Mandatory invoice details: what section 209 e of the VAT Act requires

An invoice is a voucher in value added taxation, and its content is set by section 209 e of the VAT Act. The section lists the details that must appear on the invoice; the rest – the payment term, penalty interest, the reference number, the layout – is a matter of the contract and your own practice. The difference matters: the details are not negotiable, the payment terms are.

When the seller must give an invoice

A VAT-compliant invoice is required for taxable sales to a business or another legal person, such as an association or foundation. Ordinary domestic consumer sales are generally outside this duty, but still need an accounting record. The duty also covers certain exempt sales and special consumer transactions, such as a new means of transport sold to another EU country. Check the exceptions in Chapter 4 of the Tax Administration’s guidance.

An invoice drawn up by the buyer counts as issued by the seller if that has been agreed and the seller accepts the invoice. This arrangement is called self-billing, and it shows in the mandatory details as well.

Three situations produce an invoice without a new delivery:

• Advance payments (point 4.2.6). The seller must issue an invoice for an advance payment. If only part of the consideration has been invoiced as advance payments, an invoice is also issued after the delivery or the performance. The clearest way is to invoice the remaining amount at that point, or to enter the earlier advance payments on the invoice as a deduction with references to them.
• Adjustment items (point 4.2.7). Annual and turnover rebates, purchase and sales refunds and other adjustment items are invoiced if they have not been taken into account in earlier invoices.
• Price changes and cancellation (section 4.2.7). Issue an amending invoice referencing the original. A reduction is a credit and an increase an additional charge.

The time limit for issuing the invoice

The VAT Act sets no general time limit for issuing an invoice. The time limit applies to two situations: the intra-Community supply of goods, and services sold to another EU country and taxed under the general rule. In those, the invoice must be issued by the 15th day of the calendar month following the sale (point 4.6 of the guidance).

An invoice has been issued once the party drawing it up makes it available to the recipient. It can be made available by e-mail, through a service provider or in a web portal (point 4.6 of the guidance). What counts is therefore the sending, not the moment the recipient opens the invoice.

In domestic trade the contract and practice set the invoicing rhythm. Invoicing quickly serves both the cash position and people’s memory: the closer to the delivery the invoice is given, the more precisely the delivery date and the nature of the performance are still known.

The mandatory details under section 209 e of the VAT Act

The details may be written in any language (section 209 e and point 5.1 of the guidance). The numbering below follows the points of the section – points 14–17 on special situations are gathered into one – and the same numbers are referred to in the sample invoice in this guide.

1. Date of issue. The invoice date, for example the date it is sent.
2. A sequential number that identifies the invoice. The number must be based on one or more series. There may therefore be several series – one for sales invoices and one for credit notes, for example – as long as the number identifies the invoice unambiguously.
3. The seller’s VAT identification number under which the goods or services were sold. On a domestic invoice this is the business ID, which the Tax Administration guidance calls the VAT identification number in its list of simplified details (point 5.2).
4. The buyer’s VAT identification number that the buyer used for the purchase. It is required in two situations: the buyer is liable for the tax on the purchase (reverse charge), or the sale is an intra-Community supply of goods. On other domestic invoices the buyer’s number is a useful identifier, not a requirement.
5. The name and address of the seller and of the buyer. The address belongs to both, including on an e-invoice, where delivery runs on the e-invoicing address.
6. The quantity and nature of the goods sold and the extent and nature of the services. “Work done” states neither the extent nor the nature. In hourly work the extent is the number of hours and the nature is the work performed; for parts, it is the number of pieces and the item.
7. The delivery date of the goods, the performance date of the services or the payment date of the advance payment. The detail is required if the date can be determined and it is not the same as the date the invoice is issued. In monthly work invoiced in arrears these dates can differ.
8. The taxable amount for each VAT rate and exemption, the unit price excluding VAT, and refunds and discounts, if they have not been taken into account in the unit price. When an invoice carries several VAT rates, the taxable amount is broken down by rate.
9. The VAT rate.
10. The amount of VAT payable.
11. A note of the exemption, or a reference to the relevant provision of the VAT Act or the VAT Directive, if no VAT is payable on the sale.
12. The note “reverse charge”, if the buyer is liable for the VAT on the sale.
13. The note “self-billing”, if the buyer draws up the invoice.
14. The details for special situations (points 14–17 of the section): the sale of a new means of transport, the profit margin scheme, travel agency services and investment gold. Each of them requires a note of its own.
15. An unambiguous reference to the invoice being amended (statutory item 18) when changing an earlier invoice.

Use the established wording for reverse charge and self-billing in the invoice’s language. The notation need not be Finnish, but it must clearly convey the required information.

Only a registered seller may state the amount of VAT

Section 209 e of the VAT Act ends in a limitation: the amount of VAT or the VAT rate may be entered on an invoice only if the seller has been entered in the register of VAT-liable businesses. If the registration is pending and the invoice says so, the VAT and the rate may still be entered (section 209 e).

The consequence of failing to enter the mandatory invoice details is laid down in section 39 of the Act on Assessment Procedure for Self-Assessed Taxes (section 209 e of the VAT Act).

Simplified invoice details

Point 5.2 of the guidance allows a narrower set of details when the invoice total including VAT is no more than 400 euros. The same relief applies, regardless of the total, to retail trade and comparable sales made almost exclusively to private individuals, to invoices for restaurant and catering services, to invoices for passenger transport, and to receipts from parking meters and comparable devices.

