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).