Finland: Ministry of Finance Proposes 2025 Budget With Significant Tax Changes
The Finnish Ministry of Finance unveiled its draft budget proposal for 2025 on August 9, outlining several key tax measures aimed at raising revenue and adjusting various tax rates. Key proposals include:
VAT and Insurance Premium Tax Hike: The standard VAT and insurance premium tax rates would increase from 24% to 25.5%, effective September 1, 2025.
Higher VAT Registration Threshold for Small Businesses: The VAT registration threshold for small businesses would rise from €15,000 (US$16,556) to €20,000 (US$22,075).
Revised VAT Rates: Goods currently subject to the reduced 10% VAT rate, excluding newspapers and magazines, would be shifted to a 14% rate, alongside additional rate changes.
Pension Income Reduction Adjustments: The household deduction would be tightened, leading to a reduced pension income reduction.
Earnings Tax Base Adjustments: All tax brackets, except the top two, would be subject to index revisions.
Higher Social Insurance Contributions: Social insurance contributions are set to rise in 2025.
Work Income Deduction for Families: A child-related increase would be added to the work income deduction.
Vehicle Tax Changes: The basic vehicle tax for high-emission vehicles would be reduced starting January 1, 2025. However, taxation on fully-electric and plug-in hybrid vehicles, as well as the motive power tax for motorhomes, would increase from January 1, 2026.
Real Estate Transfer Tax Update: Transfer tax rates in 2025 would apply at 3% of the real estate purchase price and 1.5% for specified share transactions.
Additionally, the Ministry confirmed that preparations are underway for a tax credit designed to support large industrial investments, first announced in the spring.
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