Finland 2026 Tax Reform Explained for Businesses

Finland has long been recognised as one of Europe’s most transparent, predictable, and business-friendly economies. With strong institutions, advanced digital infrastructure, and deep integration into the European Union, it continues to attract domestic and foreign businesses alike. In 2026, however, Finland is introducing a significant tax reform that reshapes the corporate and investment landscape. The Finland tax reform 2026 is designed to strengthen public finances while accelerating the country’s transition toward a net-zero economy.  

For businesses, this reform brings both new challenges and strategic opportunities, particularly through corporate tax changes and targeted green investment incentives. This guide explains what is changing, why it matters, and how businesses can prepare, covering corporate tax increases, VAT considerations, cross-border implications, and the opportunities created for forward-looking companies. 

Finland’s Current Tax Framework 

Before understanding the reform, it’s important to understand Finland’s existing tax structure and how businesses currently operate within it. 

Corporate Income Tax 

Prior to 2026, Finland applied a flat 20% corporate income tax (CIT) to resident companies and permanent establishments of foreign entities. This rate has been considered competitive within the EU, contributing to Finland’s attractiveness for international business. 

VAT System 

Finland follows EU VAT rules, with

• A standard VAT rate 
• Reduced rates for specific goods and services 

VAT registration is mandatory once turnover thresholds are exceeded, with digital filing handled through the Finnish Tax Administration. 

Employer Taxes and Social Contributions 

Employers are responsible for payroll-related contributions, including pension, social security, and insurance payments, all administered through Finland’s well-developed digital systems. 

Withholding Taxes 

Withholding tax applies to

• Dividends 
• Interest 
• Royalties 

These rates are often reduced or eliminated under Finland’s extensive network of double taxation treaties. 

Role of the Finnish Tax Administration (Vero) 

Vero oversees tax registration, filings, audits, and enforcement. Its digital-first approach makes compliance efficient, but also requires accuracy and timely reporting. 

Why Finland Introduced the 2026 Tax Reform? 

The Finnish tax reform of 2026 reflects broader economic and policy objectives rather than a simple revenue increase. 

Key Drivers Behind the Reform 

• Strengthening public finances amid global economic uncertainty 
• Aligning national policy with EU sustainability goals 
• Encouraging long-term investment in clean and innovative industries 
• Maintaining Finland’s competitiveness despite rising fiscal pressures 

The reform follows a dual-track strategy, modestly increasing corporate tax while offering substantial relief to businesses investing in the green transition. 

Corporate Income Tax Increase in 2026 

One of the most headline-grabbing Finland corporate tax changes is the increase in the corporate income tax rate. 

What’s Changing 

1. Corporate income tax increases from 20% to 22% 
2. Applies to: 

• Finnish resident companies 
• Permanent establishments of foreign companies 

Business Impact 

• Higher effective tax burden on distributed profits 
• Increased importance of cost management and tax planning 
• Potential pressure on margins, particularly for SMEs 

While the increase is moderate, it requires businesses to reassess budgeting, pricing, and operational efficiency. 

Green Transition Incentives and Investment Tax Credits 

To offset the corporate tax increase, Finland is introducing one of the most significant incentive measures in the reform. 

20% Green Investment Tax Credit 

Businesses can claim a 20% tax credit for qualifying investments in the net-zero economy. 

Eligible Sectors Include 

• Renewable energy 
• Hydrogen production 
• Carbon capture and storage 
• Sustainable industrial processes 

Key Conditions 

• Minimum investment thresholds apply 
• Projects must align with Finland’s sustainability criteria 
• Documentation and reporting requirements must be met 

For eligible businesses, this incentive can significantly reduce the effective tax burden, even after the CIT increase. 

VAT and Indirect Tax Considerations 

While VAT rates remain largely unchanged, the reform reinforces compliance and reporting expectations. 

Key VAT Considerations 

• Continued alignment with EU VAT directives 
• Increased focus on digital reporting accuracy 
• Scrutiny of cross-border VAT arrangements 

For international companies trading in Finland, correct VAT structuring and reporting remain critical to avoid penalties. 

Withholding Taxes and Cross-Border Payments 

Finland maintains its strong commitment to transparency in international taxation. For international businesses, this means cross-border payments are closely monitored to ensure alignment with EU and OECD standards. 

Key Points 

• Withholding tax continues to apply to dividends, interest, and royalties 
• Finland’s extensive treaty network mitigates double taxation 
• Anti-avoidance and disclosure standards remain strict 

Foreign shareholders and multinational groups must ensure treaty eligibility and proper documentation. 

Impact on Foreign Businesses and Permanent Establishments 

The Finland tax reform 2026 has direct implications for non-resident companies operating in Finland. 

Key Considerations 

• Permanent establishment (PE) risks may increase with expanded operations 
• Higher CIT raises the cost of maintaining a Finnish entity 
• Structuring decisions (subsidiary vs branch) become more important 

Finland remains competitive, but businesses must plan carefully to manage compliance and tax exposure. 

What does the Reform mean for Employers and Operating Companies? 

For employers, the reform changes both cost structures and administrative priorities. 

Business Implications 

• Higher corporate taxes increase pressure on operational efficiency 
• Compliance management becomes more critical 
• Payroll and reporting accuracy gain importance 

Companies with strong internal systems or external support will adapt more easily. 

Workforce and Talent Implications for Businesses 

The reform includes personal income tax adjustments designed to support employees. These measures aim to preserve purchasing power while maintaining Finland’s attractiveness as a destination for skilled talent. 

Key Workforce Effects 

• Increased basic personal tax deductions 
• Protection against “bracket creep” 
• Improved net pay stability for employees 

Additionally, green incentives are expected to drive higher demand for skilled professionals, particularly in engineering, clean tech, and digital innovation. 

Real Estate and Asset-Heavy Business Considerations 

The reform introduces technical adjustments to real estate tax valuation. These changes may alter assessed property values, affecting tax liabilities for businesses with significant physical assets in Finland. 

Who Is Affected 

• Manufacturing businesses 
• Logistics operators 
• Property-intensive companies 

Asset-heavy businesses should review valuation methods and plan accordingly. 

Finland 2026 Tax Reform 

Strategic Opportunities Created by the 2026 Reform 

Despite higher taxes, the reform creates clear strategic advantages. Businesses that align early with Finland’s sustainability and innovation goals can convert regulatory change into long-term value. 

Key Opportunities 

• Offsetting higher CIT through green investment credits 
• Positioning Finland as a sustainable innovation hub 
• Long-term gains for compliant, well-structured businesses 
• Early planning as a competitive differentiator 

How OAEC Supports Businesses Navigating Finland’s 2026 Tax Reform? 

OAEC provides end-to-end support for businesses adapting to the Finland corporate tax changes by offering comprehensive assistance across every stage of market entry and operation. This includes company formation and optimal structuring in Finland, tax registration and VAT setup, and ongoing compliance management. OAEC also advises on foreign investment considerations and permanent establishment (PE) risks, while delivering continuous accounting and regulatory support. For businesses with growth ambitions beyond Finland, OAEC offers multi-jurisdictional expansion planning across Europe, ensuring long-term compliance and strategic efficiency. 

Conclusion 

The Finland tax reform 2026 marks a strategic shift toward sustainability-driven growth while modestly increasing corporate tax obligations. Although the rise in corporate income tax introduces new cost considerations, the generous green investment incentives offer powerful opportunities for innovative and forward-thinking businesses. With early planning, careful structuring, and professional guidance, companies can turn regulatory change into a long-term advantage. Finland remains a highly attractive jurisdiction, especially for businesses aligned with innovation, sustainability, and EU market expansion. 

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