A recent Finnish tax advisory case highlights a common VAT issue involving the sale of commercial vehicles previously used in VATable business activity. In the case, a business owner sold a van that had been used for VATable purposes. Although no deductible VAT had been included on the original purchase invoice, the tax auditor concluded that the subsequent sale should have been subject to VAT. The vehicle was sold to another VAT-registered business, but the sale was treated as VAT-exempt. According to tax lawyer Miika Härkönen, Finnish VAT law provides a possible remedy in such situations. Under Section 50 of the Finnish VAT Act, the seller may request a waiver commitment from the buyer.
If the buyer confirms in writing that it waives its right to deduct input VAT on the purchase, the Tax Administration may refrain from assessing VAT on the seller for the transaction. If such a waiver commitment is presented during or after a tax audit, the VAT on the vehicle sale does not need to be imposed on the seller, provided the buyer would otherwise have been entitled to deduct the VAT. The mechanism is designed to prevent double taxation and to ensure VAT neutrality where the economic burden of VAT would not otherwise arise.
