Taxation in Finland

A stable and competitive operating environment by using tax tools

Taxation is one of the key factors affecting companies' operating environment. The Finnish tax system must be well functioning, stable and predictable. It should bring competitive advantage to Finnish companies and Finland, so that companies would see Finland as an attractive environment to invest and do business. Tax policies can also speed up the double transition (towards green and digital business). International competitiveness of the Finnish companies must be considered when making changes to taxation.

The current competitiveness of Finland's corporate tax rate must be retained

In the global world, we constantly compete with other countries. Not only when trying to sell Finnish products and services, but also e.g. in attracting investments and talent.

The competitiveness of Finland's corporate tax rate and corporate tax system must be continuously evaluated and improved in order to attract companies and activities with high value add. The business environment and taxation must also be predictable.

  • The prerequisites for entrepreneurship and ownership must be constantly developed. They create well-being and prosperity for the entire society. The corporate and capital taxation as a whole should promote entrepreneurship and Finnish ownership.
  • The alternatives and effects of taxation must be evaluated in terms of competitiveness, purchasing power, costs, fairness, climate and environment, and tax revenues.

Companies' administrative burden must be eased:

  • Taxation should be simple, functional, and predictable.
  • Finland should actively and in a timely manner participate in national and international projects aimed at simplifying and digitizing tax reporting and Real-Time Economy (e.g. EU's VAT for Digital Age and OECD's Tax Administration 3.0).
  • Read more here, free to copy: A Finnish model for the digitization and automation of taxation

R&D tax incentive to speed up the digital-green transition

Competitiveness and value creation require large tangible, intangible and personnel investments, all of which can also be influenced by tax tools. To speed up the digital-green transition, a permanent, broad R&D tax incentive came into force in the beginning of 2023. R&D tax incentive will especially support the increase in R&D innovation investments of SME and midcap companies. An additional R&D tax incentive, based on the increase in R&D costs when compared to the previous years' level, came into force 2024.

The R&D tax deduction covers the employment costs incurred from the company's own R&D activities, as well as externally purchased R&D services.

Other Technology Industries of Finland’s tax policies in short:

1) Free deduction rights to machinery and equipment investments

The results of R&D activities must be scalable and transformable into production and sales. Keeping manufacturing in Finland also promotes that R&D activities stay here. The current accelerated depreciation right for machines and equipment should be expanded to a permanent free depreciation right.

2) Tax on earned income should be lowered

The technology industries need 130,000 new experts in the upcoming ten years. Strict taxation is a significant challenge for attracting skilled workers. Tax on earned income should be lowered to attract skilled workers from Finland and abroad.

Finland should be actively involved in solving the challenges caused by international personal taxation and the taxation of remote work.

3) The current tax model of intergenerational transfer of business must be retained

The tax model for intergenerational transfer of business is important for the continuity and development of companies' operations. In addition, the inheritance tax payment period should be extended to ten years in situations where the actual possession of the inherited property is received later.

4) Updating the property taxation must not lead to unreasonable tax increases

5) Sustainable taxation is green, digital and fair

Submission regarding revision of energy taxation directive

6) Finland's interests must be taken into account in the international tax reforms