Arvonlisäveroilu

Arvonlisäveroilu, often abbreviated as ALV, is a consumption tax levied on the value added at each stage of production and distribution of goods and services. It is a broad-based tax, meaning it applies to most transactions. Businesses are responsible for collecting ALV from their customers and remitting it to the tax authorities. However, businesses can typically deduct the ALV they have paid on their own purchases of goods and services, effectively making the tax borne by the final consumer.

The standard rate of arvonlisäveroilu varies by country, with many European nations having rates around 20-25%. Some essential goods and services, such as food, books, and certain medical supplies, may be subject to a reduced ALV rate or even be exempt entirely. The specific rates and exemptions are determined by national legislation.

Arvonlisäveroilu is a significant source of revenue for governments, contributing a substantial portion of their overall tax income. Its mechanism aims to tax consumption rather than income, and it is designed to be neutral for businesses, meaning it should not affect their pricing decisions or profitability in the long run, apart from the administrative burden of collection and remittance. International trade is also subject to ALV rules, with specific provisions for imports and exports to ensure the tax is levied in the country of consumption.