Finland Lowers Reduced VAT Rate to 13.5%: What Businesses Need to Know
Effective January 1, 2026, the Finnish Parliament has officially implemented a decrease in the reduced Value Added Tax (VAT) rate, moving it from 14% down to 13.5%. This change is particularly relevant for businesses registered under the VAT Special Schemes (OSS and IOSS) that trade within the Finnish market.
Which Goods and Services are Affected?
The new 13.5% rate applies to a wide range of categories, including:
- Food and Groceries: Includes restaurant and catering services and animal feed.
- Culture and Leisure: Entry fees for events, physical exercise services, and sports facility operations.
- Media and Health: Both printed and electronic books, as well as pharmaceutical products.
- Logistics and Travel: Passenger transportation and accommodation services.
Determining the Correct VAT Rate: Timeline Rules
To ensure compliance and avoid reporting errors, it is vital to identify which rate applies based on the date of the transaction. The general rule is based on the date of delivery or completion of service.
| Transaction Date / Status | Applicable VAT Rate |
|---|---|
| Delivery/Service completed before Jan 1, 2026 | 14% |
| Delivery/Service completed on or after Jan 1, 2026 | 13.5% |
| Advance payment received before Jan 1, 2026 | 14% |
Important Exceptions: IOSS and Union Schemes
There are specific derogations for digital commerce and import schemes:
- Import Scheme (IOSS): The VAT rate is determined by the moment the buyer’s payment is accepted, rather than the delivery date.
- Union Scheme (e-commerce): If a non-EU company uses an electronic interface to facilitate sales within the EU, the rate is also determined by the time of payment acceptance.
For further technical details or specific inquiries, businesses are encouraged to consult the official Finnish Tax Administration website or review the updated Rates of VAT section on our portal.