General VAT will increase on 1.9.2024

The general VAT rate will change from 24% to 25.5% on 1 September 2024. The increase applies to goods and services currently taxed at 24%.

HLB Tietotili is prepared for the increase, and we are ready to assist our clients with system and policy changes as the autumn begins. We have informed our clients separately about this matter.

The minimum VAT rate would also be increased from 10% to 14% (excluding magazines and books).

In addition, the government is about to introduce a bill to increase VAT on sweets and chocolate from 14% to the new general rate of 25.5%. This will possibly be given as a separate bill or in one go with the increases in the minimum VAT rates.

What tax rate to use?

For sales of goods, VAT is normally allocated to the tax period in which the goods are delivered to the buyer. So, if the goods are delivered to the buyer by 31 August 2024 at the latest, the current rate of 24% will apply, even if the goods are paid for later in September.

Advance payments will be subject to the tax rate during the period in which the advance payment was made. In other words, if the advance payment has accrued to the seller before the amendment comes into force, it will be subject to the current VAT rate of 24%.

For sales of services, the VAT will be allocated to the tax period in which the service is provided. If the service has not yet been completed when the rate changes, the new rate will apply. The service is deemed to be fulfilled when it is available for the customer to use.

For sales of goods and services of a recurring nature (e.g. rental services), the consideration is determined by the passage of time. The good or service is therefore considered to be delivered or fulfilled at the end of each accounting period related to the delivery.

Goods and services of a recurring nature do not include one-off sales that are paid for in instalments (e.g. hire purchase or building contract).