CONTENT
- Application instructions
- Settings
- Products
- Sales ledger
- Purchase ledger
- Accounting and obligations
- Integrations
- Rackbeat inventory management
- Payroll and travel
Note! Changes to VAT rates and VAT for small businesses will take effect on 1.1.2025, read more about the topic in our announcement.
Application instructions
You can find the Tax Administration's guidance on applying the new VAT rate on the Tax Administration's website. Tilisanomat has also published guidance from the Financial Management Association on the subject.
You can also find our blog post VAT in a nutshell here.
Settings
In Netvisor, it has been possible to add new decimal VAT rates yourself and these have been used in situations where the company has been liable for VAT abroad.
We have added a new VAT rate of 25.5% for all our customers on 25.7.2024, so now you don't need to add it yourself to the company's settings.
New tax rates can be added directly if needed. This can be done in Financial Management > Settings > Accounting settings > Accounting and obligations settings > Tax rate management.
Once the new VAT rate has been added to the accounting settings, it can then be selected in various Netvisor functions.
It is possible to update the VAT rate for multiple accounting rules simultaneously. This can be done from the accounting rules management when we have added the new VAT rate to Netvisor for everyone in July. Select the desired accounting rules from the view and at the bottom of the page "Change selected tax rate 24% -> 25.5%".
Products
Updating the VAT rate for products can be done in Netvisor in bulk or alternatively, the VAT rate can be updated for individual product cards. Note that the VAT rate change for the TEMP product cannot be done with the bulk function, but it must be changed directly on the product card. The product's VAT rate update takes effect immediately when the change is made and automatically applies, for example, to newly created sales invoices. Since the transition period between two VAT rates can be very long, we recommend checking the invoices for the correct VAT rate if the default VAT rate in the product information is not applied.
The VAT rate can be updated for individual products directly from the product card. This can be done on the product card's basic information editing tab, and in the VAT rate section, select the new VAT percentage. Our guide: Product card.
We recommend using the product listing for bulk updating VAT rates.
List the desired products in the product listing and select them from the checkbox on the left side, then a button "Add selected to processing basket" is activated at the bottom left of the page, but do not add products to the basket, instead click the smaller button on the right side of the button (white triangle) to open the bulk actions menu and select "Change selected products' tax rate".
Note! When updating products with a VAT rate of 24%, it should be set as the starting value in the "From VAT" section, and in the "To VAT" section, naturally select this new tax rate of 25.5%. When the starting value is given, only those products with a VAT rate of 24% will be updated from the selected products.
The system will notify the result of the update separately:
Our guide: Product listing
Although large quantities of products can be updated at once using bulk tools, we recommend dividing large registries to be updated into parts, e.g., a few product groups at a time. Alternatively, the product listing can be organized by the used VAT rate without product grouping and divided into batches of 5000 products at a time for updating. This especially helps in tracking the VAT rate update, as the bulk tool reports numbers if the VAT rate of some products could not be updated. It is also expected that many of our customers will make changes simultaneously, so this can speed up the use of bulk tools. We recommend making all VAT change bulk updates in batches of about 5000 to ensure smooth and faster changes to the settings.
Sales ledger
Sales orders and invoices are formed with the VAT rate defined for the product. Since during the transition period, 24% and 25.5% VAT rates need to be handled simultaneously, it is necessary to change the VAT rate on the order and invoice if a VAT rate different from the product information is applied. If possible, we recommend avoiding creating large numbers of sales orders and invoices in advance in the ledger if their VAT % needs to be modified after the order or invoice is created to avoid manual work.
The VAT % of a sales order can be modified on the order lines as long as the order is not invoiced. Invoiced order lines can no longer be modified. Similarly, the VAT % of sales invoice lines can be modified until the invoice is sent and an accounting voucher is created for it.
If a situation arises where a sales invoice has been sent to the customer with an incorrect VAT %, it is advisable to credit the incorrect charge invoice using the function "Sales invoice actions > Create credit invoice". In this case, the credit invoice will copy the original invoice details, and finally, a new charge invoice can be created with the correct VAT % details.
