Arvonlisäveroa

Arvonlisävero, often abbreviated as ALV in Finland and VAT in English, is a consumption tax levied on most goods and services sold within Finland. It is a value-added tax, meaning it is collected at each stage of the production and distribution chain, with businesses able to deduct the VAT they have paid on their inputs. The final consumer ultimately bears the burden of the tax.

The standard rate of arvonlisävero in Finland is 24%. However, certain goods and services are subject to reduced rates, such as 14% for foodstuffs and 10% for publications and passenger transport. Some essential services, like healthcare and financial services, are exempt from arvonlisävero.

Businesses registered for VAT must charge the applicable rate to their customers and remit the collected tax to the Finnish Tax Administration (Verohallinto). They can, however, reclaim the arvonlisävero they have paid on business-related purchases, such as raw materials or office supplies. This mechanism ensures that the tax is only applied to the value added at each stage.

The arvonlisävero system is designed to be revenue-neutral for businesses and to tax consumption rather than income. It is a significant source of government revenue in Finland, funding public services. The administration and collection of arvonlisävero are governed by specific legislation, and businesses are required to maintain detailed records for VAT purposes. The rates and regulations are subject to periodic review and adjustment by the Finnish government.