The Finnish Tax Administration updated its written guidance related to a 2017 Court of Justice of the European Union (CJEU) decision (C-288/16). The VAT exemption implemented in the Finnish VAT Act (article 71(1)) is not applicable to transport services purchased from a subcontractor if the services cannot be considered as providing direct transport from Finland to a destination outside the EU as a standalone service.
As a result, the VAT exemption on “export” transport services (as set out in § 71, subsection 1.1 of the VAT Act) does not apply on the kind of transport that is supplied through a subcontract because this cannot be viewed as a direct transport from Finland to a non-EU country. This means that VAT must be paid on the subcontractor’s service performance, which is one of the components of a larger transportation service package that the seller of the service has sold to the consignor. An example of a subcontractor-performed service is the driver service or a shorter leg of the transport journey inside Finland. Under the circumstances, the subcontracted services are not directly rendered to the consignor or consignee. Moreover, the subcontracted services, in themselves, cannot be treated as being a direct transport service from Finland to a destination outside the EU.
The changes, which can be considered to be effective as from the date of the update (i.e., 15 November 2021),
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