Taxation, VAT and OY companies.

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foca
Posts: 739
Joined: Mon Sep 05, 2011 11:38 pm

Re: Taxation, VAT and OY companies.

Post by foca » Thu Feb 16, 2017 11:23 pm

Rosamunda wrote: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. ...

Now , you get it right ;)
Rosamunda wrote: 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)...
It is easy. Vat is always a local tax and the place where the sale takes place is quite important. In the case described above ,VAT on your purchase is just reimbursed in the next VAT reporting period. The foreigner who buys your service will be not be liable to pay Finnish vat (the situation may diviate concerning how a service purchase is handled in the foreign country, in EU it will not be subjected by local , say German VAT, but in Russia a reverse charge system will be applied).


What do you want from me?????

Re: Taxation, VAT and OY companies.

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User avatar
foca
Posts: 739
Joined: Mon Sep 05, 2011 11:38 pm

Re: Taxation, VAT and OY companies.

Post by foca » Thu Feb 16, 2017 11:26 pm

Rosamunda wrote: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. ...

Now , you get it right ;)
Rosamunda wrote: 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)...
It is easy. Vat is always a local tax and the place where the sale takes place is quite important. In the case described above ,VAT on your purchase is just reimbursed in the next VAT reporting period. The foreigner who buys your service will be not be liable to pay Finnish vat (the situation may diviate concerning how a service purchase is handled in the foreign country, in EU it will not be subjected by local , say German VAT, but in Russia a reverse charge system will be applied).
What do you want from me?????


harryc
Posts: 1112
Joined: Thu Jan 23, 2014 6:09 pm
Location: Espoo-Helsinki

Re: Taxation, VAT and OY companies.

Post by harryc » Sun Feb 19, 2017 12:29 pm

VAT paid -- is deductible from 'VAT payable' on whatever you sell

(some exceptions - autos, some entertainment, and others)

I somehow doubt amortisation is required for minor purchases


Rosamunda
Posts: 10626
Joined: Fri Jan 02, 2004 12:07 am

Re: Taxation, VAT and OY companies.

Post by Rosamunda » Sun Feb 19, 2017 6:23 pm

harryc wrote:
I somehow doubt amortisation is required for minor purchases
It isn't. But the OP was spending 100 000€ on computer equipment.
That would have to be capitalised according to Finnish accounting rules.


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