Plans to lower the 14-percent VAT rate to 13.5% in 2026
Finnish government puts forth a proposition to decrease the reduced-rate VAT, applied on certain goods and services, to 13.5 percent. The lower percentage would enter into force on 1 January 2026.
Decreased VAT would apply on the selling of the following goods and services:
- groceries, food
- restaurant and catering services
- animal feed including related substances
- services relating to physical exercise and cultural activities, sports, admission tickets to events, operation of facilities for sports
- books (printed and electronic)
- pharmaceuticals
- passenger transport
- accommodation services
VAT rate is determined by the delivery date of a good or on the date of service performance
The VAT percentage rate to apply to a sales transaction depends on the date of delivery of a good, or on the date of completed service performance. In general, when goods are being sold, the day when they are handed over to the buyer will determine the VAT rate. Correspondingly, the day when the service is fully performed for the buyer will determine the VAT rate.
Paying a sum of money in advance
An advance payment means that the seller has received the payment, fully or partially, before the goods are delivered or service provided to the customer. When the VAT percentage is changing, whether the previous or current VAT rate applies depends on when the amount of money becomes available to the seller. If this happened before the changed VAT rules entered into force, the previous rules and the previous VAT rate will apply.
The Tax Administration will release a more detailed instruction on how the legal change will affect the VAT rates.
It should be noted that in accordance with the Government proposal, the new 13.5-percent VAT rate would also be applicable to public radio and TV broadcasting. At present, the VAT rate applied on this activity is 10%.
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