New VAT Changes in Finland by January 2025
Finland raised standard VAT rate to 25.5%., effective September 2024. Now, further changes are implemented to extend the list of goods and services at reduced rate of 14% by 1 January 2025.
New Goods and Services at 14% VAT Rate in Finland
VAT registered business in Finland should take into account various changes coming into effect starting 1 January 2025:
- Some goods and services currently subject to reduced VAT of 10% will be subject to reduced VAT of 14%.
- Also, some sanitary products currently subject to 25.5% VAT, will be subject to reduced VAT of 14% by January 2025.
These changes have been approved by the Finnish Parliament (Riksdag) few months after the standard VAT rate was increased to 25.5%. They are aimed at modernizing the country's VAT system to meet the current market and economic needs
The products and services that will be subject now to 14% reduced VAT rate in Finland are:
- Animal Feed and Feed Mixtures: The 14% VAT rate will now apply to animal feed, feed mixtures, as well as raw materials and additives used in their production, and industrial waste intended for animal and fish feed.
- Passenger Transport: This includes both public and private transportation, a key sector for the mobility of citizens.
- Medicines and Health Products: The 14% rate will apply to medicines regulated by the Medicines Act (395/1987), which can only be sold through pharmacies, as well as to products related to menstrual protection, incontinence, and baby diapers, provided they meet certain requirements under the Finnish Health Insurance Act (1224/2004).
- Books: Books, both in physical and electronic formats, will now be subject to a 14% VAT rate, instead of the previously applied reduced rate.
- Entrance fees to cultural, entertainment and sporting events, such as theatre, circus, cinema, exhibitions, amusement parks, zoos and museums
The above changes will not impact on the VAT rate for newspapers and public broadcasting services, which will remain at 10%. Find here the official information published by the tax authorities.
VAT Rate Applicable at the Turn of the Year in Finland
The VAT rate for goods depends on the delivery date. If the goods are delivered by 31 December 2024, the VAT rate is 10%, even if paid in 2025. If delivered on or after 1 January 2025, the rate is 14%. The rate is based on the date of the payment if the seller receives an advance. For services, the VAT rate depends on the service completion date. If completed by 31 December 2024, the rate is 10%, and 14% applies after 1 January 2025. For continuous supply, goods or services are considered delivered at the end of each payment period.
New Standard VAT rate of 25.5% in Finland
In a bid to bolster its finances and navigate economic challenges, Finland approved the raise of its standard VAT rate to 25.5% (previously, 24%).
This increase, outlined in the budget for 2025-2028 is already approved by the Finnish Parliament, and came into effect by 1 September 2024. The decision to increase the standard VAT rate reflects the government's efforts to stabilize public finances.
Additionally, certain food items high in sugar, like chocolate, will see a significant VAT increase from 14 percent to 25.5 percent. Soft drinks, tobacco, and select alcoholic beverages will also face additional levies.
Nevertheless, the government has opted to maintain the 14 percent VAT rate for other food products and restaurant meals.
Have a look at our overview of current VAT rates in Finland.
New VAT Return Form in Finland
If you are filing Finish VAT returns in a paper form, you will need to continue using the current VAT return form, including all sales to 24% and 25.5% in the same box (Domestic sales 24%).
In case you are filing Finish VAT returns online, there will be available a new space to include domestic supplies at 25.5% starting 1 September 2024. For the Q3 2024 VAT return, period including sales at both standard VAT rates, the amounts should be entered in the corresponding boxes for 24% or 25.5%.
Finish tax administration released general guidelines about the VAT rate change and the reporting consequences.
How Marosa can help you?
We assist clients in Finland with VAT compliance, ensuring correct rates are applied based on delivery dates and service completion.
Our team provides expert guidance on advance payments, continuous supplies, and regulatory changes, while our VAT reporting software ensures accurate VAT return reporting, identifyes discrepancies, and manages deadlines, allowing clients to stay compliant and focus on operations without the administrative burden.