New guidance on VAT liabilities for crowdfunding, including peer-to-peer loans
The Finnish tax authority has issued new tax guidance including the VAT issues for contributors to crowd-funding projects.
Scope of the new guidance
The taxation issues of crowdfunding are examined exclusively from the point of view of the person making the investment, which is taxable according to
the Income Tax Act. The guidelines do not deal with the taxation of investments of entrepreneurs, other companies or farmers in the business or agricultural income source.
Types of crowdfunding
- Rewards-based crowdfunding
- In commodity-based crowdfunding (rewards-based crowdfunding), funding is collected from the public via a service platform for a specific project or project in exchange for some kind of goods or services. Commodity crowdfunding is sometimes also called reward, pre-purchase, pre-order or consideration crowdfunding.
Commodity-based crowdfunding may also sometimes be called crowdfunding.
- In commodity-based crowdfunding (rewards-based crowdfunding), funding is collected from the public via a service platform for a specific project or project in exchange for some kind of goods or services. Commodity crowdfunding is sometimes also called reward, pre-purchase, pre-order or consideration crowdfunding.
- Loan crowdfunding
- Crowdfunding in the form of a loan basically refers to obtaining, offering or credit brokering for a consideration with a non-financial instrument, where a debt relationship is created between the recipient of the crowdfunding and the customer of the crowdfunding intermediary. In this form of crowdfunding, a private person, company, other entity or trader applies for interest-bearing or otherwise compensatory credit for a fixed period from other private individuals, companies, other entities or traders via the service platform. Loan-based crowdfunding is typically divided into two different forms: peer-to-peer business lending and peer-to-peer consumer lending.
- Investment crowdfunding
- In investment-based crowdfunding (equity-based, securities-based or investment-
based crowdfunding), a company seeking funding issues financial instruments, such as shares or bonds, for investors via a service platform, and accordingly gives the public the opportunity to subscribe to or buy these financial instruments using the service platform’s functionalities. In practice, in investment-type crowdfunding, an equity or debt-based investment is made in a company applying for funding through a service platform.
- In investment-based crowdfunding (equity-based, securities-based or investment-
The guidance goes on to cover the following issues:
- Donation-based crowdfunding
- Collection of money as crowdfunding
- Taxation of the donor
- Advance collection and notification
- Commodity crowdfunding
- Procurement of commodities as crowdfunding
- Taxation of the purchaser of the commodity
- Advance collection and notification
- Loan and investment crowdfunding
- Granting loans and making investments as crowdfunding
- Taxation of current income
- Income acquisition and interest expenses
- Loan receivable or – loss of investment value
- Loan receivable or – transfer of the investment
- Advance collection and notification
- Fund transfer tax on the transfer of the security
