Taxation changes 2022

News, 12/17/2021

This is a summary of the changes becoming effective in 2022. Some of them are legislative changes proposed by the Government but not yet debated in the parliament. Updates to this page are being made as we receive confirmation that the new rules enter into force.

Individual income taxes

Temporary increases suggested for the tax credit for household expenses

The tax credit for household expenses related to the move from oil heating to more sustainable energy sources will be increased as follows:

  • the maximum deduction is €3,500 (normally €2,250)
  • the deduction is 60% of the work-related expenses specified on a contractor’s invoice (normally 40%),
    and 30% of the wages that the household has paid to a worker (normally 15%)
  • the credit threshold is €100 a year, as before.

This temporary change is in force in 2022–2027. As regards other renovations, the tax credit for household expenses remains unchanged.

The tax credit for household expenses incurred from household work, nursing and care will also be increased:

  • the maximum deduction is €3,500 (normally €2,250)
  • the deduction is 60% of the work-related expenses specified on an invoice (normally 40%),
    and 30% of the wages that the household has paid to a worker (normally 15%)
  • the credit threshold is €100 a year, as before.

This temporary change is in force in 2022–2023.

Further information:

The deduction for home-loan interest will decrease

The deduction for home-loan interest has gradually decreased since 2012. In 2022, the deduction will decrease from 10% to 5%. From 2023 onwards, home-loan interest is no longer deductible.

The taxable value of company cars will be reduced

The taxable value of company cars will be reduced by €85 per month, provided that the car is a low-emission hybrid vehicle or natural gas vehicle. The fixed-term reduction is valid for years 2022–2025.

Further information: Government Proposal 142/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

See also: Car taxation 

The tax number will also be required at dockyards

In addition to the construction sector, the tax number will be introduced in the shipbuilding sector. You can request entry in the shipbuilding sector’s register of tax numbers as of 1 April 2022. People working at dockyards must have a registered tax number as of 1 July 2022.

Additional information: Government Proposal 2/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish)

Shareholders of jointly owned forest: interest on loans taken for the purpose of buying forest becomes deductible

If you have taken out a loan to acquire a share in a jointly owned forest, you can deduct the interest in your taxation as of the 2021 tax year. The interest will be treated as an interest expense on a loan for the production of income, and you can deduct it from your capital income. Interest on any loans previously taken for this purpose are also tax deductible from year 2021 onwards.

Further information: Government Proposal 142/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

The unemployment insurance contribution is removed from people under 18

In future, the unemployment insurance contribution will be withheld only if the employee is an adult. The change concerns wages payable as of 1 August 2022.

The unemployment insurance contribution will be withheld from 1 January to 31 July if the employee is 17 to 64 years old. If the employee is 17 on 1 August 2022, the withholding of unemployment insurance contributions will be interrupted. It will be resumed when the employee turns 18.

Further information: The 2022 social insurance contributions

Car taxation

Exemption from car tax is proposed for fully electric vehicles

It is proposed that fully electric vehicles would no longer be subject to the Finnish car tax starting next year. No car tax would have to be paid on fully electric vehicles or on nitrogen powered vehicles.

The change would enter into force on 1 January 2022. In addition, car tax would be retroactively refunded to those who have paid it on a fully electric or a nitrogen vehicle as of the beginning of October 2021. The Tax Administration will automatically refund the tax for the period 1 October–31 December 2021.

Further information: The Government proposes a change to the tax treatment of electric cars (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

Corporate taxation

Coronavirus home tests temporarily exempted from VAT

Both home tests sold in Finland and home tests imported from abroard will be temporarily exempted from VAT. The tax exemption for sales means that companies are entitled to deduct VAT included in the purchases.

Further information: Coronavirus home tests temporarily exempted from VAT

The additional deduction for research and development will be tripled

In future, companies can make a 150% additional deduction for expenses related to research and development of their own business or agricultural activities. The additional deduction is granted for research and development activities carried out together with a research organisation.

The new legal provisions enter into force on 1 January 2022 and will be applied for the first time in the tax assessment for 2022. Companies can make the 150% additional deduction in the period 1 January 2022–31 December 2027. The additional deduction is 50% until the end of the 2021.

