Value added tax to increase on 1 September

There are hundreds of thousands of entrepreneurs in Finland thanks to whose persistent work the wheels of our country keep turning. People in Finland need entrepreneurs, and now entrepreneurs need people in Finland more than ever. The increase in the VAT rate entered into force on 1 September. It impacted everyone, but especially entrepreneurs.

Employer’s checklist for the increase in value added tax

  • Make sure that the correct VAT rate is used in invoicing in accordance with the official instructions. Be careful when updating the invoice row.
  • Check the brochures, offer templates and other marketing material. Add the new prices and terms and conditions to the printing materials as soon as possible.
  • Now is a good time to check your pricing. Have your expenses increased but your rates stayed the same? Calculate the expenses for the change to the VAT rate and raise your rates if you can.
  • Let your customers know of the change in rates as soon as possible. Check any agreement terms and conditions with regard to the change in rates.

Summary of the impacts of the increase in the VAT rate

The Finnish Government decided to raise the general VAT rate from 24 to 25.5 per cent. The change to the VAT rate entered into force on 1 September 2024 and impacted the value added taxation of the most common products and services. Discounted value added tax rates will remain the same, but certain services with a VAT rate of 10 per cent will have a rate of 14 per cent in January 2025.

An accrual basis was principally applied to the entry into force of the change to the general VAT rate. Therefore, the previous tax rate of 24 per cent might also need to be used even after 1 September. When you sell a service, the amount of VAT is determined according to the payment date or its end date. On the other hand, when selling goods, the VAT is determined by the date of delivery of the product or other physical goods. With regard to the applicable tax rate for advance payments, the accrual of the advance payment, i.e. the receipt, is the decisive factor.

The increase in value added tax to 25.5 per cent may impact the entrepreneur’s finances in ways other than a larger portion of VAT given to the state. A change in VAT may entail costs and administrative work demanding the entrepreneur's working time, since all possible agreements, accounting and invoicing systems and other material such as price lists, invoices and receipts must be updated in line with the new VAT rate when the amendment takes effect.

Read more about the increase in the VAT rate