From Sales > Reports > Invoice line report, the VAT % column can be displayed, allowing the VAT % used on invoice lines to be checked.
Our guide: Invoice line report
When there is a voucher on the sales invoice, the check for the used VAT rates can be done from accounting reports, such as the general ledger, or alternatively, the desired time range can be set on the VAT calculation to examine accounting entries under different tax rates. We will add the new 25.5% VAT rate to the accounting report search criteria when it is brought to all companies in Netvisor in July.
Contract billing
The VAT % for contract billing is directly derived from the product information, so the VAT % on the sales invoice line is the product's VAT % at the time of formation.
We have introduced a bulk function in contract billing that allows you to update the fixed gross price of service baskets to a fixed net price so that the VAT rate change is reflected in the product's taxable price. You can find the bulk tool as follows: Sales > Billing > Contract billing. Select the desired service baskets by clicking the checkbox in front of the service basket name, after which the button "Update net price for basket products" is activated at the bottom of the screen. If fixed gross prices are used and the products are not updated to a fixed net price, the VAT rate change will only affect the product's tax-free price. If the products' VAT rate has already been changed to the new VAT rate of 25.5%, follow the instructions below.
If the product has been set to the new VAT rate of 25.5% and the product has been in the contract billing service basket as a gross-priced product, the VAT rate change has affected the tax-free price, and the price may be incorrect in these cases. To correct the situation, the product's VAT rate should first be updated back to 24%. Then, the net price should be updated for the desired basket using this bulk tool.
Once this is done, change the product's VAT rate back to the correct new VAT rate of 25.5%. After the change, the price will update correctly, and the increase will be reflected in the product's gross price.
If invoices have been created with the wrong price and have not yet been sent to customers, the invoices can be deleted. After deletion, the invoices move to the deleted material of the service basket. Deleted materials can be accessed from Sales > Billing > Contract billing > click the desired service basket > Invoice creation > Deleted material. Once the VAT change instructed above has been made, the deleted materials are recreated, and the correct price is updated for the product.
If automatic sending is used for sales invoices, we recommend paying special attention to ensure that the applicable VAT % is checked and modified on the invoice before sending. Our guide: Automatic sending of sales invoices.
Handling of advance payments
According to the Tax Administration's guidance, the handling of advance payments during the transition period differs from the performance-based nature of goods or services. According to the guidance, the applicable VAT rate is determined by when the money from the advance payment has been received by the seller. Especially when the customer pays for goods or services partially in advance, two VAT rates may need to be used. In this case, the seller may need to divide the order lines into their own VAT rates according to what portion is an advance payment and what portion is billed upon delivery. When handling advance payments in accounting, the amounts are divided into their own VAT rates if necessary to report the VAT entries for advance payments in the target month. Our guide: Handling of advance payments.
Purchase ledger
Purchase invoice automations
We recommend checking the company's purchase invoice automations during the transition period. If a model invoice has been used for accounting in the automation rules, the model invoice should be updated to one that uses the new 25.5% rate.
Suppliers
The default VAT % for a supplier can be modified on the supplier card. The VAT % can be updated for multiple suppliers in bulk through the supplier listing. First, go to Purchases > Suppliers > Supplier listing. Select the desired suppliers from the listing using the checkbox on the left and Actions > Update tax rate.
Select the fields From 24 and To 25.5% VAT rates and finally the Update button:
Accounting and obligations
In Netvisor, the VAT identifier processed on the account is selected in the account list settings, so the change of VAT rate during the transition period does not require changes to the account list. If, for example, the VAT identifier KOMY is selected in the accounting account settings and domestic sales is used as the tax treatment, the accounting entries are reported and the VAT account entries are calculated correctly on the VAT calculation according to the used VAT rate.
According to the Tax Administration's guidance, special attention should be paid to temporal allocation. The basic rule in temporal allocation is performance-based, i.e., to allocate VAT from sales to the calendar month during which the goods are delivered or the service is performed, and correspondingly for deductions, when the goods or service is received. In certain situations, cash-based or invoice-based allocation can also be used. The obligation to pay tax does not determine the tax period for which VAT is reported. During the transition period, for example, 25.5% VAT may need to be reported on the August VAT return. Temporal allocation works well in Netvisor during the transition period, so ensure the correct VAT rate is used on sales invoices considering the performance basis.
