Changes to Finnish VAT Rates and Insurance Premium Tax Rate

On 30 April 2024, the Finnish Ministry of Finance published a draft legislative bill proposing an increase in the standard VAT rate. The current VAT rate of 24 percent is set to rise to 25.5 percent. According to the draft, this new VAT rate would apply to sales where the tax point is on or after 1 September 2024. For advance payments made before 1 September, the existing VAT rate would still apply.

In addition, the current insurance premium tax rate of 24 percent is also proposed to increase to 25.5 percent. The draft suggests that this new tax rate would apply to insurance premiums paid for insurance periods commencing on or after 1 September 2024.

The draft legislative bill is open for comments until 17 May 2024.

The Finnish Government is also planning further changes to the reduced VAT rates. The reduced VAT rate of 10 percent is proposed to increase to 14 percent for all goods and services currently subject to the 10 percent VAT rate, with the exception of newspapers and periodicals.

This implies that the VAT rate i.a. for books, passenger transport, accommodation services, pharmaceutical products, and entrance fees to cultural and entertainment events would increase. Furthermore, the VAT rate for female sanitary products and diapers is proposed to decrease from 24 percent to 14 percent. The VAT rate for candies and chocolate is set to increase from 14 percent to 25.5 percent.

At present, there are no legislative bills or drafts available regarding the other changes described above. However, according to information from the Ministry of Finance, the changes in the VAT rates of 10 percent and 14 percent are expected to take effect from 1 January 2025. Candies and chocolates will be subject to the new standard VAT rate of 25.5 percent at some point during 2025.

If you have any questions about this Legal Alert, please feel free to contact the undersigned or your regular Borenius contact.