From 1 January 2026, Finland implements a series of tax and administrative reforms. The government is advancing a “digital-first” principle, the remote-work and union-fee deductions are abolished, the reduced VAT rate falls — and at the same time the tax-free thresholds for gifts and inheritance rise.
Here are the most visible 2026 changes at a glance:
VAT, reduced rate
14% ↓ 13.5%
Inheritance tax — tax-free threshold
€20,000 ↑ €30,000
Gift tax — tax-free limit (3 yrs)
€4,999 ↑ €7,499
Key-employee withholding tax
32% ↓ 25%
Loss carryforward period
10 yrs ↑ 25 yrs
Mileage allowance
€0.59/km ↓ €0.55/km
Key Changes Affecting Individuals
Digital-first principle: tax correspondence goes electronic
From early 2026, the Finnish Tax Administration broadly applies the digital-first principle, affecting how tax documents are delivered.
- If you use electronic services such as OmaVero, official letters are generally sent only electronically.
- Individuals who do not use electronic services may still receive paper mail.
- In special situations (e.g. guardianship or authorisations), paper letters may still be sent.
Adjustments to personal income-tax deductions
From 2026, two major changes affect work-related deductions, potentially raising taxable income for some taxpayers:
- The remote-work deduction is abolished: the standard/fixed deduction for working from home is generally no longer available. Only separately rented or purchased workspace costs may still qualify.
- Trade-union membership fee deduction abolished: union and labour-market organisation fees are no longer deductible.
- Unemployment-fund fees remain deductible: but from 2026 they may not appear automatically in withholding. Report them in OmaVero or check your pre-completed return.
- Commuting deduction unchanged: annual maximum remains €7,000, with a €900 personal deductible.
Employee social insurance contributions: 2025 vs. 2026
The most notable change: the TyEL contribution for employees aged 53–62 falls from 8.65% to 7.30% (−1.35 pp), directly increasing net pay for this group. Even though some other rates rise slightly, this is one of the most tangible net-income gains of 2026.
Taxable employee benefits
Several fringe-benefit values and rules change in 2026:
Meal benefit taxable value
€8.60 ↑ €8.80
Meal benefit maximum price
€13.70 ↑ €14.00
Phone benefit
€20/mo
unchanged
- Bicycle benefit: tax exemption abolished (benefits agreed before 24 Apr 2025 may stay tax-free for the agreed period; employer-purchased bikes up to 5 years).
- Plug-in hybrid company cars: the €85/mo reduction for vehicles registered after 2021 is abolished → taxable value rises.
- Fully electric cars (zero-emission): the €170/mo reduction continues.
- Charging benefit: €30/mo for EVs, €20/mo for plug-in hybrids.
Travel expense reimbursements
Mileage reimbursement decreases, while daily allowances and meal compensation rise slightly.
| Item | 2025 | 2026 | Δ |
|---|---|---|---|
| Mileage allowance | €0.59/km | €0.55/km | ↓€0.04 |
| Full daily allowance (domestic) | €53 | €54 | ↑€1 |
| Partial daily allowance (domestic) | €24 | €25 | ↑€1 |
| Meal compensation | €13.25 | €13.50 | ↑€0.25 |
Gift and inheritance tax relief
Gift tax — tax-free limit (same donor, 3 yrs)
€4,999 ↑ €7,499
Inheritance tax — tax-free threshold
€20,000 ↑ €30,000
Household effects (gift/inheritance)
€4,000 ↑ €7,500
Interest surcharge on 10-yr payment plan
3.5% ↓ 2%
Inheritance tax is only payable on estates exceeding €30,000.
Other personal-tax changes
- The child-related tax credit rises by €55, to €105 per child per year (double for single parents). It is deducted directly from tax payable.
- Key-employee withholding tax 32% → 25%, with scope extended to Finnish citizens returning from abroad and the applicable period set to 60 months.
- Pensions: earnings-related pensions rise by 0.88% (index), the national pension index by 0.47%. The pension surtax threshold rises from €47,000 to €60,000.
- Municipal tax: 36 municipalities raise and 4 lower their rate; the average rises to 7.57%. View municipal tax rates
Key Changes Affecting Businesses and Entrepreneurs
VAT change 2026: 14% → 13.5%
From 1 January 2026, the reduced VAT rate of 14% falls to 13.5%, applying mainly to food, restaurant services (excluding alcohol), medicines, accommodation, passenger transport, books, and sports and cultural events. VAT on sweets and chocolate stays at the 13.5% food level.
Interactive
What does VAT 14 % → 13.5 % mean for you?
Drag or type an estimate of your monthly sales.
For businesses, the 0.5 pp change typically means two strategies: pass the benefit to prices (better price competitiveness) or absorb it into margin (a buffer against rising costs).
Employer social insurance contributions
Although total cost may fall slightly, the structure of contributions changes. Recalculate your 2026 labour-cost budget.
| Contribution | 2025 | 2026 | Δ |
|---|---|---|---|
| TyEL contract-employer base rate | 25.28% | 24.85% | ↓0.43 pp |
| TyEL temporary-employer rate | 26.28% | 25.85% | ↓0.43 pp |
| Employer health insurance | 1.87% | 1.91% | ↑0.04 pp |
| Employer unemployment insurance | 0.20% | 0.31% | ↑0.11 pp |
| Average pension contribution | 17.38% | 17.10% | ↓0.28 pp |
| Total employer cost (approx.) | 19.45% | 19.32% | ↓0.13 pp |
Excise tax reforms
| Category | Direction in 2026 | |
|---|---|---|
| Transport fuels | Tax burden reduced (petrol & diesel) | ↓ |
| Alcohol | Increased, linked to CPI automatic adjustment | ↑ |
| Tobacco & nicotine products | Increased; EU import limit 1,000 g | ↑ |
| Soft drinks | New sugar-based six-tier model | ◆ |
| Mining & data-centre electricity | Tax benefits removed → higher burden | ↑ |
Other business-tax changes
- Forestry deduction improves: annual deduction limit from capital income 60% → 75%, and the deduction base from acquisition cost 60% → 75%.
