Most Common Questions and Answers about the VAT Change in January 2026

When should I choose the new VAT rate for income or expenses and how is it done?

When the VAT change takes effect on January 1, 2025, the UKKO service will offer the option to select either the old or new VAT rate for both income and expenses. The VAT rate is determined based on when the product is delivered to the customer or when the service is fully performed. For expenses, you will find the correct VAT rate on the expense receipt, i.e., the invoice or receipt.

Select the old VAT rate of 14% when:

• The product is delivered to the customer by December 31st, 2025, or earlier.
• The service is fully performed for the customer by December 31st, 2025.
• The expense receipt or invoice for the business expense shows the old VAT rate of 14 %.

Select the new VAT rate of 13,5 % when:

• The product is delivered to the customer on or after January 1st, 2025.
• The service is completed on or after January 1st, 2026.
• The expense receipt or invoice for the business expense shows the new VAT rate of 13.5%.

I purchased equipment for my business on installment. What VAT rate should I record in the accounting when paying installments?
 

If you made the purchase on installment before the VAT change, the entire price is subject to the old VAT rate of 14%, as the product was delivered to you while the old VAT rate was still in effect. Therefore, record the remaining installment payments in your accounting with the old VAT rate.

Which VAT rate should be applied to advance payments?
 

Advance payments are subject to the VAT rate in effect at the time of the payment. If the advance payment is charged by December 31, 2025, the old VAT rate of 14% applies.

However, if you have invoiced the advance payment but the customer pays it late, in January, the new VAT rate of 13.5% will apply. In this case, create a credit note in the UKKO system and send a new invoice for the advance payment with the new VAT rate.

I have a long-term project that started before the VAT change and continues after the VAT change. How should I choose the VAT rate when invoicing for the work?
 

The VAT rate is determined based on when the product or service is delivered or performed. For a longer project, choose the correct VAT rate based on when the reporting period ends.

For example: You deliver a comprehensive fitness coaching program for your corporate customer that started in early December and is completed at the end of January, the reporting period is from December 1 to January 31, 2025. The invoice for the project should use the new VAT rate of 13.5%.

If, however, you charge for part or all of the project as an advance payment in December, you can apply the old VAT rate, as mentioned earlier about advance payments.

I work continuously for a client and invoice the work once a month. When should I start using the new VAT rate?
 

In a continuous assignment, products or services are considered delivered at the end of the reporting period if the invoice is sent after the reporting period ends. So, similar to larger projects: for example, for the reporting period from December 14 to January 13, the invoice should use the new VAT rate of 13.5%, as it is already in effect at the end of the reporting period.

If, on the other hand, you invoice the work at the beginning of the reporting period, it is considered an advance payment, and the situation is different. If you send the invoice to the customer at the beginning of the reporting period, for example, during December for the reporting period from December 14 to January 13, use the old VAT rate of 14%.

Which VAT rate should be chosen if I send a product to the customer in December but it arrives in January?
 

If you know the product will arrive with the postal carrier in January, the new VAT rate of 13.5% applies. However, if you invoice and the customer pays for the product in December, the payment is considered an advance payment, and you can use the old VAT rate of 14%.

Late payments – what to do if the invoice's original date and due date are in December but the customer pays in January?
 

If the product or service was fully delivered to the customer before the VAT rate change, i.e., by December 31, 2025, the old VAT rate of 14% applies, even if the customer pays late. No new invoice is necessary.