Set up Finnish taxes in your Shopify store

Selling products on Shopify involves a lot more than building an online store. It also means ensuring that you comply with local tax requirements—including VAT if you operate in Finland.

Let’s explore how to set up these taxes in Shopify with ease.

This article will also teach you about the basics of Finnish VAT, when you need to register your business, and more.

• What is VAT?
• Tax settings
• Tax rates in Finland and the EU
• Selling goods to customers in Finland
  • My business is not VAT registered
  • My business is VAT registered
• Selling goods to customers in other EU Member States
  • Selling as a “micro-business”
  • Surpassing the micro-business threshold
  • Country-specific registration
• Selling goods outside of the EU
• Where to find further information
• Invoices

VAT (Value Added Tax) is a general consumption tax levied on the consumption of goods and services. It is also an indirect tax which needs to be paid by the end consumer.

This means VAT is not a charge on businesses, but taxable businesses are required to collect and pay the VAT to the government. Therefore, as a VAT registered business, you must include VAT in the sale price for end consumers.

VAT is levied on the value added at each stage of the production and supply chain. The level of VAT included in consumer prices is determined by the VAT rate.

To avoid multiple taxation, those liable to VAT may deduct input VAT from their tax.

If you want to charge VAT to some customers and not to others, you may choose from two settings, depending on how you want to display product prices in your Shopify store.

If you are selling predominantly to consumers (B2C), you may prefer to display product prices as including VAT.

To display your product prices including VAT, but still allow your business customers to have VAT deducted at checkout:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Decide how tax is charged section, check the Include tax in prices check box.
3. Click Save to apply the changes.
4. Go to the Settings → Markets → Preferences page and switch the Include or exclude tax based on your customer's country toggle on.

In case your customers are mostly businesses (B2B), you can choose to have your product prices displayed as excluding VAT.

To display your product prices excluding VAT:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Decide how tax is charged section, uncheck the Include tax in prices check box.
3. Click Save to apply the changes.
4. Go to the Settings → Markets → Preferences page and switch the Include or exclude tax based on your customer's country toggle off.

The standard rate of VAT in Finland is 24%. You should charge the standard rate unless the goods fall into a category with the reduced rates of 14% and 10%, or are zero-rated. Some business operations are exempt from VAT altogether.

The 14% VAT rate applies to food, groceries and related services (except alcohol and tobacco), whilst the 10% rate applies to books, newspapers/periodicals, pharmaceutical products, and some services.

For information on what goods and services are charged at the reduced rates, zero-rated, or exempt, see: Finnish VAT rates.

If you are selling goods to customers—either businesses (B2B) or consumers (B2C)—in Finland, then you must charge Finnish VAT.

If your business is not VAT registered, you do not charge VAT. This also means you cannot include VAT on your invoices until you register your business for VAT.

Most businesses start as unregistered. When the taxable part of your business’s turnover exceeds €15,000 in 12 months, you must register for VAT. You can also voluntarily register at any time.

For more information on registering for VAT see: How to register for VAT.

If your business is in Finland and you are VAT registered, you must charge VAT to some customers and not others. It all depends on where your customers are located.

If you are selling goods B2B in other EU Member States, then these sales are zero-rated for VAT. This means that you put the VAT on your invoices, but you only charge 0%. Under the reverse-charge mechanism rules, the customer will account for the VAT.

If you are selling goods B2C in other EU Member States, then you charge VAT. However, the rate of VAT depends on whether you surpass the “micro business” threshold.

If your taxable turnover during a calendar year outside your home country but still within the EU does not surpass a threshold of €10,000 (excluding VAT), you qualify for the micro-business exemption. Once you apply for it at your local tax authority, you will charge the VAT rate of the country your business is based in.

To use the "micro-business" taxation scheme, you need to apply for the "micro-business" exemption at your local tax authority. You will use just one VAT registration within the EU.

Then, you can set up your tax settings in your Shopify admin. This task only needs to be performed once.

To set VAT rates for the "micro-business" exemption scheme and charge your home country's VAT rates on all orders:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Countries/regions section, click on European Union.
3. In the Shipping within the EU section, click on Collect VAT.
4. In the Collect VAT window, select the Micro-business exemption option and click Next.
5. Select your Registration country and enter your VAT number. Leave this field blank if you have applied for a VAT registrationnumber but don't have one yet. You can update it later when you receive it.
6. Save your changes by clicking on the Collect VAT button.

If the total value of your sales to any EU Member State during a calendar year exceeds the threshold of €10,000 (excluding VAT), you charge the VAT rate of the country you are shipping to.

As a result, you will be charging different VAT rates to customers from other EU countries, varying from country to country (from 15% to 27%).

If you breach the threshold by selling to multiple countries, registering for VAT in each EU member state can become admin heavy. In this case, you can choose to use the One-Stop Shop (OSS) Union scheme, which means you still charge VAT at the rate of the country in which you are selling, but you only have to report on one OSS VAT return.

Shopify allows you to set these tax settings for individual VAT registrations and automatically charge the correct taxes to your EU customers.

For further information on selling goods between EU Member States see: VAT guide for Shopify stores in the EU.

To set VAT rates for the OSS scheme and charge your customers' shipping country VAT rates on all orders:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Countries/regions section, click on European Union.
3. In the Shipping within the EU section, click on Collect VAT.
4. In the Collect VAT window, select the One-Stop Shop registration option and click on Next.
5. Select your Registration country and enter your VAT number. If you have applied for a VAT registration number but don't have one yet, leave this field blank. You can update it later when you receive it.
6. Save your changes by clicking on the Collect VAT button.

Now, your customers' shipping country VAT rates automatically apply to all EU sales.

Some businesses may decide to continue to hold tax registration for each EU country they ship to. If that is your case, in Shopify, you can add a local VAT registration number for a different country, which allows you to charge the correct VAT rates. Shopify will then automatically apply VAT rates based on your VAT registration.

To add the local VAT registration number:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Countries/regions section, click on European Union.
3. In the Shipping within the EU section, click on Collect VAT.
4. In the Collect VAT window, select the Country-specific registration option and click on Next.
5. Select Country and enter your VAT number. If you have applied for a VAT registration number but don't have one yet, leave this field blank. You can update it later when you receive it.
6. Save your changes by clicking on the Collect VAT button.
7. To add the local VAT registration number for every country you are registered in, click on the Add country option and confirm the selection by clicking on the Add country button.

If you cannot select the additional country you are VAT registered in, you may need to create a shipping zone first.

To create a shipping zone:

1. In your Shopify admin, go to the Settings → Shipping and delivery page.
2. In the Shipping section, click Manage rates → Create shipping zone.
3. Type in the name of the shipping zone, add the country (or countries) you are VAT registered in using the search bar, and when finished, click Done.
4. To make this zone available, add the shipping rates.
5. Save your changes.

If you are selling goods from Finland outside of the EU—whether B2B or B2C—these sales are exempt from VAT.

This means that you do not charge VAT on your invoices.

For personalized advice based on your specific business situation, consider consulting with a tax professional or accountant who specializes in VAT and ecommerce. You can do this by googling a local tax advisor in your area.

Once you finish setting all the tax rates in your Shopify store, Sufio will automatically create and send invoices, credit notes, and other important documents with a section showing the VAT charged.

The app will create documents in multiple languages and include all the information to make them compliant with invoicing legislation in the EU and other key markets, like the UK and the US.