Finnish VAT rate change to 13.5% approved by parliament

The Finnish parliament has approved a legislative amendment to decrease the VAT rate from 14% to 13.5%. The law is now awaiting the President’s confirmation.  The current 14% rate will be lowered to 13.5% from 1st January 2026. This change applies to essential goods and services, aiming to provide financial relief to households.

Affected Goods and Services
The 13.5% VAT rate will cover the same categories as the previous 14% rate, primarily essential items and services. These include:

– Groceries (food and non-alcoholic beverages)
– Restaurant and catering services
– Books
– Pharmaceuticals
– Passenger transport services
– Admissions to cultural and sports events/activities

Impact on Consumers and Businesses
The VAT reduction is expected to put more money into consumers’ wallets, helping households manage the cost of living and potentially stimulating the economy by encouraging spending.

Businesses in the affected sectors will need to update their systems to ensure the correct rate is applied from the effective date. While the administrative burden of implementing the change exists, the reduction itself is intended to boost demand and support businesses by increasing consumer spending. Tax authorities will release detailed guidance on the transition period to assist businesses with the switch.