Originally published 07AUG2017 in the old version of tinohakkarainen.com
Published: 21OCT2018
Updated: 21MAY2023
The latest update was regarding grammar corrections.
♥ This page is being updated to have comprehensive details for post-pandemic travel. The purpose is to benefit tourism and retailing.
There are multiple ways to receive a tax-free refund in Finland.
Tax-Free Refund Options in Finland Chart
Your tax-free refund amount is around 14 % of the total purchase price.
In European Union countries, foreign tourists can do tax-free shopping easily. One big operator dominates the field as a few smaller ones that started just before COVID emerged from the startup scene to provide infrastructure for tax-free shopping. It’s not commonly known that tourists’ actual refund amount is not the total tax included in the sales price.
Here are a couple of FAQs from tourists:
What is the tax percentage in Finland?
In Finland, the tax on goods is 24 %, on food, 14 %, and on medications, 10 %. The final figures are around 14 % because the refund amount is not a total tax.
Do the prices in Finland include tax?
Yes, prices in Finland include taxes, compared to the US, where local and federal taxes are added at the checkout.
How much refund do I get?
There is a chart where the refund is calculated, and the amount is based on the final price group (for example, if the final price is between 40 – 49,99 EUR = the refund is 5 EUR). It’s about 14% of the cost.
How does it work?
The tax-free form is issued at the store if the customer’s purchases exceed 40 EUR or more. Tourists can add other sales receipts from the same store paid on the same day to the tax-free form to meet the minimum 40 EUR limit.
Finland has strict taxation laws, so the products have to be sealed. The salesperson issued the refund form after the tourist had purchased the item (payment transaction). Many stores seal the paper shopping bags. Packing the items inside a plastic bag would be more practical, making it easier for customers to pack them in their luggage.
The refund is then collected at the airport or the other refund points if leaving the EU by land. In Finland, tax-free operators will do random checks to ensure that they have not been used inside Finland/Europe. The tax-free desks are not performing these checks in other countries, and the stores do not usually seal the purchases.
The check-in agent will stamp the tax-free forms if purchased items are placed into the checked-in luggage. Customs officials will check the items and stamp the forms if the tax-free desks are closed. It is advised to collect the refund as soon as arriving at the airport and before the security check.
A refund can be received either in cash (with a service fee of 3 EUR or more), or a tax-free provider can add it to the credit card free of charge. Tourists have reported that the mailed forms are prolonged, taking over three months, with more questions following the procedure.
Three options to choose from
The most known tax-free operator in Europe is called Global Blue. For years, Finland has had the “only” operating monopoly. In 2016, a Finnish company, E-Tax Free, gained a good market share with better-improved service than the original one. Another big player in Europe, called Premier, bought the Finnish company in 2017, and the current name is Planet. With this acquisition, Planet also entered the Finnish market.
Global Blue Tax-Free
Many people might remember the times when issuing the tax-free form for customers was relatively long. At that time over ten years ago, the salesperson had to fill in the form manually. Each item needed to be described, and the return amount had to be written in words (for example, “21,50 EUR” was twenty-one euros and fifty cents”). In some situations, it was challenging to ask the customer to write mandatory personal details such as name and home address. They sometimes wrote this information in their national language. Luckily technology has come to the rescue, and currently, the forms are issued using software on the cashier’s computer, which is connected to the receipt printer. Nowadays, only the country, passport number, and customer name are required, along with minimal receipt details. This makes the whole process faster, especially with the bar codes printed on the receipt for a quick refund. Most Russian tourists have a membership card from Global Blue, which will auto-fill mandatory details on the system. When collecting the refund in cash, Global Blue will charge 3 EUR per form – meaning if you shop in five stores, the service fee would be 5 x 3 EUR = 15 EUR.
In 2020 quick payment was started at the eligible stores. The salesperson can also begin the refund process when issuing the tax-free form. The shopper should give an email address to Global Blue and a qualifying credit card. The credit card is swiped to Global Blue, and the refund is added to the credit card in 3 business days. The tourist needs to visit the Global Blue desk when leaving the country. Otherwise, Global Blue will take the refund amount back from the credit card. This aims to ensure cash flow for the tourist and ease up the refund process at the airport.
Planet (Premier E-Tax Free)
This new player seems much more user-friendly to me than Global Blue Tax-Free because of the customer’s larger refund amount and the advanced software. Planet creates a customer account in the cloud based on their passport number. All the purchases are visible on the account. The return amount is calculated from the total value when leaving the EU. This way, if most of the purchases were done with the same passport and using Planet, the refund would be slightly bigger. Planet also has a free Plus membership, giving a 10% more refund back. They also have a Premium membership where the refund is slightly bigger than the Plus membership one.
