On 24 September 2025, the Finnish Government submitted several legislative proposals that would, if approved by Parliament, introduce multiple changes to Finnish taxation from the beginning of 2026. VAT rate reduction included in the reform package One of the proposed measures concerns value added tax (VAT). The Government proposes reducing the 14% reduced VAT rate to 13.5%. The VAT reduction would apply to goods and services currently subject to the 14% rate, including:
• Foodstuffs
• Restaurant and catering services
• Sports and physical activity services
• Admission to cultural and sporting events
• Books
• Medicines
• Passenger transport services
• Accommodation services According to the Government’s impact assessment, if the VAT reduction were passed on in full to prices, consumer prices for affected goods and services would decrease by approximately 0.44%.
The actual price impact will depend on businesses’ pricing decisions following the tax change. If approved, the VAT rate change would enter into force on 1 January 2026. Other tax measures in the same proposal package (non-VAT)
The Government’s proposals also include several non-VAT measures, such as:
• Abolition of the home office deduction for employees
• Removal of the tax deductibility of labour market organisation membership fees (with unemployment fund fees remaining deductible)
• Removal of the income tax exemption for certain employee bicycle benefits
• Increases in tax-free gift and inheritance thresholds
• Changes to inheritance tax late-payment interest