The removal of the VAT relief

The VAT Relief Will Be Removed on January 1, 2025
The VAT relief has served as a tax benefit for small entrepreneurs whose annual turnover is below €30,000. In 2023, approximately 80,000 businesses utilized the VAT relief threshold.

Impact of the Removal of the VAT Relief

After the removal of the VAT relief threshold, small entrepreneurs will no longer be able to reclaim a portion of the VAT they have paid. This change applies to all businesses registered in the VAT register, regardless of their turnover.

The last application period for the VAT relief is for the year 2024, and the application must be submitted along with the final VAT return for the financial year. If you are a UKKO.fi customer, you don’t need to worry about this—we’ll take care of it for you!

Although the VAT relief threshold is being removed, entrepreneurs will still have the right to deduct VAT on their purchases as long as they remain in the VAT register. Additionally, the threshold for VAT exemption due to low turnover will rise from €15,000 to €20,000 starting January 1, 2025.

This means that entrepreneurs with an annual turnover below €20,000 can invoice without VAT. The benefit of operating VAT-free is particularly significant in service sectors, where the ability to deduct VAT on purchases has less impact. Note that invoicing without VAT requires you to exit the VAT register.

If your turnover exceeds €20,000 annually and you have invoiced without VAT, you will not need to pay VAT retroactively for the earlier part of the year. VAT liability begins only from the moment the €20,000 threshold is exceeded.

UKKO.fi Will Handle the 2024 VAT Relief Application for You

As our customer, you can focus on running your business without worry. We will automatically apply for the VAT relief on your behalf whenever your turnover meets the required criteria.

We ensure that your 2024 VAT relief application is submitted on time and includes all the necessary information.

Exiting the VAT Register if Turnover Is Below €20,000 Annually

If your company’s turnover is below €20,000 both this year and next year, you can apply to exit the VAT register.

Example from the Finnish Tax Administration: A company’s turnover for 2024 is €22,000, and it is registered for VAT. If the turnover decreases to €18,000 in 2025, the company can exit the VAT register due to low turnover starting January 1, 2026, at the earliest.

To exit, you need to submit an application to the Tax Administration either through the MyTax service or via a paper form. The Tax Administration will review the conditions for removal from the VAT register and make a decision. Upon exiting the VAT register, you will no longer need to add VAT to your invoices, submit VAT returns, or make VAT payments to the Tax Administration.

If you exit the VAT register and later need to rejoin, you will not have to retroactively correct your previous bookkeeping to include VAT.

Important: If you exit the VAT register, you will lose the ability to deduct VAT paid on purchases. This may affect your pricing and the profitability of your business.

If you exit the VAT register, please inform our customer service!

Summary of the VAT Relief Threshold Removal

• The VAT relief threshold will be abolished on January 1, 2025, with the last application year being 2024.
• UKKO.fi will automatically handle the 2024 VAT relief application for you.
• The change does not require any action from UKKO.fi customers unless you wish to exit the VAT register. Please inform our customer service (e.g., via email) if you plan to exit the VAT register!
• If you exit the VAT register and later need to rejoin, you will not need to retroactively correct your bookkeeping.
• The VAT exemption threshold for low turnover will increase to €20,000.