Taxation, VAT and OY companies.

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shrimp67
Posts: 47
Joined: Wed Sep 16, 2009 12:03 pm

Taxation, VAT and OY companies.

Post by shrimp67 » Mon Feb 13, 2017 10:51 pm

Hello,

I've been trying to find an answer for this question for 3 days now, Vero.fi don't seem to understand my question and communicate very poorly in English.
I posted it in the taxation forum on Suomi24, but the moderators keep deleting my message, I assume because it's in English also.
Getting very frustrated.

I would be very grateful if someone here knows or knows anyone who might know.
The question is this:

Are computer parts that are valued at 100 000e, and imported to Finland from China by an OY company subjected to customs tax and/or VAT?
If so, then how much, and is it possible to get a return for all of part of this VAT back somehow?

Also, will it be cheaper to import to Estonia and then bring to Finland?

Many thanks!



Taxation, VAT and OY companies.

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betelgeuse
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Re: Taxation, VAT and OY companies.

Post by betelgeuse » Mon Feb 13, 2017 11:50 pm

shrimp67 wrote: Are computer parts that are valued at 100 000e, and imported to Finland from China by an OY company subjected to customs tax and/or VAT?
Yes.
shrimp67 wrote: If so, then how much, and is it possible to get a return for all of part of this VAT back somehow?
VAT is 24% that you pay when you sell the items forward. Customs you will need to ask from:

http://tulli.fi
shrimp67 wrote: Also, will it be cheaper to import to Estonia and then bring to Finland?
No.


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foca
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Re: Taxation, VAT and OY companies.

Post by foca » Mon Feb 13, 2017 11:56 pm

Of course the shipment is subject to VAT and , possibly, customs duty. Customs duty percentage can be found on tulli.fi and it is the same for all EU countries ( after all EU is also a customs union). Vat you can claim back via a normal procedure , as it is done with internal vat operations (or almost the same).
In theory it is not cheaper to import the same from Estonia - customs duty will be levied in the same amount ( see above) abut vat will be applied through a "eu purchase" procedure ( basically it is a reverse vat procedure).
Best to employ a professional for the import procedure .....
What do you want from me?????


shrimp67
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Re: Taxation, VAT and OY companies.

Post by shrimp67 » Mon Feb 13, 2017 11:57 pm

betelgeuse wrote:
shrimp67 wrote:
shrimp67 wrote: If so, then how much, and is it possible to get a return for all of part of this VAT back somehow?
VAT is 24% that you pay when you sell the items forward. Customs you will need to ask from:

http://tulli.fi
What if I don't sell them forward, but use them for my company instead?

Thanks for your answers.


shrimp67
Posts: 47
Joined: Wed Sep 16, 2009 12:03 pm

Re: Taxation, VAT and OY companies.

Post by shrimp67 » Mon Feb 13, 2017 11:59 pm

foca wrote:Of course the shipment is subject to VAT and , possibly, customs duty. Customs duty percentage can be found on tulli.fi and it is the same for all EU countries ( after all EU is also a customs union). Vat you can claim back via a normal procedure , as it is done with internal vat operations (or almost the same).
In theory it is not cheaper to import the same from Estonia - customs duty will be levied in the same amount ( see above) abut vat will be applied through a "eu purchase" procedure ( basically it is a reverse vat procedure).
Best to employ a professional for the import procedure .....
Can you recommend such professional?


shrimp67
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Re: Taxation, VAT and OY companies.

Post by shrimp67 » Tue Feb 14, 2017 1:03 pm

Also,
I read here:
https://en.wikipedia.org/wiki/European_ ... e_excluded

That aland islands don't fall under the EU VAT laws, is there a way to use this to cut expenses?


Rosamunda
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Re: Taxation, VAT and OY companies.

Post by Rosamunda » Tue Feb 14, 2017 7:36 pm

shrimp67 wrote:
What if I don't sell them forward, but use them for my company instead?

Thanks for your answers.
In a nutshell, when you import something, you debit your purchase VAT account (credit cash). When you sell something you credit your sales VAT account (debit cash). The amount you owe Vero is the net amount of your VAT account. So if you don't sell the goods on, the ending balance on your VAT account will be higher (you owe Vero more).


Rosamunda
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Re: Taxation, VAT and OY companies.

Post by Rosamunda » Tue Feb 14, 2017 7:37 pm

shrimp67 wrote:Also,
I read here:
https://en.wikipedia.org/wiki/European_ ... e_excluded

That aland islands don't fall under the EU VAT laws, is there a way to use this to cut expenses?
Do you live in Mariehamn?
As soon as the goods enter the EU, you owe VAT. Whether or not they transit through the Åland Islands, Greenland or Guernsey.


shrimp67
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Re: Taxation, VAT and OY companies.

Post by shrimp67 » Tue Feb 14, 2017 8:55 pm

Rosamunda wrote:
shrimp67 wrote:Also,
I read here:
https://en.wikipedia.org/wiki/European_ ... e_excluded

That aland islands don't fall under the EU VAT laws, is there a way to use this to cut expenses?
Do you live in Mariehamn?
As soon as the goods enter the EU, you owe VAT. Whether or not they transit through the Åland Islands, Greenland or Guernsey.
Thank you for the clear explanation!
I don't mind running my company from aland if the real estate prices are the same as in rural Finland, and the network speeds are the same.
We're planning to build our own data center.


