Global Daily Tax News, Finland Legislates For Soft Drinks Tax Overhaul, (Oct 6, 2025)

The Finnish Government has tabled draft legislation to overhaul the tax rules that apply to drinks, including sugar-sweetened beverages and low alcohol beverages.

A soft drink tax has been in place in Finland since 1940. The proposed amendments will make the tax regime progressive, depending on the sugar content of the drink, and the tax burden will rise.

Finnish lawmakers and the country's president approved legislation to implement the changes in 2023. Prior to implementation, in November 2024, Finland notified the Commission of its intention to amend its soft drinks tax, seeking legal certainty that the amended tax regime does not involve state aid. However, in May 2025, the Government announced that several changes were necessary to the package, to secure approval from the European Commission.

Rather than proceeding with the law agreed in 2023, the Government has proposed to progress new legislative amendments that have now been tabled in parliament.

As set out by the Government in May, under the reforms, the excise tax on soft drinks will be levied under six tax rate bands based on sugar content, compared to the current two categories. The soft drink tax will apply to non-alcoholic or low-alcohol drinks, such as juices, lemonades, energy drinks, mineral waters, and coffee drinks.

Key changes agreed with the Commission include:

• Unpackaged drinks will not be exempt from the tax. However, the lowest tax rate will be charged on these goods, regardless of sugar content;

• The conditions for tax exemption for plant-based drinks and milk must be harmonized so that calcium content is also taken into account; and

• Solid beverage ingredients and liquid concentrates must be treated in the same way for taxation purposes, so solid beverage ingredients cannot be excluded from the tax.

Under the draft legislation, the tax on sugar-free drinks will increase to EUR0.20 per litre, while the tax rates on drinks containing sugar will be 27, 35, 43, 51, or 59 cents per litre, depending on the sugar content of the drink.

The taxation of unsweetened and unflavored waters and mineral waters would be changed so that soft drink tax would also be levied on beverages packaged in retail packages of more than five litres.

For administrative reasons, soft drink tax would not be levied on unpackaged beverages based on their sugar content, but would be taxed according to the lowest tax level. The tax on unpackaged beverages will therefore be EUR0.20 per litre.

The proposal would also enshrine tax exemptions for coffee, tea, and cocoa in law, and the conditions for tax exemption for plant-based beverages would be supplemented with a minimum calcium content requirement. In addition, the tax rules for beverages based on legumes, such as broad bean beverages, would be harmonized with those for other plant-based beverages.

In connection with the increase in the soft drinks tax, the alcohol tax on certain low-alcohol beverages would be increased but, for mild fermented beverages containing 1.2-2.8 percent alcohol, the level of alcohol tax will be low relative to the soft drinks tax rate for high sugar content drinks.

The Government estimates that, as a result of the changes, the retail price of soft drinks will increase by about four percent.

The changes are proposed to enter into force from April 1, 2026.