VAT change 2024 – what small business owners need to know

The Finnish government will raise the general VAT rate from 24% to 25.5%, effective September 1, 2024. This change affects all VAT-registered businesses. As a small business owner, it's important to prepare for this.

What does this mean for you?

The VAT increase means a larger portion of your sales revenue will go to the state, impacting your cash flow and potentially requiring a reassessment of your pricing strategy. Additionally, some administrative work will be needed.

Read our tips on pricing your work as a sole entrepreneur 

Remember these points:

• Date of performance matters: The applicable VAT rate is based on the delivery date of the service or product, not the invoice date. Ensure you apply the correct VAT rate on your invoices.
  
  
• Update financial systems: Make sure your accounting software supports the new 25.5% VAT rate and the use of decimals.
  
  
• Train your staff: Make sure your employees understand the new VAT requirements and processes.
  
  
• Review your pricing strategy: Check your product and service prices to ensure they cover the new VAT rate.
  
  
• Ensure transparency and reporting: Update your reporting and accounting practices to comply with the new VAT rate.
  
  
• Update your website and marketing materials: Update all materials to reflect the new VAT rate to avoid confusion.
  
  

Delivery date determines VAT rate. 

For instalment sales, VAT is based on the date the goods are delivered. For example, if a customer orders a new car in May 2024 and it is delivered in September 2024, the applicable VAT rate is 25.5%.

Ongoing services and contracts: The rate in effect at the time of service completion applies. For contracts, parts completed before September 1 will be taxed at the current rate, and parts completed after at the new rate. If parts of the contract completed after September 1 are prepaid before September 1, their VAT rate is 24%.

The Tax Administration will publish guidelines related to this change in June.

How can Holvi help?

At Holvi, we make financial management easy. We will automatically update VAT rates in our systems to ensure a smooth transition for you. Invoices and other documents created in Holvi will display the new VAT rate after it comes into effect. Make sure to check the correct VAT rate during the transition period.

Tips for Holvi customers:

• Keep systems up to date: Ensure all software you use supports the new VAT rate.
  
  
• Check stored services and products: Verify that they use the correct VAT rate.
  
  
• Follow legislative developments: Stay updated on potential future changes in tax legislation. You can do this by signing up to our newsletter. 
   

We’re here to help you through the change. If you have any questions, our customer service team is ready to help. Let's keep your business finances in order together!