According to the Finnish national law, since 1 April 2020, all public organizations and private companies can request an electronic invoice from their suppliers. The law does not apply to companies with a turnover of less than 10.000 euros or companies that do B2C business only.
The Finnish Tax Administration is a participant in the project called “Real-Time Economy Project”. The vision of the Real-Time Economy Project is to build a national digital ecosystem for business enterprises that would be compatible with similar systems in other Nordic countries. The ecosystem would allow seamless, real-time and secure transmission of orders, e-invoices, digital sales receipts and business information between corporations of all sizes. One of the Tax Administration’s objectives is to approach a seamless model of collecting tax information from taxpayer companies’ IT systems. This means that records on business transactions such as invoicing, sales receipts, and tax payments would be readily available online, in an inter-operable, machine-readable format.
No timetable has yet been published for the introduction of mandatory e-invoicing and e-reporting for everyone. As to ViDA, the Finnish Tax Administration is waiting for the EU decisions. The Finnish national legislation will be amended on the basis of the ViDA Directive.
E-invoicing
An electronic invoice refers to an invoice that is made and received in a structured electronic format and complies with EU electronic invoicing standards. The updated Finnish e-invoicing standards (TEAPPSXML 3.0, Finvoice 3.0) and international e-invoicing formats (UBL, CII) are accepted invoicing formats. Invoices sent by e-mail are not e-invoices according to the law.
PEPPOL, Pan-European Public Procurement Online, is the European equivalent of Finvoice (standard e-invoice format used in Finland). In Finland, a transition from the current e-invoicing standards to PEPPOL and the UBL standard is being considered at the end of the decade.
Legislation in Finland
On 22 February 2019, Finland’s parliament passed a law (the Act on Electronic Invoicing of Procurement Entities and Entrepreneurs (241/2019)) requiring public bodies to accept exclusively e-invoices being compliant with the European standard on e-invoicing. The implementation of the Directive 2014/55/EU was realised with this law on e-invoicing that entered into force on 1 April 2019 for central government bodies.
Beginning 1 April 2020, the law allows public administrations and private companies to require e-invoices from their suppliers in Finland. This means that if the invoice receiver in Finland so decides, he can reject e-invoices that are not following the European norm. The buyer has even the right to leave invoices unpaid if the supplier company does not send an e-invoice.
Consequently, as of 1 April 2020 all public organisations and private companies can require e-invoices from their suppliers in Finland. The law does not prohibit anyone from receiving invoices of different formats, but it does give the buyer the right to reject e-invoices that do not contain the data fields specified in the Directive 2014/55/EU.
The e-invoicing Act does not affect companies with a turnover of less than 10.000 euros or companies that do only B2C business.
Whenever the sender does not have the capability to send European standard compliant e-invoices, a bilateral agreement can be set between the trading partners.
The e-invoicing is actually not an issue of the Finnish Tax Administration since it is governed by other legislation than tax legislation. However, the e-invoicing is a prerequisite for digital reporting.
E-invoicing Registry in Finland
The Finnish Information Society Development Centre (TIEKE), a non-profit organisation, maintains an e-invoicing Registry with contact information and e-invoicing address of companies that have implemented e-invoicing. TIEKE also coordinates the Finnish e-invoicing Forum, established in 2001, that brings together experts, developers, service providers and users to promote the adoption of e-invoicing based on common standards and procedures.
E-reporting - Finnish Tax Administration: The goal is real-time VAT reporting
The fact is that the current VAT return in Finland is narrow in content and does not give a clear picture of the company's operations. In the VAT return, only the total amount is reported for many different events. On the other hand, some information must be given very precisely. If invoice- and receipt-specific reporting is implemented, the VAT return will be updated at the latest in that connection, so that the comparison of invoice-specific information with the VAT return is possible. All special situations of VAT, for example purchases made for non-deductible use, are not reflected in the invoice information. Therefore, the VAT return will be necessary in the future as well and its content must be updated.