Official invoice
Global Blue and Planet are commercial service providers that charge customers for their services “secretly.” There is a way to get the tax fully refunded, and this is a government-related procedure.
If a store can deal with the whole VAT procedure, the benefit is much more valuable for the customer. This process is a bit more complex than the two other options for the company (store) and the customer.
The store writes an invoice document with details about the company, the item breaks down, and places for a stamp from the customs. The tricky part is if the item is on sale, as the purchased amount is written on the invoice. It depends on how sophisticated the cashier system is because taxes are not typical percentage calculations. There is an online calculator which will tell the tax amount. If the item’s price is 10 EUR and the tax is 24%, then the amount of tax is 1,93 EUR, and the net price is then 8,06 EUR. Tax is calculated from 9,99 EUR. This is the slowest version to do a tax-free refund, but it’s worth it.
Items must be sealed at the store, typically with clear plastic tape or with branded tape if available. The customer would need to visit the customs office at the border to get a stamp on the invoice when leaving Finland. The customer needs to return to Finland and return the invoice to the store. The store would give the tax amount to the customer, and the store would need to reclaim the government’s tax amount with the earlier invoice. The customs stamp will tell that the goods were exported from Finland.
Tax-Free refund business
These operators depend on how well the sales representatives are pushing the sale in the first place. Companies providing the service for tourists are getting a margin gap between 14 % – 24 % (Finland) as their income. Other services include analyzing the massive data they get from the stores via their own system.
The data these tax-free companies are getting are:
- From which country is the tourist from?
- Where did the tourist shop?
- Did the same tourist shop in another country?
- How much did the tourist spend in total + breakdowns and categories of purchases?
- The length of the stay (first purchase – refund collection when leaving the EU)
The second important thing is which credit cards are accepted in the store. China has two major players, which are UnionPay and Alipay.
UnionPay has been in Finland for at least a couple of years. Finnish payments operator Nets accept UnionPay, so even small companies can access this payment option. One might experience technical issues with UnionPay with a MasterCard/Visa double card, as the Nets card reader will automatically take the MC/Visa instead of UnionPay. UnionPay has its own service provider in Europe from Switzerland (Six Payment Services) to provide additional payment transaction machines.
Alipay in Finland is coming from an operator, ePassi, and some stores in downtown Helsinki already accept this payment method. Alipay does not use a plastic card, so it’s a phone app. Stores should consider having free Wi-Fi for this option. However, I have noticed between 2011-2018 that it’s pretty rare that a customer asks for Wi-Fi.
Customers usually have more credit on Alipay than their other credit cards; hence they buy a more expensive items. Japan also has one of its own credit cards, JCB. This is available together with UnionPay from Nets.
Many people have been waiting for this, and in Q2/2017, Apple announced that Apple Pay was finally coming to the Nordics. It has already worked in Finland if the user has been from the US/UK. The card reader can process the payment transaction via iPhone/iWatch – where the user’s credit cards are stored. As a salesperson, I would need to press “Card payment” on the cashier, and the customer would show the device to the card reader (must be an NFC card reader) and approve the payment on their own screen. Even big purchases are approved, as Finland has a 25 EUR limit on NFC payment cards – without a PIN code or signature. Apple Pay came relatively late to Finland (end of 2017), and currently, only Nordea’s payment cards and Amex can be used. To work on Apple Pay in a specific store, Amex would need to accept Amex in general. Apple Pay will not transfer the payment as a bridge, so it will not cover the costs of transaction fees. Stores will not need to upgrade their cashier system if there is an NFC card reader. It would be good to see the virtual payment icon near the checkout. Apple says that it has increased sales via Apple Pay five times.
Tax-Free shopping rules even for a Finnish citizen.
Most of this article is about tourists coming to the EU. In Finland, most purchases are made by the Chinese and Russians. Japanese tourists usually buy only “Made in Finland” items. The Chinese might purchase well-known luxury brands in Helsinki, and the Japanese would prefer local Finnish goods over global brands. The Russians tend to like buying from Finland because they trust the item is authentic.
A Finnish national who lives permanently in a non-EU country (excluding Norway and Switzerland) and holds a residency permit is eligible for a tax-free refund when buying goods in Finland/Europe. If a person has a Canary Island permit, they can get a tax-free refund inside the EU.
If, for example, you would visit New York City, regardless of your nationality, please remember that if you are going to purchase clothes or footwear for less than 110 USD, you will not pay sales tax. If the item costs 110 USD or more, the sales tax of 8,875% is added to the total.