports them immediately to its own warehouse in Germany. The import is exempt from VAT if the following requirements are met:

  1. The German company’s VAT number issued in Finland is provided in the customs declaration.
  2. The German company’s VAT number issued in Germany is provided in the customs declaration.
  3. On request, the importer provides proof that the imported goods are going to be dispatched or transported to another Member State.

The fact that a direct or an indirect representative of the importer is VAT-registered in Finland, is not sufficient for the application of section 94 b of the VAT Act, as a representative never acts as an intra-Community supplier (that is, the goods are not current assets of the representative).

Provide the following details in the Customs Clearance Service or in the customs declaration submitted through message exchange:

  • Customs procedure code 42xx (xx = the previous procedure)
    • If the customs procedure code 21xx, 22xx or 23xx was provided when the goods were exported, provide the customs procedure code 6321, 6322 or 6323 in the import declaration.
  • Importer: An entrepreneur registered for VAT in Finland (e.g. FI1234567-8).
  • Additional fiscal trader: under “FR2 – Customer” and “Identification number”, provide the VAT number issued to the buyer in the Member State of destination of the transport (e.g. if the transport ends in Sweden, provide the VAT number issued to the buyer by the Swedish Tax Agency, SE23322233443).
    • In the case of transfer of goods handled as intra-Community supply, provide under “Identification number” the VAT number issued to the importer in the Member State of destination of the transport (e.g. if the transport ends in Sweden, provide the VAT number issued to the buyer by the Swedish Tax Agency).
  • Under “Additional information” at goods item level, provide the code FIXXX for Community invoice and invoice number (intra-Community supply, not transfer). If a Community invoice is not available at the time of customs clearance or in the case of transfer of goods comparable to intra-Community supply, provide the number of the commercial contract or other document.

If there is a service interruption in the Customs Clearance Service and you are using the fallback procedure, provide the same details in the SAD form as in the Customs Clearance Service.

If you are submitting your declaration via message exchange to the ITU system or if you use the SAD form, provide the following details:

  • column/box 8 consignee: company located in the Member State of destination
  • column/box 14 declarant: name of the entrepreneur and the VAT number issued in Finland (1234567-8)
  • column/box 44: code XAJ + Y040 the VAT number issued to the buyer by the tax authority of the Member State of destination. Provide the Y code+country code+VAT number in the format Y040SE23322233443
    • In transfers of goods processed as intra-Community supplies, the declarant’s own VAT number issued in the Member State of destination of the transport is provided.
  • column/box 44: number of the intra-Community supply invoice or the number of the commercial contract or other document. If an intra-Community supply invoice is not available at the time of customs clearance for a declaration submitted with the SAD form, Customs will archive the invoice for the intra-Community supply as an attachment to the customs clearance.

Read more:

A crew member on duty on a means of transport that provides professional transportation between Finland and non-EU country or territory has the right to bring in the same quantity of goods free of customs duty and tax during one calendar month import as a traveller can bring in from one trip. However, a crew member on a means of transport by road can bring in, in addition to products subject to quantity limits, other products free of customs duty and tax for a maximum value of 300 euros. In air and sea traffic, the maximum value for other duty-free and tax-free products is of 430 euros.

Read more about imports by travellers and the customs clearance carnet.

Imports of special automatic data processing software are exempt from tax, when the importer is an entrepreneur or a VAT-registered legal person.

Examples of declaring data media:

  1. If the software is downloaded via an online service, it is not considered as goods, so no customs declaration is submitted to Customs for the software and no import duties are paid on it.
  2. Software freely available for anyone to buy is delivered to the customer on a flash drive. An import declaration for the software is submitted to Customs and the customs value is based on the price paid for the software. Customs duties are paid for the import. Importers registered for VAT declare the import details on their own initiative by filing a VAT return in the Finnish Tax Administration’s MyTax service. Customers not registered for VAT pay the import VAT levied by a customs clearance decision in conjunction with the customs clearance.
  3. Bespoke software developed for a company is delivered to the customer on a flash drive, i.e. it is so-called special automatic data processing software. An import declaration is submitted to Customs for the flash drive. As a rule, the customs value is based on the total value of the flash drive and the software stored on it, and import duties are levied on this value (licences or activation codes are not software). Services carried out after the import (e.g. installation, maintenance, training etc.) and items paid for them are not included in the customs value. Lodge a customs declaration as follows:
  • If the special automatic data processing software was imported by an entrepreneur or a VAT-registered legal person, the additional procedure code “636 – Special automatic data processing software, imported by an entrepreneur” shall be provided in the customs declaration.
    • Importers registered for VAT declare the import VAT on their own initiative by filing a VAT return in the Finnish Tax Administration’s MyTax service.
    • If the entrepreneur isn’t registered for VAT, the exceptional taxable amount for VAT must be provided in the customs declaration with the code 80. The taxable amount for VAT includes the value of the storage medium, the import taxes and customs duties as well as other items to be included (e.g. freight and insurance costs) to the place of destination in Finland. If it is known at the time of customs clearance that the goods will be transported to another destination located within the EU, these costs shall also be included in the taxable amount for VAT.
  • If the importer of the special automatic data processing software is not an entrepreneur, no additional procedure code or exceptional taxable amount for VAT shall be provided. 
    • Importers registered for VAT declare the import VAT on their own initiative by filing a VAT return in the Finnish Tax Administration’s MyTax service.
    • If the importer is not registered for VAT, the import duties and VAT are levied by a customs clearance decision.

