Finland : Supreme Administrative Court considered the right of financial operators to a VAT refund to be broader than the express wording of the national VAT Act

The Supreme Administrative Court’s (SAC) case SAC 2025:20 concerns a Finnish company which sold, inter alia, credit intermediation services to financial institutions, such as Norwegian branches of Swedish banks or Norwegian banks which may have a branch in Sweden. The SAC’s ruling has a major direct impact on financial operators established in Finland and possible more general impact on questions concerning the application and interpretation of the VAT Directive.

The question before the SAC was precisely whether VAT on purchases could be refunded to a company in so far as the purchases related to the sale of credit brokerage services where the recipient of the services was either a branch outside the Community or a company established outside the Community with a fixed establishment in a Member State.

Under Section 131(1)(2) of the Finnish VAT Act, a trader is entitled to a refund of VAT if the purchaser is a trader who does not have a place of business or a fixed establishment in the Community or if the sale relates directly to goods intended for export outside the Community”. Under the corresponding Article 169(c) of the the Council directive 2006/112/EC of 28 November 2006 on the common system of value added tax (the VAT Directive), the taxable person shall be entitled to deduct the VAT --, “where the customer is established outside the Community or where those transactions relate directly to goods to be exported out of the Community”. The wording of the provision in the Finnish VAT Act is therefore much narrower than the corresponding article of the Directive.

The SAC held that, despite its express wording, the provision of the VAT Act had to be interpreted in such a way that it corresponded to the interpretation of the corresponding provision of the VAT Directive. According to the SAC, the VAT Directive had thus to be interpreted as meaning that a taxable person has a right to refund if it sells a financial service to a purchaser who has place of business outside the Community. According to the SAC, it is irrelevant that such a purchaser may have a fixed establishment in the Community.

Even though the SAC’s ruling substantially extends the scope of the provision of the Finnish VAT Act on the right to refund in relation to the express wording of said provision, the conclusions of the SAC are, in our view, logical and what we expected on the basis of our own interpretation. The SAC’s ruling is relevant also because directives are not in general directly applicable law in the Member States. The ruling provides therefore grounds to critically assess the wording of the domestic VAT regulation in the light of the interpretation and purpose of the VAT Directive also in the future.