The Finnish Tax Administration has clarified that sole proprietors registered for VAT must generally pay VAT when ceasing business operations and transferring VAT-deductible assets to private use, regardless of asset age.
When a VAT-registered sole proprietor discontinues operations, VAT becomes due on the transfer of business assets to private use where input VAT deductions were previously claimed. The VAT liability applies through own-use taxation, with the tax base calculated as the probable selling price of the assets excluding VAT at the time of private transfer.
Finland provides a de minimis exemption for private use of goods and services valued at up to €850 annually. If assets transferred to private use fall below this threshold, no VAT is due. Where transfers exceed €850 per year, VAT applies only to the amount above the threshold. This exemption does not extend to limited companies.
The guidance addresses the common misconception that asset age affects VAT obligations on business cessation. Assets over five years old remain subject to VAT on private transfer if input VAT was previously deducted, contrary to some business understanding in the market.
