Finland

Value-added tax (VAT)

The standard VAT rate is 24%. A reduced rate of 14% is applied to food and animal feed. The reduced VAT rate of 14% also applies to restaurant and catering services. A reduced VAT rate of 10% is applied to certain goods and services (e.g. books, newspapers and magazines, accommodation, passenger transport).

A zero rate applies in certain instances (e.g. intra-Community supplies of goods and exports of goods). Additionally, certain services (e.g. financial services, insurance services, and certain educational services) are exempted from VAT.

Customs duties

Goods imported into Finland from outside the European Union need to be customs cleared and might be subject to customs duties. The rates of customs duties are determined at the EU level.

Carbon Border Adjustment Mechanism (CBAM)

The CBAM is also applicable for imports into Finland. The CBAM entered into force in its transitional phase as of 1 October 2023. It initially applies to imports into the European Union of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage. These goods are cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen.
 
The CBAM will be fully implemented as of 1 January 2026, and importers will need to declare each year the quantity of goods imported into the European Union in the preceding year and their embedded greenhouse gases (GHGs). Importers will then surrender the corresponding number of CBAM certificates. The price of the certificates will be calculated depending on the weekly average auction price of EU Emissions Trading System (ETS) allowances expressed in EUR/tonne of CO2 emitted.

Excise duties

Product specific excise duties are levied on tobacco and alcohol products, certain fuels, electricity, soft drinks, and beverage packaging.

Finland has several excise tax exemptions and reliefs in place for energy and alcohol used in e.g. manufacturing and datacentres. Finland levies excise tax on electricity at the EU minimum level of 0.063 cents/kWh.

The Finnish tax authority has digitalised nearly all excise tax administration procedures, and handling times are among the shortest within the European Union.

Real estate tax

Municipalities impose an annual real estate tax. The tax is levied on the taxable value of buildings and land. The municipal council determines the applicable tax rates, although the minimum and maximum tax rates are set by tax legislation. The tax is deductible from taxable business income if the real estate is used for business purposes. The tax is deductible from taxable income of the so-called 'other-source income' if the real estate is used to acquire other taxable income than business income.

Transfer tax

An amended Act on transfer taxation, which reduces applicable transfer tax rates, will enter into force on 1 January 2024. The reduced rates are applied retroactively to acquisitions made on or after 12 October 2023. Please find more detailed information on transfer taxation and applicable rates below. 

A transfer tax of 3% of the sales price is payable on transfer of real estate located in Finland. A transfer of shares in Finnish companies and other domestic securities is subject to a transfer tax of 1.5%. A transfer of shares in Finnish housing companies and real estate companies is subject to a transfer tax of 1.5%.

A transfer tax of 1.5% of the sales price is payable on a transfer of shares in a foreign company whose activities consist mainly of owning or holding (directly or indirectly) real estates in Finland, provided that either the transferor or the transferee is a resident of Finland or, alternatively, a Finnish branch of a foreign credit institution, a Finnish branch of a foreign investment firm, or a Finnish branch of a foreign fund management company.

Generally, the transfer tax is payable by the transferee.

Transfer tax is calculated as a certain percentage of the sales price and potential other consideration. The consideration includes payments made by the transferee to other parties than the transferor as well as obligations assumed by the transferee towards the transferor or another party, provided that such payment or obligation accrues to the benefit of the transferor. If the transferee acquires shareholder loans from the transferor in connection with the share acquisition, the amount of shareholder loans will be included in the transfer tax base as of 2024 onwards. In case of transfer of shares in a real estate company, additional provisions concerning transfer tax base are applicable.

No transfer tax is payable on the transfer of securities that are subject to trading on a regulated market or multilateral trading facility in the European Economic Area (EEA). Similarly, no transfer tax is payable if both the seller and the transferee are non-residents. Transfer tax is, however, always payable on transfers between non-residents if the transferred shares are shares in a Finnish housing or real estate company.

Stamp tax

No stamp taxes are levied in Finland.

Payroll taxes

The employer has a liability to withhold income taxes on remuneration subject to tax in Finland, including cash remuneration and non-cash benefits based on their taxable value. The taxes can, however, be withheld only on cash compensation, and the maximum income tax withholding liability equals the amount of cash remuneration.

Social security contributions

According to the Finnish social security legislation, both Finnish and foreign employers have a liability to pay several social security payments in Finland in cases where an employee performs one's tasks partly or wholly in Finland. The liability concerns all employers, regardless of the form of the company and whether the foreign company has a PE in Finland. The percentage rates for the employer’s (and employee’s) social security contributions are revised on an annual basis.

Compulsory social security contributions payable by the employer in 2023, according to the paid salaries, are as follows:

• Employer’s health insurance contribution: 1.53% (no cap).
• Employer’s pension insurance contribution: 17.39% (on average, no cap). 
• Employer’s unemployment insurance contribution: 0.52% for the first EUR 2,251,500 of gross salaries and 2.06% for the portion of the gross salaries exceeding EUR 2,251,500 (no cap). Employer’s unemployment insurance contribution applies to employees of age 18 years old or older.
• Group life insurance premium: 0.06% (on average, no cap).
• Accident insurance premium: 0.57% (on average, no cap).

The employer’s health insurance contribution is paid to the Finnish Tax Administration, and the other contributions are paid to the insurance providers and the Employment Fund. All of these contributions are tax deductible as salary costs.

Compulsory social security contributions payable by the employee are described in the Other taxes section in the Individual tax summary.

If an employee is regarded as a foreign-posted employee and has an A1 certificate or a certificate of coverage from one's home country stating the other country's social security coverage, the liability to take out Finnish social insurances and pay the respective contributions is excluded or limited.