Further information: Government Proposal 186/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

The right to deduct interest will be limited

Changes are introduced to the act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968): the provisions on the exception that is based on balance sheet comparison and the exception related to infrastructure projects will be amended. Deduction for interest expenses, which has been allowed when based on balance sheet comparison, will be limited in situations where a party owning a significant share of the group has funded the group. The amendment is effective as of 1 January 2022.

Further information: Government Proposal 211/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish)

Transfer pricing adjustment rules to comply with the OECD guidelines

The transfer pricing adjustment rule (§ 31 of the act on assessment procedure (Verotusmenettelylaki 1558/1995)) will be amended to reflect the OECD Model Tax Agreement and the OECD Transfer pricing guidelines for the interpretation of tax agreements. The amended provisions provide a more precise legal definition for the arm's length principle of transfer pricing, for a business transaction, etc. The amendment is effective as of 1 January 2022.

Further information:

Reverse hybrid entities’ income becomes subject to tax

Non-resident partners of Finnish business partnerships will have to pay tax on the income of a reverse hybrid entity in Finland if the conditions for applying the new tax rules are met. A reverse hybrid entity refers to a situation in which a Finnish business partnership is regarded as a separate taxpayer under the laws of another state. As the amendment is adopted, the Anti-Tax Avoidance Directive and its amending directive are fully implemented in Finland.

Further information: A reverse hybrid entity’s income under the Anti-Tax Avoidance Directive will be subject to tax (vm.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

Jointly owned forests: limitations to forest deduction

Forest funds’ possibility of utilising the forest deduction is limited as of the beginning of 2022. The limitation applies to forests bought in 2022 or later. 

In future, jointly owned forests qualify for the forest deduction only if at least half of the shares are owned by natural persons or death estates.

Further information: Government Proposal 142/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

Excise duties

Changes to excise duty on alcohol

The threshold of the reduced excise duty rate for beer is raised from 2.8% by volume to 3.5% by volume of ethyl alcohol. The excise duty on mild beer is raised from the current 24.75 cents to 28.35 cents per centilitre of ethyl alcohol. These changes have no impact on revenues from the excise duty on alcohol. 

The changes to excise duty on alcohol also mean that independent small producers of alcohol can now self-declare the information required for the certificate for small production, specifying the annual production volume and stating that they meet the conditions for a reduced tax rate for small-scale production.

Further information: Government Proposal 175/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

Excise duty on tobacco will be raised

The excise duty on tobacco will be raised in 2022 and 2023. On average, the excise duty on cigarettes will increase by 13%, on roll-your-own tobacco by 40%, on pipe and cigarette tobacco by 24%, and on cigars and cigarillos by 31%. The increases will be implemented in four stages during 2022 and 2023. In addition, a new tax category will be added to the law for heated tobacco products. The excise duty rate in the category will be 30 cents per gram.

Further information: Government Proposal 143/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

Excise duties on fuels will change

Tax support for paraffinic diesel and the lowering of energy-intensive companies’ tax refunds will continue in 2022, as previously decided. 

A new excise duty will be imposed on biogas used for transport. If biogas does not meet the sustainability criteria, it will be subject to tax whether it is used for heating or for transport. The ambition is that the use of sustainable biogas for heating would in future be exempt from tax, but this is subject to the approval of the European Commission. 

Further information: Government Proposal 212/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament made changes to the government proposal, then adopted it

Excise duty on electricity used by heat pumps, electric boilers and data centres will decrease

Electricity used by heat pumps and electric boilers that produce heat for district heating or district cooling networks would be transferred to bracket II, which is the lower tax bracket. Another proposed cut concerns the excise duty on electricity consumed by circulation pumps of geothermal heating plants. The reduced excise duty on electricity is subject to the approval of the European Commission, and the reduced rate would become effective during 2022.

The excise duty on electricity used by data centres will be changed in such a way that smaller data centres would also be entitled to purchase bracket II electricity. From the beginning of 2022, data centres with server capacity of at least 0.5 MW and compliant with the energy recovery or efficiency criteria will be eligible for bracket II electricity. A requirement is that the data centre operations are the company’s main business activity. The new criteria do not apply to data centres already eligible for the lower-bracket electricity on 31 December 2021.

Electricity used by recycling industry will be transferred to tax bracket II as of the beginning of 2022.

