Finland

New proposals for 2027 introduced concerning Equity Incentives

The Ministry of Finance has published a government proposal on 17 June 2026. This proposal concerns taxation of employee stock options and employee share issues.

The proposed amendments are based on the policy decisions made in the spring 2026 government spending limits discussion and are intended to enter into force on 1 January 2027.

Employee stock options: Deferral of tax payment until the year in which the shares are transferred

Under the current rules, a benefit received on the basis of an employee stock option is taxed as earned income in the year in which the options are exercised. This has been perceived as problematic particularly in unlisted companies, as an employee may incur taxable income without any cash flow with which to pay the tax.

According to the draft proposal, the benefit would continue to be taxed as earned income in the year of exercise, but payment of the tax could be deferred until the year in which the shares are transferred, without interest or charges. This would specifically be a deferral of payment: The amount of the benefit and the related tax would still be determined by reference to the year of exercise.

Deferral would require that:

• the taxpayer claims deferral before the end of the tax assessment for the year in which the option is exercised,
• the option exercise period has begun no earlier than 24 months after grant, and
• the company whose shares are subscribed for with the option carries on business activities. In addition, the company’s assets should be based primarily on the business activities it carries on, rather than, for example, passive asset management.

The deferred tax would become payable on a share-by-share basis no later than in the year in which the shares are transferred. Corporate restructurings governed by the continuity principle, or a mere listing, would not trigger collection of the tax, but inheritance and gifts would be treated as transfers. The taxpayer would be required to notify the Tax Administration annually whether any shares covered by the deferral have been transferred, as failure to file the notification would result in the shares being deemed transferred.

The employer would not be required to withhold tax at source if the conditions for deferral are met and the employee notifies the employer that they will claim deferral. No late-payment interest would accrue on the deferred tax during the deferral period.

Employee share issues: Group entity restriction to be removed

Section 66 a of the Income Tax Act is a special provision concerning employee share issues in unlisted companies, under which the taxable benefit is determined on the basis of the mathematical value of the share. This is a different provision from the general employee share issue rule in section 66 of the Income Tax Act, under which a discount of up to 10 per cent may be tax-exempt.

Currently, section 66 a applies only where an employee subscribes for shares in their own employer company, which has restricted the use of employee share issues within groups. The draft proposal suggests removing this limitation. In future, for example, a parent company could arrange an employee share issue under section 66 a of the Income Tax Act for the employees of its subsidiary. No other amendments to the provision are proposed.

Please note that the above is an excerpt of the proposal and it is likely that there will be changes. However, there should be no 

Highlights from 2026 tax legislation changes

Tax reductions for earned income and pension income 

The highest marginal tax rates on earned income taxation have been reduced to around 52% starting from 2026. 

The tax-at-source tax for foreign key employees has been reduced to 25% from 32%. The same rule of law is also applied to Finnish nationals returning to Finland.   

The additional tax rate assessed on pension income was reduced from 5.85% to 4%. The income threshold beyond which the additional pension income tax must be paid was increased from 47,000 to 57,000 euros (EUR).

Tax year for additional purchase price (earn out)

Capital gains from a conditional additional purchase price/earn out will be taxed in the year when the obligation to pay and the amount are confirmed. This provides clarity on which year's income the additional purchase price will be taxed for the taxpayer. The act also includes provisions for adjusting capital losses and specifies that capital gains are realised in the year the transfer agreement is executed.

Inheritance and gift taxation 

The minimum taxable amount in inheritance taxation was increased from EUR 20,000 to EUR 30,000 in 2026. The minimum taxable amount in gift taxation during a period of rolling three years was increased from EUR 5,000 to EUR 7,500. The value of ordinary household goods exempt from inheritance and gift tax is EUR 7,500 (previously EUR 4,000).

Use of Tax Administration’s MyTax service

From 2026, tax decisions and other official tax documents will be delivered through the Tax Administration's electronic service, MyTax, whenever the taxpayer has utilised this service.