Value-added tax (VAT) is a widespread levy on consumption that is applied to nearly all products and services.
The Finnish general value-added tax (VAT) is expected to be raised to 25.5 percent from the current 24 percent. The increase may potentially generate an extra billion euros into the state treasury per year.
The reduced value-added tax rate of 14 percent currently applies to groceries as well as restaurant and catering services. It is anticipated that this reduced VAT rate will remain unchanged. Prime Minister Petteri Orpo ruled out raising the VAT on food. He justified the exclusion of a VAT increase on food by stating that it would hit the daily lives of low-income people too hard.
The lowest 10 percent VAT is levied on items such as books, newspapers and periodicals, pharmaceutical products, sports services, passenger transport, accommodation services, and cultural and entertainment events. However, out of the above-mentioned items, all but newspapers and periodicals are set to be moved to the 14 percent VAT category likely next year.
Tightening the general VAT to 25.5 percent will result in a higher tax rate for Finland compared to Denmark and Sweden, where the tax rate is 25 percent. Based on 2022 figures, the only country in the EU with a higher standard VAT rate is Hungary, where the general tax rate is 27 percent.
It is not yet known when the rate increase will come into force. Nevertheless, the changes are expected to be implemented by the end of this year at the very latest.
See also:
Online VAT calculator in Finland
The full information and the source text can be found at HS website and Suomenmaa website.
Published 17.04.2024, FINREPO