What is the VAT lower limit relief?

The VAT relief will be removed on January 1, 2025.

You can find more information on the topic here

A private trader entrepreneur can benefit from the VAT lower limit relief offered by the tax administration when the turnover is low.

Entrepreneurs and companies that belong to the VAT-register and whose turnover for the accounting period (12 months) is less than 30,000 euros can get the relief.

For turnover of up to 15,000 euros (starting in fiscal years 2021), you can get lower limit relief from the value added tax billed for the entire fiscal year. Previously, the limit was 10,000 euros.

• In UKKO light entrepreneur with business ID- service, the lower limit reduction is automatically calculated at the end of the accounting period whenever the turnover warrants it. The lower limit reduction is calculated in connection with the last VAT declaration of the year.

The lower limit relief is the entrepreneur's taxable income and it is reported as income in the income statement for the year in question. When the lower limit relief has been applied for, you will receive the lower limit relief from the previous year. The lower limit relief is announced in the following year's annual income statement.

When can you not get lower limit relief?

There are a few things that can affect receiving lower limit relief, which are mentioned below:

• Lower limit relief cannot be obtained when the value added tax for the accounting period is negative, i.e. the tax included in the purchases of the accounting period is more than the tax payable on sales.
• Lower limit relief cannot be obtained when the turnover consists of business activities to which the lower limit relief is not applied. Such business operations include, for example, the sale of services outside of Finland and the sale of fixed assets.
• Lower limit relief cannot be obtained when the foreign entrepreneur does not have a fixed place of business in Finland.

How can you apply for lower limit relief?

Lower limit relief can be applied for with a VAT declaration of the last tax period of the calendar period or the accounting period.

The notification must also state:

• VAT for the tax period.
• Lower limit relief for the entire financial period.

The length of your company's tax season determines when the lower limit relief is applied for.

The length of the tax period for VAT can generally be

• Month: the declaration is made with the VAT declaration of the last month of the financial year.
• Quarter: The declaration is made with the VAT declaration for the last quarter of the calendar year.
• Year: the declaration is made in the VAT declaration issued for the calendar year.

In UKKO light entrepreneurship with business ID-service, the length of the tax period is usually one year. We apply for the lower limit relief for you automatically, so you don't have to worry about calculating it or whether you're entitled to it.