UKKO Light Entrepreneur
UKKO Entrepreneur
UKKO Light Entrepreneur
UKKO Entrepreneur
Currently, the reverse charge VAT system is applied within the EU. This means that in trade between EU member states, when the seller is a VAT-registered business and the buyer is a business registered for VAT in another EU country, the invoice is always issued without VAT. The recipient of the invoice is responsible for paying the VAT.
The buyer of the service or product must have a valid VAT registration number in another EU country. This is referred to as a VAT number and it must be included on the invoice. When preparing the invoice, the seller must therefore verify the buyer’s VAT number. If the reverse charge VAT system is applied, the invoice must contain a standard indication stating this.
Products and services purchased under the reverse charge VAT system should be entered into our service using the same VAT rate that would apply if the purchase had been made in Finland.
Purchase from a company with a VAT number
Make sure you have a receipt or invoice for the purchase that shows both your company's own VAT number and the seller’s VAT number. For a Finnish company, the VAT number consists of the country code FI followed by the Business ID without the hyphen before the last digit. For example, if the company’s Business ID is 1234567-8, its VAT number is FI12345678. The format of the seller’s VAT number may vary depending on the company’s home country and local business ID format.
Once you have confirmed that your receipt includes the VAT numbers of both parties, add the purchase in the UKKO system with expense voucher.
When creating the expense voucher, remember to select an EU country as the country of purchase and enter the seller company’s details (name and VAT number).
In the entry details breakdown, select the correct entry type and enter the VAT rate that would apply if the purchase had been made in Finland.
For example:
- If you purchased a service, select a VAT rate of 25.5%.
- If you purchased for example books, select a VAT rate of 13,5%.
As amount put the paid amount from the invoice (without VAT).
Here is an example how to fill in an expense voucher; payable amount (amount in the invoice / receipt) is 15 euros and reverse charge VAT is applied:
The VAT is reported and paid in Finland, which is why the expense voucher should always show the VAT percentage corresponding to the Finnish VAT rate.
On the VAT calculation, an EU purchase appears both as payable VAT and deductible VAT, meaning that the net effect on the VAT return is ±0.
Purchase without a VAT number (the receipt/invoice includes the seller’s local VAT rate)
If you made a purchase without providing your company's VAT number to the seller (and without requesting an invoice/receipt under the EU reverse charge VAT system), the seller will include their own country’s VAT in the sales price, and this will appear in the VAT breakdown on the receipt or invoice.
In this case, the purchase should be entered into your limited company’s bookkeeping using the gross amount and selecting VAT 0% (as seller choose "private person", but tell the seller company name in the name section).
In this situation, the seller has paid the VAT to their own country, which means the purchase is not VAT-deductible for your company in Finland. The full amount is therefore recorded as a business expense.
Please also note that if the purchase was made in your own name (meaning the receipt/invoice does not contain your company’s details), you must first pay the expense personally to the seller and then reimburse yourself from your limited company through an expense claim (read more here).
VAT number starting with “EU”
Please note that a VAT number beginning with “EU” is not an actual VAT number. Instead, it is a special identifier used by non-EU businesses for consumer sales.
If you made a purchase from a company that has a VAT number beginning with “EU”, the purchase should be entered into the bookkeeping using the gross amount and VAT 0% (as seller choose "private person", but tell the seller company name in the name section).
In these cases, your company does not receive any VAT deduction benefit from the purchase.