Loomio
Sun 31 Mar 2019 7:43AM

Applying to the VAT registry

TT Tarmo Toikkanen Public Seen by 154

OKFI has started organizing training events in 2019. Tickets are sold to participants. This is clearly business, and not part of the "common good" mission (yleishyödyllisyys) of the association.
Now, this is completely fine and allowed to do, as associations can and often have business-like activities as well. However, if our business exceed 10,000€ yearly, we will be required to pay VAT on all our business income for the entire year. If we come up with other training events or other activities (such as selling t-shirts), we will exceed this limit.
We have the option of voluntarily joining the VAT register. This would essentially mean that our business-like sales would have 24% VAT in their pricing, but on the other hand, any costs we have related to our business, we can deduct the VAT from them.
Again, if our sales exceed 10,000€ yearly, we have no option but to become VAT-compliant and pay any VAT after the fact. We have the option of now voluntarily starting to handle VAT to avoid a nasty surprise towards the end of the year.

TT

Tarmo Toikkanen Sun 31 Mar 2019 7:46AM

As stated, the downside of not voluntarily applying for VAT is that if we exceed 10,000€ in 2019, we will have to pay 24% of those sales as VAT. And we would not be able to deduct VAT from any of the purchases we may have made.

TT

Tarmo Toikkanen Sun 31 Mar 2019 7:48AM

The downside of applying for VAT is that we need to separate whether our various activites are business or "common good". In our financial system this is actually quite easy to do.
In general, if we sell services or products, it's business. If the beneficiaries are not our members and the society at large, it's business. Most of the projects we do are not business, since we don't sell products or services to consumers in them. Our membership fees and member services will be VAT-free in the future as well.

TT

Poll Created Sun 31 Mar 2019 7:52AM

What should we do about VAT? Closed Fri 5 Apr 2019 12:03PM

Results

Results Option % of points Voters
Don't apply for VAT. Store 24% of all sales in reserve until end of 2019 in case we need to pay VAT. 33.3% 2 PA AT
Apply for VAT. Benefit from VAT deductions of purchases. All future and past sales will have 24% VAT in them whether we reach 10,000€ or not. 33.3% 2 TT AT
Don't apply for VAT. Stop any sales before 10,000€ is reached. 16.7% 1 MS
Don't apply for VAT. Take the risk that we will have to pay 24% of our sales from our other savings. 16.7% 1 MS
Undecided 0% 39 JP MK OK AJP JK JN OKF SM RM IP TT TR MH L LS KA SÅ RP EH AK

4 of 43 people have voted (9%)

TT

Tarmo Toikkanen Sun 31 Mar 2019 7:52AM

Apply for VAT. Benefit from VAT deductions of purchases. All future and past sales will have 24% VAT in them whether we reach 10,000€ or not.

This makes us future-proof in case our sales volumes increase.

MS

Mikael Seppälä Sun 31 Mar 2019 9:05AM

Don't apply for VAT. Take the risk that we will have to pay 24% of our sales from our other savings.
Don't apply for VAT. Stop any sales before 10,000€ is reached.

During the last years we have been organizing a large conference with a turnover of many hundreds of thousands. The tax authority has chosen to view this as common-good/non-profit activities. I think the harsh self-interpretation that our very small scale Training EVENTS (turnover of trainings events in 2018: 0e) related to the Open Knowledge Finland purpose is not necessary. Let's return to this issue in 2020 when we see how this year goes.

PA

Pia Adibe Mon 1 Apr 2019 7:19PM

Don't apply for VAT. Store 24% of all sales in reserve until end of 2019 in case we need to pay VAT.

Storing the possible VAT 24% of sales is the most sustainable and risk-free solution. There is no sense of applying VAT and paying for pas sales - would be huge figures due to MyData ticket sales.

SÅ

Susanna Ånäs Sun 31 Mar 2019 9:04AM

Can this give an opportunity to commission services VAT 0% in projects?

TT

Tarmo Toikkanen Sun 31 Mar 2019 9:40AM

Each project's VAT status is decided. Most are probably not business (liiketoiminta) so they will be VAT 0%. Like they have been so far. But if a project does produce products or services to citizens (consumers) it may well be under VAT 24%, which would then of course mean that any tickets or sales to consumers would include that VAT 24%, making our services that much more expensive to consumers. But then again, any subcontractors that invoice us will be 24% cheaper.

SÅ

Susanna Ånäs Sun 31 Mar 2019 9:49AM

I am interpreting that in the case of Wikidocumentaries, we could not benefit from the tax deduction opportunity for paying contractors, since the project is by nature non-profit.

TT

Tarmo Toikkanen Sun 31 Mar 2019 12:47PM

Correct. Contractors that invoice with VAT 24% will still cause that VAT to be a cost to the project, not something we can deduct.
The non-profitability is not the key issue, but rather if the project's goal is to provide products or services. So if it's actually in "the market" with other companies, then VAT needs to be included because otherwise there would be an unfair advantage. But yes, most of our projects don't provide something for consumers to buy.

SÅ

Susanna Ånäs Sun 31 Mar 2019 9:08AM

Is this vote for a broader audience than the Board?

TT

Tarmo Toikkanen Sun 31 Mar 2019 9:37AM

I'm collecting opinions and concerns (and objections). The board will make the official decision, but now everyone is welcome to pitch in.

SÅ

Susanna Ånäs Sun 31 Mar 2019 9:41AM

I support registering and paying/deducing VAT fully, already from the beginning of the term. Learning when it can and cannot be applied requires some learning but I am convinced we can manage this with the robust new accounting processes.

TT

Tarmo Toikkanen Sun 31 Mar 2019 9:43AM

@mikaelseppala , yes, MyData has been not-VAT. Unique events are not business, that is stated clearly in VAT guides. But my understanding is that MyData Global is now applying to be in VAT, since that event is clearly turning into a continuous process and thus becoming business. The size of the activity is not the deciding factor (except for the 10k limit for small scale activities).
Likewise, our training events are continuous. If they (plus any other activities that the tax authority might consider business) reach 10,000€, we will be in a bit of trouble.

TT

Tarmo Toikkanen Tue 2 Apr 2019 5:16PM

@piaadibe , this decision would not affect anything from previous years, so MyData conferences will be unaffected.

MS

Mikael Seppälä Wed 3 Apr 2019 7:15PM

We had a seriously disturbing email discussion with @tarmotoikkanen about this proposal to deduct VAT retrospectively for courses that have already been done and completed before this discussion about VAT even started.

@tarmotoikkanen is making the interpretation that if the board makes the decision to apply for VAT, the association is justified to take an additional 24 % of the income of these courses that were not able to bill the VAT from the payers since VAT was not discussed up front.

From a financial standpoint this means that given @tarmotoikkanen's interpretation the association would be taking 18 % overhead + 24 % VAT = 42 % of total income with a one-sided decision.

We don't feel this interpretation is fair nor legal. It is not fair nor do we believe it is legal for business companions or employers to change agreements one-sidedly. If the board wishes to apply VAT retrospectively to past courses, it should be the association overhead rather than the agreed-upon compensation for the trainers that should account for it.

TT

Tarmo Toikkanen Thu 4 Apr 2019 5:24AM

Just to clarify it's not the association that is taking the 24%. It's the tax authority. OKFI will not get any of that 24%, it's just paid through the association to the tax authority. And the risk here is that if we are lated forced to pay VAT, it's the association's own savings that will be used to pay those taxes. Therefore this is a conundrum. Sorry if you feel the discussion has been "disturbing", I've tried to keep it to the facts, which are quite clear, but apparently have not been successful.