Finland Adopts Pharmacy Economy Reform with VAT Implications for Medicine Retail from 2026

On 16 December 2025, the Finnish Parliament adopted, as amended, the legislative package included in Government Proposal HE 111/2025 vp, concerning the reform of the pharmacy economy and the implementation of pharmaceutical savings. The package consists of amendments to the Medicines Act, the Pharmacy Tax Act, the Act on Electronic Prescriptions and the Health Insurance Act. Parliament’s response was issued as EV 174/2025 vp, closing the legislative procedure. From a VAT perspective, the adopted legislation does not change the Value Added Tax Act or VAT rates applicable to medicinal products. However, several elements of the reform are relevant for VAT compliance and practical application in the pharmaceutical sector. A central change is the creation of a limited range of over-the-counter (OTC) medicines that may, subject to authorisation, be sold outside pharmacies. Retail sales of these products will be permitted on the basis of a retail sales permit issued by the Finnish Medicines Agency. This reform expands the group of taxable persons engaged in the retail sale of medicinal products beyond traditional pharmacies, increasing the importance of correct VAT treatment by new market entrants. The adopted amendments also revise price regulation rules for prescription medicines and OTC medicines. Throughout the legislation, regulated medicine prices, delivery fees and sales margins are defined exclusive of VAT, with VAT added separately in accordance with the Value Added Tax Act. This structure is reflected both in the Medicines Act and in the amended Government Decree on pharmaceutical tariffs. In addition, the pharmacy tax base is calculated on the basis of profit margins excluding VAT, and sales of OTC medicines belonging to the new limited range are excluded from that tax base. Although this change concerns pharmacy taxation rather than VAT, it underlines the need for clear separation between VAT-exclusive pricing elements and VAT amounts in accounting and reporting. The adopted laws are scheduled to enter into force mainly on 1 January 2026, with certain provisions applying from 1 October 2026 and 1 January 2027. Businesses involved in the retail sale of medicines should therefore assess any necessary updates to VAT classification, pricing systems and compliance processes ahead of the entry into force.