As of June 1, VAT is no longer applicable on letters and postal parcels paid in cash. So-called universal service products becoming exempt from VAT (23%) will not affect the postage on letters, but the sales price on postal parcels will drop by 15%. Invoiced or prepaid services provided for companies will continue to be subject to VAT, and the postal charges for companies will remain unchanged.
Removing the VAT will not affect the consumer prices on stamps for two reasons: Itella Posti is suffering from increasing expenses and is now compensating for the pressure to increase prices. The VAT changes also increase the expenses for Itella Posti, as they no longer will be able to deduct VAT from their own production costs.
- We have been experiencing a pressure to increase stamp prices for quite some time. We felt obliged to changes the prices simultaneously with the VAT change, because it's not practical to change stamp prices very often, says Petri Aaltonen, Vice President at Itella Posti.
Finnish households spend a little more than EUR 20 per year on sending letters and cards, or EUR 31 per year including parcel services.
Increasing costs keep sales prices for stamps unchanged
Posti's new price lists will apply as of June 1, 2011. The prices of the most commonly used consumer letter services, domestic 1st class and 2nd class letters, will remain unchanged: 75 cents and 60 cents, respectively. The prices of the most common consumer parcels, max. 10 kg parcels picked up from a postal outlet, will decrease by 15%.
The unit-specific costs for letter mail have been increasing due to more digital communication and less letter mail, as well as the increase of overall costs. This is reflected most concretely in the financial result of Itella Mail Communications, which declined for nearly 75% in the first quarter of 2011 compared with the corresponding period previous year.
Despite the pressure to increase stamp prices, it is now possible to keep the sales prices unchanged by taking both the cost increase and the VAT exemption into account. As of June 1, the sales prices for stamps will be at the same level as in 2010.
With online shopping picking up, the number of parcels has been increasing. This positive development gives cause to adjust the prices for max. 10 kg parcels picked up from a postal outlet.
Postage for letters to other European countries will also remain at the same level. The service range for foreign parcels has been rationalized, and the parcels are now being transported faster and at less cost.
Save by sending 2nd class letters
Earlier, companies have been able to deduct VAT on postage paid in cash. Now this option has been scrapped. Customers with extensive letter volumes are given a discount on large single purchases, meaning rolls of 100 stamps.
Currently, consumers and companies can also send single letters in the more inexpensive and now faster 2nd class. The reform means savings, especially for SMEs who can choose a less expensive alternative for their daily mail than 1st class. Postage for 2nd class letters is now 60 cents, as was the postage for 1st class letters in 2002.
VAT-exempt products
The VAT change applies only to universal postal service products paid in cash. Invoiced and prepaid services for companies will continue to be subject to tax.
In accordance to the Postal Act, universal postal service products (both domestic and foreign services, i.e. those exempt from VAT) are the following products that are paid using the most common methods (stamps, payment stickers attached on the shipments in the postal outlets):
The changes relate to the EU VAT Directive which has given cause to adjust the national VAT legislation accordingly.
Further information: For more information on customer services and prices, please contact our Customer Service, phone +358 200 71000 (local/mobile call rate) Mon-Fri 8 a.m.-8 p.m., Sat 9 a.m.-2 p.m. Please also visit Posti's website at www.posti.fi/english/pricesandinstructions/
More information for the media: Please place your interview requests via Itella MediaDesk, tel. +358 20 452 3366
Caption: Cost increase mainly due to salaries and fuel prices. In 2011 (after June 1), also due to abolition of VAT deduction.