The Tax Administration has instructed that both 24% and 25.5% VAT rate events are reported technically in the same section on the VAT return. The new VAT rate is reported from Netvisor in the same way as before.
During the transition period, we recommend checking the VAT calculation with special care to ensure the correct VAT rates are selected for events according to application. If it is necessary to modify a previously reported VAT return, a corrective VAT return can be sent from Netvisor: Sending a corrective VAT return.
Integrations
Netvisor also supports decimal VAT rates in terms of the interface. This already works in most interface resources, and we will ensure the remaining interface resources support decimal VAT percentages in good time.
When importing material through the interface, the VAT percentage comes from another system, so the connected system must be able to produce a decimal VAT percentage for the material. We have informed our software partners who have built the integration and instructed them to ensure that the software connected to Netvisor is ready to handle VAT percentages in decimal form. Integration partners also have the opportunity to test the change in the test environment.
To import material with a decimal VAT percentage through the interface to Netvisor, the VAT rate must be established in Netvisor. If you want to import material with the new VAT rate before the VAT rate is added to Netvisor, the VAT rate must be established in Netvisor. (see section Settings).
Rackbeat inventory management
If the company has open orders at the turn of August-September, the company must ensure that the events have the correct VAT rate. The VAT rate itself is managed in Rackbeat with product groups, which can be updated manually or with Excel to the correct VAT rates. For open events: If the order is made with VAT 24%, and it is delivered but not yet invoiced. After delivery, change the VAT rate from 24 to 25.5. The change does not reflect on the invoice. So the invoice goes according to the original order line. If the order is made with VAT 24%, and the VAT rate is updated from 24 to 25.5. Then the product is retrieved again on the order line -> the new VAT updates on the line. This applies if the order is a draft. The VAT percentage of a once confirmed order line cannot be changed. So if a confirmed order is reopened for VAT rate change, the old line must be removed and then a new line added.
Payroll and travel
During the transition period, we recommend paying special attention when creating travel expense reports to ensure the correct VAT % is used on the travel expense lines according to the receipt. By default, the lines show the "Current Finnish VAT rates" selected in the accounting settings:
Next to the field is a small green arrow button, from which all the company's VAT rates can be selected:
In the company-specific payroll item settings, a default VAT percentage may be set for the payroll item, which should be updated to the correct one during the transition period if necessary. Our guide: Company-specific payroll items
The increase in the VAT rate also affects the value of the bicycle benefit. The value of the bicycle benefit in taxation is determined based on its VAT-inclusive monthly rent. The VAT increase raises the value of a bicycle benefit rented at a monthly price of 100 euros to 101.21 euros. This means that the value of the bicycle benefit exceeds the tax-free fringe benefit value. If the company bicycle is taken only after the law change comes into effect (1.9.2024), the new VAT amount will increase the purchase price of the bicycle, and the change will be taken into account when making the rental agreement. The monthly rent and the value of the bicycle benefit in taxation can still be agreed upon at a monthly price of 100 euros, making the acquisition of a new company bicycle a completely tax-free benefit again.
The VAT change can be handled in several ways on the payroll in Netvisor, depending on what the employer and employee agree on.
Example 1:
The value of the bicycle benefit is now 101.21 euros/month
The tax-free value of the bicycle benefit is 100 euros
Reported to the income register with income type 363 (Tax-free portion of the bicycle benefit)
The portion of the bicycle benefit considered as salary 1.21 euros, added to the employee's gross salary
Reported to the income register with income type 364 (Portion of the bicycle benefit considered as salary)
Example 2:
The value of the bicycle benefit is now 101.21 euros/month
The tax-free value of the bicycle benefit is 100 euros
Reported to the income register with income type 363 (Tax-free portion of the bicycle benefit)
The portion exceeding the tax-free value of the bicycle benefit 1.21 euros, deducted from the employee's net salary
Reported to the income register with income type 420 (Compensation deducted from the bicycle benefit)
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