- Loss carryforward extends 10 → 25 years (for losses confirmed from the 2026 tax year). Supports long investment-cycle businesses.
- General tax reference number: companies can pay several taxes with one reference number (in force 18 Nov 2025), reducing “wrong reference” errors.
- Industry classification TOL 2008 → TOL 2025: the Tax Administration maps automatically — check your main industry in YTJ/OmaVero if you have several activities.
- Crypto-asset reporting tightens: provider reporting obligation begins; first reports in 2027 (covering 2026).
- Financial-sector customer bonuses are more likely to be taxable capital income.
- Mining tax rises 0.6% → 2.5%; electricity-tax benefits for mining and data centres are removed.
How to prepare for the 2026 changes
The reforms reflect three lines: digitalisation of services, targeted tax measures and enhanced supervision.
For individuals
- Update your tax card in time — withholding may change as deductions are removed.
- Review deduction details yourself (e.g. unemployment-fund fees) — not everything transfers automatically.
- Set up electronic notifications — enable Suomi.fi/OmaVero messages and keep contact details current.
For businesses
- Run a “system-parameter health check” — payroll, contributions, benefits, VAT 13.5%, reference numbers.
- Review TOL 2025 — don’t rely blindly on the automatic update.
- Set an internal rule for year-end transactions — advance payments, gift cards, platform settlements.
- Run a quick pricing & margin calculation of the VAT change (see the calculator above).
- Treat enhanced supervision as a project — make documentation routine, not a year-end scramble.
Frequently asked questions
What is the VAT change in 2026?
From 1 January 2026, Finland’s reduced VAT rate falls from 14% to 13.5%; the general 25.5% rate does not change. What matters is the delivery date, not the payment date: goods or services supplied before 1 January 2026 are at 14%, after that at 13.5%. A gift card sold before year-end keeps the rate at the time of sale. Update your POS tax rates and price lists in good time.
Which goods and services does the 13.5% VAT rate cover?
Mainly food, restaurant services (excluding alcohol), medicines, accommodation, passenger transport and books. VAT is determined by the situation of use, not the item: when a restaurant’s own staff deliver food on a single invoice, the whole supply is 13.5%, but a separate courier company’s delivery fee is 25.5%. Alcohol is always 25.5%, in the restaurant and in take-away alike.
How does the 2026 VAT change affect a restaurant?
Food and restaurant services are 13.5% and alcohol stays at 25.5%, so the same bill is split across two rates. Steps: 1) test the POS tax rates in training mode before 31 Dec, 2) separate product groups at PLU level (food / alcohol / other), 3) decide a pricing strategy (same net or same gross price), 4) update your margin calculation.
Which deductions are abolished in 2026?
The remote-work deduction (the fixed deduction for working from home) and the trade-union membership-fee deduction have been announced as ending. Do this: check your tax card in OmaVero early in the year, as withholding may change. Note: the unemployment-fund fee remains deductible, but may not appear automatically, so report it yourself. Confirm the details in OmaVero.
Do gift and inheritance taxes change in 2026?
Yes. The inheritance tax-free threshold rises 20,000 → 30,000 €, the three-year tax-free limit for gifts 4,999 → 7,499 €, and the exemption for ordinary household effects 4,000 → 7,500 €. Important: 30,000 € does not mean everything below it is tax-free for everyone — it is the tax bracket’s tax-free floor, and the excess is taxed progressively. Gifts from the same donor to the same recipient are added together over three years.
What is the tax-free mileage allowance in 2026?
The tax-free mileage allowance falls 0.59 → 0.55 €/km. The domestic full daily allowance rises to 54 €, the partial allowance to 25 €, and meal compensation to 13.50 €. Common mistake: the commute between home and workplace is not covered by mileage allowance (that is the commuting deduction); the allowance covers trips driven for work. Tax exemption requires a travel claim (date, route, kilometres, purpose).
How does the soft-drink tax change in 2026?
From 1 April 2026, the soft-drink tax is graduated from two to six levels by sugar content (Act 1098/2025). Sugar-free drinks (≤ 0.5 g/100 ml) are taxed at 20 cents/litre, sugary drinks at 27–59 cents/litre. Key point for restaurants: unpackaged drinks served on the premises (e.g. soda from a tap) are taxed at the lowest level, 20 cents/litre, regardless of sugar content.
Go deeper by topic
Deeper · financial managementElectronic financial managementHow receipts, invoices and payroll move through one system. Deeper · payrollMaRa TESRestaurant-sector pay, premiums and employer on-costs.Talous SK turns the tax changes into practical steps: a tax-card and deduction review, a company 2026-parameter check (payroll, social insurance, VAT, POS) and the changes translated into euros per month. We know Finnish taxation and serve in Finnish, English and Chinese across Finland.
Euro amounts and percentages are verified against official Vero.fi and Finlex sources (June 2026). Some changes (e.g. certain deductions) are confirmed by official decisions; check current values in OmaVero.
