Finland to Lower the Reduced VAT Rate to 13.5% from January 2026

VAT Rate Changes in Finland from 1 January 2026

The Finnish government has proposed lowering the current 14% reduced VAT rate to 13.5% starting from 1 January 2026. The change would apply to a wide range of goods and services, including food, catering, transport, accommodation, medicines, and cultural activities.

Scope of the New 13.5% VAT Rate

According to the government proposal, the new reduced rate would apply to the following categories:

• Food and animal feed
• Restaurant and catering services
• Passenger transport
• Accommodation services
• Guest harbour services
• Medicines, menstrual and incontinence products, and baby nappies
• Books (both printed and electronic), cultural and sports events, use of sports facilities, museum and cinema tickets, and taxable performances by artists.
• Imported or occasionally sold works of art and copyright royalties
• Broadcasting services – which would increase from the current 10% to 13.5% instead of the previously planned 14%.

The proposal () would amend Article 85 of the VAT Act (1501/1993) to introduce the 13.5% rate, and Article 18b of the Åland Exceptions Act (1266/1996) to align VAT treatment of certain imports, such as collectors’ items and antiques, across Åland, mainland Finland, and the rest of the EU.

Implementation Timeline for the New 13.5% VAT Rate

The proposed VAT amendment is tied to Finland’s 2026 State Budget and is currently under parliamentary review. Once approved, the law is expected to be adopted by late 2025, allowing a short transition period for businesses to prepare.

The 13.5% reduced VAT rate will apply from 1 January 2026 to all taxable supplies where VAT liability arises on or after that date. Companies are advised to prepare during Q4 2025 by updating accounting systems, reviewing pricing and invoicing, and testing their VAT reporting to ensure a smooth transition.

Past Changes in VAT Rates in Finland

Goods and Services at Reduced 14% VAT Rate in Finland from 1 January 2025

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
• Hotel accomodation.

The above changes will not impact on the VAT rate for newspapers and public broadcasting services, which will remain at 10%. Find  published by the tax authorities.

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 from 1 September 2024

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.

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  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  ensures accurate VAT return reporting, identifyes discrepancies, and manages deadlines, allowing clients to stay compliant and focus on operations without the administrative burden.