Further information: Government Proposal 212/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

Natural gas distribution networks and biogas producers will be able to register

The taxation of natural gas and biogas will be changed in such a way that gas distribution networks can be registered as taxpayers in the future. In consequence, the gas end-users of a registered distribution network will be able to register as gas users.

As biogas becomes subject to tax, biogas producers must register as taxpayers. Both the plants producing biogas to the distribution and transmission network and the off-grid producers are liable for excise duties.

Small producers of biogas, whose annual production volume does not exceed 1 GWh, do not have to register as taxpayers. Instead, they register as small producers of biogas. A new measure aiming for control of production volume thresholds is introduced: producers must report the volume of biogas they produce to the Tax Administration.

Further information: Government Proposal 212/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

The threshold for tax-exempt use of fuel peat will be raised

A “floor price mechanism” will be introduced in the taxation of fuel peat. In addition, the threshold for tax-exempt use of fuel peat will be raised. In 2022–2026, annual use of up to 10,000 Mwh will be exempt from tax, and in 2027–2029, the use of up to 8,000 Mwh will be exempt. The tax exemption applies to all power plants and heating plants using fuel peat.

The peat users’ obligation to register and to submit reports will be extended to small-scale users of fuel peat. The annual use of a small-scale user may not exceed the annual threshold for tax-exempt use.

The obligation to register and to submit reports does not apply to households and comparable activities, provided that they produce heat from fuel peat only for their own use.

Further information: Government Proposal 144/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

Fish farmers will be able to apply for a refund of energy tax

Professional fish farmers and other water farmers can apply for a refund of energy tax as from tax year 2022. You can request a refund for the electricity and fuel oil used for aquaculture. Limited liability companies and other corporate entities may apply for a refund no later than 4 months from the end of their accounting period. Other than corporate entities can apply for a refund at the end of February of the year following the tax year. In addition to fish farming, the change applies to other aquaculture as well, such as shellfish farming.

Further information: Government Proposal 212/2021 (eduskunta.fi) (available in Finnish and Swedish, link to Finnish) – update: Finnish parliament adopted the proposal

Other changes

Business operators and self-employed individuals no longer receive tax return forms by post

Business tax return forms for 2021 (Form 5) will not be sent to business operators and self-employed individuals by post in January 2022. However, the Tax Administration will continue to send Form 5 to estates of deceased persons by post. 

More than 90% of the business operators and self-employed individuals already use MyTax and other e-services to complete their business tax returns electronically. MyTax users will find background information prepopulated on the business tax return. 

Already some time ago, the Tax Administration stopped sending paper forms to limited-liability companies and other corporate entities, and to general and limited partnerships.

Changes to negative VAT refunds

Processing of negative VAT refunds related to tax periods starting 1 January 2022 or later will change. The change applies to situations where the negative VAT balance decreases, i.e. the payable amount of VAT increases. If a refund originally reported incorrectly, i.e. an unfounded refund, has been used for the payment of employer's contributions or some other tax, the taxpayer must pay it back.

The change will not have a retroactive effect on tax periods ending on 31 December 2021 or earlier. Refunding of negative VAT balances for tax periods ending on 31 December 2021 or earlier will continue to be treated in the current way, i.e. the negative VAT used for other taxes will be cancelled and the other taxes will have to be paid again.

Read more: Refunds

New taxable values for fringe benefits, 2022

The Tax Administration’s official decision on valuation of employer-provided benefits is now issued. The 2022 values for company cars, employer-provided accommodation, meals and telephones are listed in the text of the decision.

One of the topical tax guidelines in the official decision concerns the valuation of meals: employees are allowed to pay not only for the lunch but also for its delivery with the tax-exempt allowance. Other topical updates of fringe-benefit rules concern company cars and company bicycles.

Text of the official decision for 2022, English translation

Tax-exempt coverage of employees’ travel expenses 2022

In accordance with the 2022 rules, €45 is the basic per diem for business trips in Finland (the amount for the 2021 tax year is €44), the partial per diem is €20 (also €20 in 2021), and the tax-exempt maximum amount of employer-provided meal money is €11.25 (the amount for the 2021 tax year is €11.00).

The kilometre allowance is 46 cents (up from 44 cents for the 2021 tax year).

Tax-exempt allowances in 2022 for business travel


This page was last updated: 31 December 2021