Finland’s Ministry of Finance published its draft proposal for Budget 2025 on Friday, 9 August 2024. The draft budget totals EUR 88.1 billion and shows a deficit of EUR 12.2 billion.

The deficit will decrease due to measures taken by the Government to strengthen general government finances. Without these, the deficit for 2025 would be just under EUR 16 billion. The tax provisions in the 2025 Budget are expected to go into force from 1 January, 2025.

The government will further discuss the draft proposal during a meeting scheduled for 3-4 September, 2024.

The main tax measures include:

Corporate income tax (CIT)

  • Eliminating the education/training deduction granted to employees from 2025.

Value-added tax (VAT)

  • The standard VAT rate and the tax rate on certain insurance premiums will be raised from the current 24% to 25.5%, which will come into effect on 1 September, 2024;
  • The VAT rate for sweets will be raised from 14% to 25.5% as of 1 June 2025;
  • Beginning in 2025, commodities currently subject to a reduced VAT rate of 10% will be transitioned to a VAT rate of 14%, excluding newspapers and periodicals;
  • The VAT rate for incontinence pads, menstruation pads and children’s nappies will be reduced to 14%;
  • The minimum threshold for VAT for small-scale businesses will be increased from EUR 15,000 to EUR 20,000.

Excise duties

  • The taxation of rental income in agriculture will be restructured;
  • The excise duty on soft drinks and spirits will be raised on 1 November 2024;
  • The excise duty on tobacco products will be raised on 1 July 2025.