Finnish used car dealers reluctant to discuss tax evasion in the industry

Used car dealers in Finland are unwilling to comment on recent tax fraud allegations within the sector, according to an analysis by Yle, the Finnish national broadcaster. The reluctance stems from fears of damaging their own and competitors’ reputations, as well as broader struggles in the car trade market.

Recent weeks have seen two major investigations into tax evasion linked to used car imports. In early March, Yle reported that employees of J. Rinta-Jouppi, a car dealership in South Ostrobothnia, were suspected of involvement in a large-scale VAT fraud scheme. Finnish companies allegedly purchased vehicles from European auction sites while evading value-added tax payments on sales.

A week later, Ostrobothnia police revealed a separate case involving a group of ten individuals—centered around a couple from South Ostrobothnia—accused of evading over €1 million in taxes through car imports and brokering over a decade.

Yle contacted around ten used car dealerships in South Ostrobothnia and Ostrobothnia, regions known for their concentration of car traders, including the major hub in Tervajoki. Dealers declined interviews, fearing that public discussion could tarnish the industry’s reputation. While they support efforts to remove “bad actors,” they avoid taking a stance that might disrupt the already fragile market.

The used car trade in Finland is facing declining sales, with only a 1% increase in transactions last year—around 325,000 vehicles—while new car sales have stagnated. More buyers are turning to private sellers, further squeezing dealerships. Industry players are wary of actions that could deter customers, even as tax evasion concerns persist.

Jarkko Liljander, a senior inspector at the Finnish Tax Administration, confirmed to Yle that some dealerships rely on fraudulent practices to maintain profitability, particularly through VAT evasion. A 2024 change raising the small-business VAT exemption threshold to €20,000 per year has created opportunities for abuse, such as establishing multiple companies to sell cars tax-free.

Marja Hokkanen, a tax law specialist and former representative of the Finnish Automobile Trade Association, noted that while tax evasion occurs across industries, not all discrepancies in VAT reporting are intentional. Errors or misreporting can sometimes explain irregularities, she said.

The recent cases raise questions about how widespread and long-standing tax fraud in the car trade may be—and whether the exposed schemes represent only the tip of the iceberg.