Legal Alerts/7 Aug 2024
The Government Proposes Changes to the Application of Reduced VAT Rates Starting in January 2025
On 2 July 2024, the Finnish Ministry of Finance published a draft legislative bill proposing several changes to the application of the reduced 10% and 14% VAT rates. The draft is in line with the plans previously communicated by the Finnish Government. According to the draft, the changes would apply to sales for which the tax point is on or after 1 January 2025.
The draft legislative bill is open for comments until 19 August 2024.
The proposed changes to VAT rates
According to the draft bill, goods and services currently subject to the lower reduced VAT rate (10%) would be transferred to the scope of the higher reduced rate (14%), apart from newspapers and magazines. Consequently, the VAT rate applicable to the following goods and services would increase from 10% to 14%:
- Passenger transport services
- Accommodation and guest harbour services
- Services that provide opportunities for physical exercise
- Admission fees, including access to related streaming services, to:
- Performances
- Theatres
- Circuses
- Concerts
- Amusement parks
- Cinemas
- Exhibitions
- Sports events
- Zoos
- Museums
- Other cultural and recreational events and institutions
- Use of sports facilities
- Medicines
- Books (both physical and digital)
- Certain works of art
- Performance fees charged by performing artists, other performers, and athletes who have opted for VAT liability
- Compensation related to copyright when paid to an organisation representing copyright holders
As a result, the 10% reduced VAT rate would apply only to newspapers and magazines (both physical and digital) and to the amounts received by Yleisradio Oy from the State Television and Radio Fund and the compensations received by Ålands Radio och TV Ab for the media fees collected in the Åland region from 2025 onwards.
In contrast, menstrual products, incontinence products, and children's diapers would be transferred from the scope of the standard VAT rate of 24% (which will be 25.5% as of 1 September 2024) to the scope of the 14% rate.
If you have any questions about this Legal Alert, please feel free to contact the undersigned or your regular Borenius contact.
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