Common-good education or business?

Until now, we have notified all of our new participants that we are not currently sending out invoices because of some differences with the Finnish Tax Administration. In this article we try to explain why this happened and what this means.

However, let’s start with the most important thing: The differences with the Tax Administration are only between the Turku Agile Group association and the Tax Administration, and the association is prepared for any results. The invoices we send out to our participants and supporters are final, and they will absolutely not be amended.

If a participant or supporter is not able to deduct the possible value-added tax in their own taxation, we additionally promise that the agreed-upon participation or support fee (added by invoice, reminder and late fees as necessary) is the total of the invoice – this means that we will not add the amount of value-added tax for those participants and supporters who are not able to deduct it in their own taxation.

Some background

The association behind Turku Agile Day, Turku Agile Group ry, got a notification last autumn from the Finnish Tax Administration about tax year 2012. In the notification they informed us, that they are planning on regarding the association as a not-for-common-good for-profit business. Naturally the association replied with a statement, which sadly didn’t change the decision the Tax Administration gave us. After the decision, last November, the association gave the Tax Administration an appeal letter concerning the tax year’s tax decisions and the announced duty for value-added tax starting January 1st, 2014.

Today we live the 28th day of April, 2014. The Tax Administration is still to make their decision concerning our appeal for the taxation and the duty for value-added tax from the start of year 2014. We have inquired about the matter from the handler of the case in the Tax Administration. Their reply was to be expected: The association has no way of knowing what the final decision would be, and no way to continue working in a fully correct manner.

Since the association has still not, despite the announcement of the Tax Administration, been entered in the registry for value-added tax, we cannot, by law, charge the VAT from our participants or supporters. On the other hand, if the Tax Administration eventually decides and the used stages of appeal confirm, it is possible that we will be required to pay the VAT’s since the beginning of the year for all the income we have (thankfully deducted by the VAT’s paid by us for arranging the conference.)

This is the basic reasoning for our decision of postponing sending out the invoices for a bit – we’d have naturally liked to charge the correct VAT in the invoice. According to a estimate given to us, we should have a decision some time in the spring. However, since the conference is nearing fast, we’ve decided to send the pending invoices within a few days without the VAT and prepare for paying for the VAT ourselves, not charging our participants or supporters for them.

How does this affect me?

Short and simple: To our company customers our differences with the Tax Administration don’t affect at all. Regardless of the decision, this year’s conference will be arranged. Also regardless of the decision we will naturally not send out any new or amended invoice for invoices already sent.

Why did this happen?

The association’s view is that this is a misunderstanding – the Tax Administration did not, when sending out the decision, understand the nature of the association and it’s functions despite the statement we gave them. We have, however, found a few things amiss in our statutes thanks to the Tax Administration’s notice and have already fixed those to be in line with general practices. These fixes were confirmed just a few weeks ago by the Finnish Patent and Registration Office.

What now?

The association’s administration will continue to handle the matter and the invoices pending will be sent three weeks before the conference at latest. All sent invoices are final and further decisions by the Tax Administrations regarding the association’s status will not affect them in any way. The association will cover possible VAT’s through other means, when they have not been included in the invoice.