Finland’s Ministry of Finance has initiated a public consultation regarding a tax credit aimed at large industrial investments that facilitate the transition to a net-zero (climate-neutral) economy. The government decided on the preparation of the tax credit as part of the Government’s growth package in its spending limits session last spring.
The consultation is set to conclude on 11 October 2024.
Projects will be eligible if they relate to:
- Production of renewable energy (including hydrogen and hydrogen fuels); storage of electricity and heat; storage of renewable hydrogen, biofuels, bioliquids, biogases, and biomass fuels;
- Decarbonisation of industrial production processes and energy efficiency measures;
- Investments in the production of equipment (for instance, batteries), key components, and related critical raw materials essential to the transition to a climate-neutral economy.
Tax credit amount
The tax credit is intended for large investments. According to the decision of the Ministerial Committee on Economic Policy, the minimum size of eligible investments would be EUR 50 million and eligibility would be considered separately for each investment.
The tax credit will be no more than 20% of the investment costs and would be capped at EUR 150 million per company. The EUR 150 million cap will be calculated on a consolidated basis for groups of companies.
Requirements
The tax credit will only be granted for new projects, i.e. those that would begin work after submission of the application. The temporary state aid framework requires that tax credits be granted by the end of 2025.
The tax credit can first be used in 2028, with a maximum of 10% available per year, and must be fully utilised within 20 years. For investments completed after 2028, the credit can only be used after the investment is finished.
