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Finland Slashes Reduced VAT Rate to 13.5% in Push for Consumer Relief and Growth

VAT-related measures announced by Finland’s Orpo government in its 2026 budget proposal:

Key VAT Reforms

  • Reduced VAT Rate on Essentials: The standard reduced VAT rate of 14% will be lowered to 13.5% for select goods and services. This is aimed at boosting household purchasing power and easing inflationary pressure.
  • Public Broadcasting VAT Increase: The VAT rate on public broadcasting services will be increased, contributing to higher tax revenues. This aligns with broader fiscal consolidation goals.
  • Expanded VAT Base: Several tax deductions and exemptions will be removed to tighten the VAT base:
    • Elimination of tax-free status for employee bicycle benefits (for new agreements post-spring 2025).
    • Removal of deductibility for trade union membership fees and home office expenses.
  • Digital Services Levy: A new levy on subscription-based streaming services will be introduced, functioning similarly to VAT. Revenues will be earmarked for supporting domestic film and TV production.
  • Environmental Adjustments: VAT-related support for mining electricity use will be abolished starting January 2026, aligning with sustainability goals.

Sources



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