Change in the VAT Rate from 14% to 13.5%

The Finnish Parliament has approved a law under which the reduced value-added tax (VAT) rate will be lowered from 14% to 13.5% as of 1 January 2026. The law has now progressed to the confirmation stage prior to presidential ratification, after which it will enter into force. The reduced VAT rate applies to several goods and services, including foodstuffs, restaurant and catering services, books, medicines, and tourism services. Accordingly, the change affects those goods and services currently subject to the reduced 14% VAT rate.

For companies, the change requires careful preparation, as the adjustment to the VAT rate affects sales and purchase invoicing, pricing, contracts, and accounting. The correct VAT rate is determined based on the date of delivery of the goods or the date on which the service is performed. Work performed and goods delivered before 1 January 2026 will be invoiced at a VAT rate of 14%, while deliveries and services performed on or after 1 January 2026 will be invoiced at a VAT rate of 13.5%.

In outsourced financial administration, the change will be reflected in practical measures relating to systems, invoicing settings, and reporting. As your financial management partner, Aallon Group is responsible for updating the VAT rates, ensuring the correctness of VAT treatment, and making sure that the change is properly reflected in periodic tax returns. In addition, we provide guidance to our clients on matters related to pricing, contracts, and advance invoicing where necessary.

We recommend that our clients review their products and services well in advance and ensure that the correct VAT rate is applied as of the effective date of the change.