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Temporary profit tax on electricity and fossil fuel sectors

Profit taxes on electricity and fossil fuel sectors are two new, independent taxes. They were prescribed as temporary in the act (363/2023) that entered into force on 24 March 2023. As a rule, the act is applied in the assessment of taxes for tax year 2023. If a company does not have an accounting period ending in calendar year 2023, the act will be applied in the assessment of taxes for tax year 2024. In certain situations when the accounting period has changed, the act can be applied to both 2023 and 2024.  

Who is liable to pay profit tax?

Profit tax on the electricity sector is payable by a company engaged in electricity production or electricity delivery on the electricity market, provided that the combined turnover from the company’s electricity business amounts to at least €500,000. Profit tax on the fossil fuel sector is payable by a company if over 75% of their turnover is generated by the production of crude oil or natural gas, the production of refined oil products from crude oil, or the production of coal products.

For purposes of profit taxes on electricity and fossil fuel sectors, ‘company’ refers to a corporate entity, a business partnership, or a natural person who is engaged in business and professional activities.

More information is available in chapters 2 and 6 of the Tax Administration’s detailed guidance on temporary profit tax on electricity and fossil fuel sectors (available in Finnish and Swedish, link to Finnish).

Amount of profit tax, and tax basis

The amount of profit tax on the electricity sector is 30% of the profit generated by the electricity business insofar as it exceeds 10% of the annual earnings on adjusted equity of the taxpayer’s electricity business (profit exceeding the earnings limit). The tax basis is therefore profit exceeding the earnings limit. Read more and see an example of how to calculate the amount of profit tax on the electricity sector in chapter 2.3 of the Tax Administration’s detailed guidance on temporary profit tax on electricity and fossil fuel sectors (available in Finnish and Swedish, link to Finnish).

The tax basis for the profit tax on the fossil fuel sector is profit exceeding a reference limit. The tax is 33% of the profit exceeding the reference limit. ‘Profit exceeding the reference limit’ means the amount of the tax year’s business profit that exceeds 120% of the average business profit for tax years 2018–2021. Read more and see an example of how to calculate the amount of profit tax on the fossil fuel sector in chapter 6.2 of the Tax Administration’s detailed guidance on temporary profit tax on electricity and fossil fuel sectors (available in Finnish and Swedish, link to Finnish).

Filing and paying profit tax

File the profit tax on electricity and fossil fuel sectors on a dedicated return. The tax return for accounting periods that ended in 2023 must be filed by 30 April. You can file the return in MyTax.

After the tax assessment process has ended, the Tax Administration will issue a tax decision on the profit tax for the taxpayer. Prepayments cannot be made on profit tax, nor is a web invoice issued on them, unlike in the case of income tax.

Advance ruling

You can request an advance ruling on temporary profit tax on electricity and fossil fuel sectors from the Tax Administration. Read more about applying for an advance ruling.

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Page last updated 12/7/2023