VAT treatments and account types

This article serves as a reference when you create new accounts or want to check the correct VAT treatment or account type to choose.

VAT treatments

VAT treatment determines how value-added tax is calculated for transactions posted to the account. A default treatment is set on the account, but it can be changed per transaction.

No tax treatment — select this when you don't want a separate VAT treatment for the account.

Domestic taxable purchase — select this when you purchase taxable goods or services from Finland.

Domestic taxable sale — select this when you sell taxable goods or services in Finland.

Zero-rated sale — select this when you sell VAT-exempt goods or services for which VAT on purchases can nonetheless be deducted.

Sale of goods to EU countries — select this when you sell goods to another VAT-liable party within the EU.

Sale of services to EU countries — select this when you sell services to another VAT-liable party within the EU.

Purchase of goods from EU countries — select this when you buy goods from another VAT-liable party within the EU.

Purchase of services from EU countries — select this when you buy services from another VAT-liable party within the EU and the purchase is subject to reverse charge.

Purchase of goods from outside the EU — select this when you import goods from outside the EU.

Purchase of services from outside the EU — select this when you buy services from outside the EU.

Purchase of construction services — select this when reverse charge applies to the purchase of construction services.

Sale of construction services — select this when reverse charge applies to the sale of construction services.

Account types

The account type determines the account's nature in the bookkeeping. It affects which report the account appears in, how the dashboard figures are calculated, and how the chart of accounts filters work. When creating a new account, it's worth looking at similar existing accounts for reference.

Account types for balance sheet accounts:

Assets — the account type describing the company's assets. Used for accounts 1000–2000.

Depreciable assets — assets with a useful life of more than 3 years or an acquisition cost of more than €1,200.

VAT receivable — accounts used to handle VAT receivables.

Accrued income — an adjustment account needed at financial statement time. Used when expenses for the following financial year have been paid during the current one.

Accounts receivable — used in accrual-based bookkeeping when a product or service is delivered before payment.

Bank account / cash — the account type for bank accounts and cash registers.

Liabilities and equity — for accounts in the 2000–2999 range. Describes the company's sources of funds.

Equity — the company's equity accounts.

Retained earnings from previous financial years — a company usually has only one such account. Describes profits or losses from previous financial years.

Accounts payable — used in accrual-based bookkeeping when a product or service has been received and payment happens later.

Liabilities — for accounts describing the company's debts, for example bank loans.

Accrued expenses — an adjustment account needed at financial statement time. Used to record payments received for which, on an accrual basis, no income for the financial year has yet arisen.

VAT payable — used to reconcile receivables and payables for the VAT period. The chart already includes account 2939 for this purpose — it's not worth creating a new VAT payable account without good reason.

Account types for income statement accounts:

Revenue (sales) — accounts that contribute to the company's turnover.

Income — accounts that are not revenue accounts but increase the result.

Tax-exempt income — accounts whose income is exempt from income tax.

Expenses — company expenses that are fully deductible. The most common type of expense account.

Depreciation — the account type used for depreciation entries.

Non-deductible expenses — expenses that cannot be deducted in income taxation.

Half-deductible expenses — expenses of which half can be deducted in income taxation, for example entertainment expenses.

Advance taxes — the account type for advance tax accounts.