Examples of the application of reverse VAT

Main contractor B has agreed with pipe contractor A to perform a certain subcontract. The reversed tax liability applies to the sale of A to B (invoice 0%), because it is a question of the sale of construction services and the buyer regularly sells construction services. The main contractor resells the construction service to buyer C, who does not sell construction services and does not resell the construction service. Invoicing normally takes place with a tax of 25,5%.

A declares the sales covered by the reversed tax liability in the seasonal tax return. B declares in the seasonal tax declaration the purchase that is included in the converted scope and the tax to be calculated on the purchase as both the tax to be paid and the tax to be deducted.

HVAC contractor A sells the construction service to an intermediary V who sells the construction service randomly, who resells the construction service to the Main Contractor P. This sells construction services regularly. P resells the construction service to Buyer C, who does not sell construction services and does not resell the construction service.

The reversed tax liability applies to A's sale to V and V's sale to P in accordance with the arbitration rule. A and V report tax-free sales in their seasonal tax return. As taxable buyers, V and P report tax-free purchases and the tax calculated on the purchase as both payable tax and deductible tax. P invoices C with a taxable invoice and declares the sales tax in the seasonal tax return.

The group has agreed that the parent company will purchase the construction services related to the group's real estate company. Parent company E agrees with Contractor U on the repair contract for Real Estate Company K. U sells construction services first to E, who sells them on to K.

Since E sells construction services only occasionally, reverse charge does not apply to U's sales to E. U invoices E with a taxable invoice and declares the taxable sales tax in the seasonal tax return. E invoices K with a taxable invoice and states the tax on the sale and the deductible tax on the purchase.

Rautakauppa R has sold a pre-installed kitchen package to private customer A. Rautakauppa has agreed with the contractor U that he will subcontract the installation of the kitchen.

Since Rautakauppa R regularly engages in similar trade, R's sale to A is considered a construction service sale. It follows that the construction service sold by Contractor U is subject to reverse tax liability, i.e. U invoices R with 0 tax. R invoices A normally with a taxable invoice, since it is a sale to a private person.

The earthworks contractor M has agreed with the main contractor P on the overall contract, which includes the excavation of earth masses at the house construction site and their removal. M has still subcontracted the transportation of earth masses by truck with Kuljetusyrittäjä K.

Since transport services are not considered construction services, K charges M with a normal taxable invoice. Since the excavation of earth masses performed by M is a construction service, the total contract charged by M to P is considered to be within the scope of reverse tax liability. The charge is made with 0 tax. In this case, the main performance is digging and the side performance is transportation service, and the tax treatment is determined according to the main performance.

Home appliance store K sells to private customers a refrigerator, freezer, microwave oven and dishwasher installed. The sale also includes the removal of old machines. K subcontracts the installation services from Asensuliike A.

Since K's sale to the customer includes only minor installation, it is considered a sale of goods. The reverse VAT obligation does not apply to A's sale to K, because K's sale in this case is not a construction service but a sale of goods.

The kitchen furniture manufacturer sells the kitchen furniture to the customer with the machines installed. Kitchen furniture manufacturer K subcontracts installation services from Asensunliike A and Kitchen appliances from Kodinkonekauppa KK. Since K's sale to the customer also includes significant installation, the sale is considered a construction service sale.

If the customer is not a private person but, for example, a construction company, the sales tax liability and zero tax rate apply. If the customer is an individual, the sale is a normal taxable sale.

Since K sells construction services other than occasionally, the reversed tax liability applies to the sale of A's installation work. Since KK only sells machines to K, it is a normal taxable sale of goods.

The municipality rents an excavator with a driver for its use with hourly billing. The machine is used e.g. for spreading soil in the park, digging sewers, filling potholes in the road, etc. However, since the machine and the driver are mainly used for work on real estate or a permanent structure, the tax liability translated in accordance with the main performance is applied to the entire invoicing.