The simplified requirements do not apply to intra-Community supplies, to distance selling, or to a sale to another EU country where the buyer is liable under the reverse charge. It also pays to read the threshold the right way round: 400 euros is the total including VAT, not the amount excluding it.

An invoice is an accounting voucher

Under chapter 2, section 5 of the Accounting Act, an entry must be based on a dated and systematically numbered or otherwise identified voucher that verifies the business transaction, and the connection between the business transaction, the voucher and the entry must be verifiable without difficulty. An income voucher must show the performance delivered. These requirements are points 2, 6 and 7 of section 209 e in different words: an identifying number, the nature of the performance and the date.

There are two retention periods running side by side.

• VAT: invoices must be kept for at least six years. The period runs from the end of the calendar year containing the calendar month the invoices concern; if the financial year differs from the calendar year, the period runs from the start of the year following the end of the financial year. Invoices concerning immovable property investments are kept for 13 years (point 7 of the guidance).
• Accounting: the vouchers of a financial year and correspondence concerning transactions are kept for at least six years from the end of the year in which the financial year ended. The financial statements, the books of account and the chart of accounts are kept for at least 10 years from the end of the financial year (chapter 2, section 10 of the Accounting Act).

Retention is the taxable person’s own responsibility. It covers invoices drawn up by someone else too – an accounting firm, an e-invoicing operator or a buyer using self-billing (point 7 of the guidance). The contract with the service provider is worth reading from the angle of the retention period.

The payment term and penalty interest are contract matters

The invoice details come from the law, the payment term from the contract. Under section 5 of the Act on Payment Terms in Commercial Contracts, the payment period may exceed 30 days only if that has been expressly agreed, when the debtor is a business. A longer payment period is therefore possible once it has been agreed – 60 days written unilaterally on an invoice is a different thing from a contract term.

Entering the due date on the invoice also affects when penalty interest starts to run. Under section 5 of the Interest Act, penalty interest is payable from the due date if the due date has been fixed in advance in a way that binds the debtor. If the due date has not been fixed that way, penalty interest starts to run only once 30 days have passed from the sending of the invoice (section 6 of the Interest Act). The amount of penalty interest, the collection costs and the timing of a payment reminder are covered separately in the guide payment reminder and penalty interest.

The same contractual area covers discounts and refunds, the currency, the reference number and how the invoice is delivered. All of them may be entered on the invoice; the list of mandatory details sets a minimum, not a maximum.

Example: a sample invoice with its details

An installation firm invoices a business customer for one visit: five hours of installation work and four parts. In brackets is the point of section 209 e that the detail satisfies.

The total including VAT exceeds 400 euros, so the simplified details are not enough and the whole list must appear on the invoice. Special situations change a few lines of the same invoice:

Check for these omissions before sending

The following omissions can lead to a request for correction:

• The nature of the performance stays vague. “Consulting” or “work done” without the extent leaves point 6 unfulfilled.
• The delivery date is missing even though it differs from the date the invoice was issued (point 7).
• The credit note lacks a reference to the original invoice (point 18), leaving two vouchers in the accounts with no connection to each other.
• The reverse charge note is written in the seller’s own words, or the buyer’s VAT identification number is missing (points 4 and 12).
• An exempt sale carries neither a note of the exemption nor a reference to the provision (point 11), so the invoice does not show why there is no VAT.
• Tax is shown without registration, with no pending registration stated on the invoice.
• A discount has been deducted from the total without being itemised even though it was not taken into account in the unit price (point 8).

A deficient invoice can block the buyer’s right to deduct the VAT, so the buyer has reason to ask for a corrected invoice and the seller reason to get it right in one go. Chapter 8 of the Tax Administration invoicing guidance deals with the invoice as a condition for the right of deduction and with the consequences of deficient details.

Checklist

Before you send the invoice.

• The obligation to invoice. The buyer is a business or a legal person that is not a business, and the sale is taxable.
• Date and number. The invoice carries an issue date and a number from a series in which it identifies the invoice.
• The seller’s identifier. The seller’s VAT identification number is on the invoice.
• The buyer’s identifier. Under the reverse charge and in an intra-Community supply, the buyer’s VAT identification number is entered.
• Names and addresses. Both the seller’s and the buyer’s name and address are on the invoice.
• Quantity and nature. Every line shows the quantity and nature of the goods or the extent and nature of the service.
• Delivery date. The delivery, performance or advance payment date is entered when it differs from the invoice date.
• Taxable amount and unit prices. The taxable amount is broken down by VAT rate, the unit prices exclude VAT and the discounts are visible.
• Tax rate and amount. The entries are supported by registration or pending registration stated on the invoice.
• Exemption. An exempt sale carries a note of the exemption or a reference to the provision on the invoice.
• Special notations. Reverse charge and self-billing are indicated where applicable in the invoice’s language.
• Amending invoice. The credit note and the corrected invoice carry an unambiguous reference to the invoice being amended.
• The simplified option. On an invoice of no more than 400 euros and in retail trade, it has been checked whether the simplified details are enough.
• Payment term. The due date is on the invoice, and any payment period longer than 30 days has been agreed.
• Retention. The invoice is archived for six years, and retention stays under your own control even when someone else draws up the invoice.