Global Daily Tax News, Finland Lists New Year Tax Regime Changes, (Dec 16, 2024)

The Finnish tax agency has confirmed changes to the nation's tax regime that will become effective from January 1, 2025.

Changes are to be made to income tax thresholds and personal income tax reliefs. In addition, the deadline for filing personal income tax returns wil be earlier, in April, and there will be changes to the value-added tax rate that apply to goods and services and to how small businesses are assessed for value-added tax purposes.

Tax cards for 2025 will newly be valid starting January 1. In previous years, tax cards became valid only from February 1. From now on, the income ceiling stated on the tax card is also calculated for a full 12-month period.

A number of changes are being made to the tax credit for household expenses, including a reduction to the maximum amount of the credit to EUR1,600, and the deduction for commuting expenses will remain the same as in 2024 (EUR7,000).

The filing deadlines for pre-completed tax returns will be earlier than before: either April 15, April 22, or April 29. Taxpayers will receive pre-completed tax returns in MyTax by March 27, 2025.

The due date for checking real estate tax returns, meanwhile, will also be earlier, on April 15. The filing deadlines for corporate tax returns will not change.

Late-payment interest and credit interest will increase by 0.5 percentage points. If inheritance tax is paid after the due date, the late-payment interest will be eight percent. For other tax types, the late-payment interest will be 11.5 percent. Late-payment interest with relief will be 6.5 percent and the credit interest paid on tax refunds will be 2.5 percent.

The application of certain VAT rates will change as of January 1, 2025. Goods and services currently subject to reduced VAT of 10 percent will in future be subject to reduced VAT of 14 percent. However, the change will not concern newspapers and magazines or public broadcasting. Sanitary products and children's diapers, currently subject to 25.5 percent VAT, will be subject to reduced VAT of 14 percent in future. Further, the rate on candy and chocolate is proposed to rise from 14 percent to 25.5 percent from June 1, 2025.

The turnover threshold for corporate VAT liability will increase and the VAT relief for small businesses will end. In future, companies will be required to register for VAT if their turnover exceeds EUR20,000. In addition, the relevant turnover will be calculated based on the calendar year's turnover as opposed to the accounting period's turnover. The previous year's turnover will also be taken into account in these calculations. In 2024, the threshold was EUR15,000.

The Finnish VAT relief for small businesses will no longer be granted from the beginning of next year. Companies whose turnover for 2024 does not exceed EUR30,000 can still request the relief for 2024. In addition, a new VAT scheme for small businesses will be introduced in the EU. The new scheme will expand the VAT exemption granted to small businesses to companies established in other EU countries.

Excise duties for products such as cigarettes and spirits will be increased in phases between 2025 and 2027.