Significant changes to taxation coming next year. Photo: Emmi Korhonen / Lehtikuva
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The Finnish government has submitted a set of legislative proposals that, if approved, would change several aspects of personal taxation starting in January 2026. The proposals include the removal of tax deductions for home offices and union fees, the end of a popular bike benefit, an increase in tax-free inheritance, and a small cut to VAT on food and services.
The most widely used deduction affected is the home office expense claim. The government has proposed eliminating this for employees. In 2023, around 400,000 people claimed the deduction, with the total amount reaching EUR 343 million.
Mia Keskinen, Lead Specialist at the Finnish Tax Administration, said the change will apply to future income only. “If Parliament accepts the proposal, the deduction will no longer be included on tax cards for 2026. However, deductions for 2025 can still be claimed on the pre-completed tax return in spring 2026,” she said.
Employees would still receive a standard EUR 750 income-earning deduction automatically. If actual work-related expenses remain below that amount, there would be no financial reason to declare them separately.
The government also wants to end the tax deductibility of trade union membership fees. Over 2 million people received deductions totalling EUR 580 million for union and unemployment fund fees in 2023. Under the proposal, only unemployment fund fees would remain deductible. These would continue to be reported directly to the tax authority and included in pre-filled tax forms.
A separate proposal would make bicycles offered through employment taxable. The tax-free status would end for agreements made on or after 24 April 2025. Existing contracts signed before that date would retain their tax exemption until they expire, but for no more than five years from the start of the benefit.
Changes are also proposed to inheritance and gift taxation. The tax-free threshold for gifts would rise from EUR 4,999 to EUR 7,499, applicable once every three years. For inheritances, the tax-free amount would increase from EUR 20,000 to EUR 30,000 per beneficiary. Tax would only be levied on the portion of the estate exceeding this amount. The relevant date for applying the threshold would be the death of the person bequeathing the assets.
The government also proposes lowering the late interest rate on unpaid inheritance tax. Instead of the current reference rate plus 3.5 percentage points, the new formula would apply a margin of two percentage points on top of the Bank of Finland’s reference rate.
In consumer taxation, the government seeks to reduce the 14% VAT rate applied to food and several services to 13.5%. The lower rate would apply to groceries, meals, sport and fitness services, tickets to cultural and sporting events, books, medicines, transport services, and accommodation.
Keskinen said the change would affect pricing but warned against assumptions. “The government’s proposal estimates that if the full tax cut is passed on to prices, the affected goods and services would become 0.44% cheaper. But it is uncertain how businesses will set their prices after the reduction,” she said.
If adopted by Parliament, all changes would take effect on 1 January 2026.
HT
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Source: www.helsinkitimes.fi