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foca
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Re: Taxation, VAT and OY companies.

Post by foca » Tue Feb 14, 2017 9:58 pm

shrimp67 wrote:
foca wrote:Of course the shipment is subject to VAT and , possibly, customs duty. Customs duty percentage can be found on tulli.fi and it is the same for all EU countries ( after all EU is also a customs union). Vat you can claim back via a normal procedure , as it is done with internal vat operations (or almost the same).
In theory it is not cheaper to import the same from Estonia - customs duty will be levied in the same amount ( see above) abut vat will be applied through a "eu purchase" procedure ( basically it is a reverse vat procedure).
Best to employ a professional for the import procedure .....
Can you recommend such professional?
There are hundreds really. Try checking internet. I used hacklin many times , but essentially , if it is a one time thing you can easily do it yourself .
What do you want from me?????


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foca
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Re: Taxation, VAT and OY companies.

Post by foca » Tue Feb 14, 2017 10:01 pm

shrimp67 wrote:Also,
I read here:
https://en.wikipedia.org/wiki/European_ ... e_excluded

That aland islands don't fall under the EU VAT laws, is there a way to use this to cut expenses?
No way . From vat point of you it is a foreign country, like Norway or Russia.
What do you want from me?????


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foca
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Re: Taxation, VAT and OY companies.

Post by foca » Tue Feb 14, 2017 10:07 pm

shrimp67 wrote:
Thank you for the clear explanation!
I don't mind running my company from aland if the real estate prices are the same as in rural Finland, and the network speeds are the same.
We're planning to build our own data center.
Åland has it is own VAT. IF your data center is in Ålands , import the gods there , but you Will still pay VAT.
Anyway , if you import goods here for the company use you will be able to reimburse VAT. Of course, when you sell services in Finland you will have to invoice your customers with VAT and in essence pay it all to the tax office (of course minus vat payable for crevice abs supplies you procure in Finland).
What do you want from me?????


shrimp67
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Re: Taxation, VAT and OY companies.

Post by shrimp67 » Tue Feb 14, 2017 10:55 pm

foca wrote: Anyway , if you import goods here for the company use you will be able to reimburse VAT.
I'm getting here conflicting information, now.
@foca says I will be able to reimburse.
betelgeuse wrote: VAT is 24% that you pay when you sell the items forward.
@betelgeuse says I have to pay the VAT when I sell them forward, which won't happen.
Rosamunda wrote: In a nutshell, when you import something, you debit your purchase VAT account (credit cash). When you sell something you credit your sales VAT account (debit cash). The amount you owe Vero is the net amount of your VAT account. So if you don't sell the goods on, the ending balance on your VAT account will be higher (you owe Vero more).
@Rosamunda says I can only get reimbursed after I sell the goods, and won't be reimbursed if I don't sell them.


So who is right here?
The question is the funding we need in order to procure the computers from china, this is equipment that will not be sold to consumers.
The bottom line, if the computers and their shipping cost 100 000e, we need to reserve 24 000 for VAT?


Upphew
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Re: Taxation, VAT and OY companies.

Post by Upphew » Wed Feb 15, 2017 11:52 am

shrimp67 wrote:
betelgeuse wrote: VAT is 24% that you pay when you sell the items forward.
@betelgeuse says I have to pay the VAT when I sell them forward, which won't happen.
Rosamunda wrote: In a nutshell, when you import something, you debit your purchase VAT account (credit cash). When you sell something you credit your sales VAT account (debit cash). The amount you owe Vero is the net amount of your VAT account. So if you don't sell the goods on, the ending balance on your VAT account will be higher (you owe Vero more).
@Rosamunda says I can only get reimbursed after I sell the goods, and won't be reimbursed if I don't sell them.


So who is right here?
The question is the funding we need in order to procure the computers from china, this is equipment that will not be sold to consumers.
The bottom line, if the computers and their shipping cost 100 000e, we need to reserve 24 000 for VAT?
Yup, you'll need to pay VAT. In the end consumer always pays the VAT. Unless you sell something, you are the consumer.
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Rosamunda
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Re: Taxation, VAT and OY companies.

Post by Rosamunda » Wed Feb 15, 2017 1:27 pm

I think my post was confusing. So here's another take on it.
When the equipment arrives in Finland you will be charged VAT on the import value (including shipping costs). I'm not sure what the payment terms are on that VAT bill, but assume there is a short-term cash flow impact. I guess Tulli doesn't release the goods until the VAT is paid, not sure though.

From an accounting point of view, you will then capitalise the equipment ie put it on your balance sheet at purchase price without VAT and amortise the purchase over the useful lifetime of the equipment (usually 4-5 years, your bookkeeper can confirm the rules for that).

The VAT which you paid when you imported the goods IS deductible. So any sales VAT which you receive from your customers can be offset against your purchase VAT. This reduces the amount of sales VAT you have to pass on to Vero.

So there is a cash flow/timing issue, depending on your business model but - ultimately - the purchase VAT should not end up as an expense for your business.

I don't know what happens if your business does not generate any sales VAT to offset against the purchase VAT (eg if your sales are all outside the EU)...


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