Change in Value Added Tax Rate 14% → 13.5%
The value added tax rate will decrease from 14 percent to 13.5 percent at the turn of the year. The Tax Administration advises that the VAT percentage is primarily determined based on whether the service has been performed or the goods delivered to the customer before or after the date of change.
Customer Actions Required in Applications
Finago Modular Accounting
- Settings > VAT Codes - Here you can define a new tax rate of 13.5% for the current VAT code as well as a start date at the turn of the year. This way, when the VAT percentage changes, the same VAT code can still be used.
- If you need both the old (14%) and new (13.5%) VAT rates during the transition period, you can use different VAT codes for different rates and add them to Accounting via the VAT Codes / Common VAT Codes function.
- Settings – General – VAT - Here you can allow modifications for both VAT codes and VAT amounts during the transition period. Additionally, in Transactions – Open – Column Selection and Input Field Selection, it is advisable to display VAT %, VAT and VAT Code so that rows can be corrected if necessary.
- Account charts may still reference the old VAT percentage in account names, even though a new percentage is being used behind the VAT codes. However, selecting the account will still pull the correct VAT rate. Finago will update account names in January. All names mentioning "14% or 14%" will be replaced with "13.5% or 13.5%".
Finago Modular Purchase Invoices
- The CSV import of the VAT and expense account registers, as well as manual entry, support decimals. Both a period and a comma are supported as decimal separators.
Note! A comma cannot be used in the name of an expense account or VAT code; a period must be used if you want to include a percentage in the name. - If you need both the old (14%) and new (13.5%) VAT rates in the same month, use different VAT codes for different percentages, as only the VAT code is transferred in the accounting transfer, and the VAT percentage on the accounting side is determined based on the document date.
- When you need the new 13.5% VAT rate on an invoice, change the new tax rate for the current general VAT code in the VAT Codes function and, if necessary, add a separate code for the other percentage during the transition period.
- Settings – General – Other Settings – VAT Handling - Here you can select "Editable" and in Settings – General – Accounting – Edit Rows Directly on Invoice, select "In Use", so that VAT information can be edited on an item-by-item basis during the transition period.
- The account chart may still reference the old VAT percentage in account names, even though a new percentage is defined behind the VAT codes. However, selecting the account will still pull the correct VAT rate. Account names can be updated using the Importing Account Chart to Purchase Invoices guide.
- If direct percentages are used instead of VAT codes, update the percentages in the account chart using the Registers – Account Chart – Record Maintenance function.
Finago Modular Sales Invoices
- Finago Modular Sales Invoices support VAT decimals in VAT, Accounts, and Product Registers due to the new 13.5% tax rate.
- If a new percentage has been updated behind the VAT code, but when editing the invoice the old percentage still appears on the invoice line from the product, it is advisable to update the product register. If the desired VAT code is behind the product, it is sufficient to export the product register to Excel and import it back into Sales Invoices in the same format. This way, the VAT code of the product remains the same but the VAT percentage updates to the new one.
- If you are importing invoice data created in another system into Finago Modular Sales Invoices, it may be necessary to update the product register of Sales Invoices:
- If the import data only contains product codes, the VAT percentage is fetched to the invoice from the product code. In this case, the product register must be updated with the required VAT percentages for the invoices.
- If the import data also includes VAT information, these will be transferred as they are to the invoice, and updating the product register may not be necessary.
- When invoices need to be sent with the new VAT percentage, change the new tax rate of 13.5% for the current general VAT code in the VAT Codes function. During the transition period, you can add a separate VAT code for the old 14% tax rate.
- Invoice Templates do not automatically update when the VAT percentage is changed behind the VAT code, as the previously saved VAT percentage remains on the invoice's line. Invoice templates must be updated individually after modifying the VAT code.
- The product register may still show the old VAT percentage, even though a new percentage has been defined behind the VAT codes. However, adding the product to the invoice will select the correct VAT rate. This issue can be corrected if necessary by updating the product register using Importing and Exporting Product Data.
- Account charts may still mention the old VAT percentage in account names. However, selecting the account will still pull the correct VAT rate. Account names can be corrected according to the Importing Account Chart to Sales Invoices guide, especially at the end of the accounting period.
Other Considerations
- Consistent VAT codes must be used across all Finago Modular programs.
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Accounting Settings – General – Interfaces page is where the VAT handling method is selected when transactions are imported from Purchase Invoices or Sales Invoices into accounting.
- With the option "According to the data", the VAT code present in the data is used and the VAT in accounting is calculated according to the VAT code of each transaction.
- With the option "Calculate VAT", the incoming VAT code during the transfer is not taken into account, but the VAT code is checked from the account in accounting, and VAT is calculated accordingly. It should be noted that the document date determines which percentage the program uses.
- Currently, there are no changes coming to reports. Some reports have a percentage-specific breakdown of VAT (e.g., sales invoice journal) and some do not (e.g., purchase invoice journal).
The above listing is our recommended practice, applicable to most of our clients. For any additional questions, you can contact our application support primarily via the service request form.
We encourage our customers:
- to monitor announcements from the Tax Administration, the Federation of Financiers, etc.
- to monitor announcements from other financial management programs you are using.
- to order our service release directly to your email by activating tracking of Help Center articles.
- to familiarize yourself with our Frequently Asked Questions article on the subject.