The import of investment gold as defined in the VAT Act is exempt from VAT. Investment gold means gold in the form of a bar or wafer as well as gold coins.Importers that are not registered for VAT must invoke the tax exemption for import in the customs declaration and provide proof that the conditions for the tax exemption are met. The EU procedure code 637 (SAD: national procedure code 7AN) is provided in the customs declaration. The import of gold material (such as gold powder and granules) and semi-manufactured gold (such as gold rods and scrap gold) is taxable.

The manufacturer’s declaration, for example, can be accepted as proof that the conditions for the tax exemption are met. Read more in the Tax Administration’s detailed guidance about the value added taxation of investment gold, gold material and semi-manufactured gold (available in Finnish and Swedish, link to Finnish).

  • When calculating the relationship between the normal selling price and the open market price of the gold contained in a coin, the following concepts are used:
    • Normal selling price: the price at which the seller sold the coin to the buyer. Transport costs or other similar costs charged by the seller are not included in the price.
    • Currency conversion rate: the conversion rates established by Customs and published monthly on the Customs website are used when converting other currencies to euros.
    • Open market value of gold: The price of gold quoted at the London Metal Exchange on the day the coin was received is used when calculating the open market value of gold (USD/ounce). If the price of gold is not quoted on the said date, the value on the following quotation date shall apply. As a rule, the declarant is responsible for providing the open market value of gold.
    • Gold content of a coin in grams (The importer must provide proof of the gold content of the coin, e.g. the manufacturer’s declaration.)
  • Ounce (oz): 1 oz = 31,1035 g (troy ounces)
  • Tael: 1 tael = 1,193 oz (troy ounces)
  • Tola: 10 tolas = 3,75 oz (troy ounces)

An importer of dental prostheses must check whether the dental prostheses they are importing are those referred to in section 36(3) of the VAT Act. If the dental prostheses meet the requirements of the VAT Act, and the seller of the dental prostheses is a dentist, dental technician or specialised dental technician, the dental prostheses can be declared in the customs declaration with the additional procedure code “623 – Dentures referred to in section 36(3) VAT Act”.  Check the conditions in the Finnish Tax Administration’s guidance on value added taxation of health care and medical care, section 4.4 (available in Finnish and Swedish, link to Finnish).

If the conditions for VAT exemption are not met, this additional procedure code can’t be used. In that case, proceed as follows:

  • Businesses registered for VAT declare the import VAT details on their own initiative by filing a VAT return.
  • Customers not registered for VAT pay the VAT in conjunction with the customs clearance in accordance with the customs clearance decision.

If you are applying for VAT exemption for imports, provide the additional procedure codes in the customs declaration. You’ll find the additional procedure codes in the code list CL102 ‒ Additional procedure. Importers registered for VAT will also always declare the import details on their own initiative by filing a VAT return in the Finnish Tax Administration’s MyTax service, and the Tax Administration is responsible for the value added taxation of imports.

Goods exported from the customs territory of the Union that are returned to that territory shall, under certain conditions, be granted relief from import duty (Articles 203–207 UCC). Returned goods exempted from customs duty can be returned exempt from VAT, if certain requirements are met. Read more about the requirements for VAT-exempt imports of returned goods and customs declarations.

More information:

Diplomatic goods are exempt from customs duty on certain conditions (Customs Act, section 44(1)(1 and 2). If the goods are exempt from customs duty on the basis of the Customs Act, they are also exempt from VAT. However, a customs declaration must be submitted for diplomatic goods, even if imports of the goods were exempt from tax.

Goods are exempt from customs duty when they are brought into Finland 

  • for the official use of diplomatic missions operating in Finland or
  • for the official use of other foreign missions and consulates that hold an equivalent status.

Goods are also duty-free if they are imported for the personal use of diplomats, consuls or technical personnel and their family members.

The goods cannot be granted exemption without a so-called French paper certified and stamped by the Ministry for Foreign Affairs of Finland. However, the French paper is not required for diplomatic mail containing documents. Vienna Convention (Finnish Treaty Series 4/1970 and Finnish Treaty Series 50/1980)

Instructions for customs declarations on diplomatic goods.

 

The following goods can be imported exempt from VAT:

  • personal property acquired by inheritance
  • household effects imported by students for their personal use during their studies
  • basic necessities imported by State organisations or charitable or philanthropic organisations approved by Customs for distribution free of charge to needy persons. The condition for VAT exemption is that no payment has been made for the imported goods.
  • medals and cups awarded at art and sports competitions
  • gifts for state visits
  • goods intended for a fair
  • collector’s items and works of art not intended for sale and received e.g. by museums and galleries.

There are various conditions for the exemption from customs duty of these goods. If the goods listed above are duty-free on the basis of the Duty Relief Regulation, they are also VAT-free. Read more about the Duty Relief Regulation.

Points to consider