The plan is to move to invoice- and receipt-specific reporting in stages with the development of the real-time economy. The data would be transferred to the Tax Administration from the company's financial management system automatically via an interface. The interface can be built into either an electronic invoicing or cash register system or, alternatively, into an accounting system. All companies liable for VAT in Finland should report the information on a transaction basis. Reporting should be introduced as widely as possible in companies so that, for example, comparability of sales and purchases is possible and reliable. However, reporting would be introduced in stages and companies' requirements for producing invoice- and receipt-specific information would be taken into account. Sufficiently extensive use of electronic invoicing and e-receipts creates the conditions for event-specific reporting.
The Tax Administration has proposed the following deadlines for the invoice- and receipt specific reporting:
- sales invoices should be submitted no later than the 6th day after the end of the month to which the sales invoice belongs, and
- purchase invoices should be reported within one month of the end of the month to which the purchase invoice belongs (e.g. invoices for June should be reported no later than 31.7.) or no later than when the VAT return is submitted, if the VAT return is submitted before the due date for reporting the purchase invoices.
The goal of the reform is also to create a pre-filled VAT return for the company based on business transaction information. In an ideal situation, the company would only need to check and, if necessary, modify the pre-filled VAT return. This is a long-term goal, its practical implementation still requires further clarification. The pre-filled VAT return could be chosen by those companies who would find it useful. The company could therefore, if wished, use the information created in the pre-filled VAT return. The purpose of the pre-filled VAT return is to simplify the customer's operations, not to complicate reporting.
What information should be reported on transaction basis?
The most significant added value in reporting comes from transaction information between business partners, the information about which goods or services a single transaction concerns is not that significant. Therefore, it would be enough to report only defined information content per invoice and receipt. Not all company invoices are required to be reported. Among other things, geographical limitations have been proposed for which business transactions the reporting should apply to. The aim is not to make an exclusionary list of limitations, but to define the minimum scope of reporting. If desired, the company could provide information on all transactions to the Tax Administration.
In addition to sales and purchases between companies subject to VAT, information on sales to consumers or other non-VAT liable persons should also be reported. In this way, a sufficiently comprehensive picture of the business would be formed. The Tax Administration is of the opinion that community sales, i.e. sales to other EU countries and triangulation situations, should be excluded from the reporting. Community sales would continue to be reported with a separate VAT recapitulative statement. However, it would be possible for the company to report community sales, triangulation sales and also export sales on a transaction-by-event basis, even if this would not be required.
It is not necessary to obtain information about tax-free sales per invoice or receipt. Tax-free sales affect, among other things, deduction rights and have been found to be associated with significant VAT risks. The goal is that this information will be reported in the future as sum information with the VAT return.
When will event-specific reporting be implemented?
The plan is to move to invoice- and receipt-specific reporting in stages with the development of the real-time economy.
The pre-filled VAT return would become available for the smallest companies when the information for pre-filling with sufficient accuracy is available from the reporting of sales and purchases. Invoice- and receipt-specific reporting requires changes to the financial management and accounting software used by companies and accounting firms and to the data generation processes. Therefore, the change would be implemented in stages, whereby the possibilities of companies of different sizes to switch to the new reporting method would be taken into account.
In the first phase, the implementation would only concern invoices, as e-invoices are already used more frequently than electronic receipts. Reporting would start with B2G trade with the public administration. The information and experiences gained from it would be used in preparation for broader invoice-specific reporting. At a later stage, invoice-specific reporting of B2B sales and B2C sales would also become mandatory. The phasing plan will be further refined in the further preparation phase and following the development of the real-time economy.
Transitioning to event-specific reporting is facilitated by the fact that the real-time economy has been digitized sufficiently, in which case reporting would not increase the company's administrative burden or costs. Invoice- and receipt-specific reporting is not required until the information is available sufficiently extensively and in a sufficiently efficient manner.
The Tax Administration has handed over its statement on event-specific reporting to the Ministry of Finance. No further decisions have been made yet.
For more information, please visit:
https://www.yrityksendigitalous.fi/en/
https://peppol.org/
https://directory.peppol.eu/public/locale-en_US/menuitem-search
www.vero.fi
