New VAT Guide for Freelancers and Light Entrepreneurs in Finland for 2026

What is in scope?

Value Added Tax (ALV) can be confusing, especially with the recent wave of legislative changes in Finland. Whether you are a light entrepreneur or a sole trader (toiminimi), understanding these new rules is critical to pricing your services correctly.

Here is everything you need to know about VAT in Finland right now, including the major changes confirmed for 2026.

The Key Changes at a Glance

f you haven't looked at tax rules in a while, here is what is new:

• Standard Rate is 25.5%: The general VAT rate increased from 24% to 25.5% on September 1, 2024.

• Registration Threshold is €20,000: As of Jan 1, 2025, you only need to register for VAT if your revenue exceeds €20,000 (up from €15,000).

• Small Business Relief Abolished: The tax credit for small businesses (alarajahuojennus) ended on Jan 1, 2025. You can no longer apply for this relief.

• COMING IN 2026: The reduced VAT rate (for food, books, etc.) will drop from 14% to 13.5%.

Current VAT Rates in Finland

It is your responsibility to select the correct VAT rate for your invoices.

Standard Rate: 25.5%

• Applies to: Most goods and services (consulting, marketing, design, IT work, etc.).

• Note: Most freelancers will use this rate.

Reduced Rate 1: 14% (Drops to 13.5% in 2026)

• Current Rate (2025): 14%

• Future Rate (Jan 1, 2026): 13.5%

• Applies to: Restaurant services, food, animal feed, books (physical and digital), pharmaceuticals, sports and cultural services, passenger transport, and accommodation (hotels).

• Update: From 2026, public broadcasting tax (Yle) will also move into this 13.5% bracket (increasing from the current 10%).

Reduced Rate 2: 10%

• Applies to: Newspapers, magazines, medicines, and exercise services.

Zero Rate: 0%

• Applies to: Selling services to businesses in other EU countries (Reverse Charge) or outside the EU.

When Must You Register for VAT?

The registration threshold has been raised to help small businesses.

• Income < €20,000: You are not required to register for VAT. You can invoice VAT-free (0%). However, you cannot deduct VAT on your own business purchases.

• Income > €20,000: You must register for VAT. You must add VAT (e.g., 25.5%) to all your invoices and pay it to the Tax Administration (Vero).

Pro Tip: If you buy expensive equipment (laptops, cameras), it might be smart to register voluntarily even if you earn under €20k. This allows you to deduct the VAT on those purchases, effectively getting a ~20% discount on your gear.

What Happened to the "VAT Relief" (Alarajahuojennus)?

If you have been an entrepreneur for a while, you might remember the "VAT relief for small businesses" (income between €15k–€30k).

• Status: Abolished.

• Impact: As of January 1, 2025, this relief no longer exists. If you are VAT liable, you pay the full VAT amount to the tax office. There is no longer a sliding scale refund.

How to Handle VAT with Palkkaguru

As a Palkkaguru user, we make this easy:

1. Light Entrepreneurs: We handle the VAT payments for you. You just need to select the correct tax rate (usually 25.5%) when creating the invoice.

2. Sole Traders (Toiminimi): You are responsible for filing your VAT return (OmaVero), but our accounting service tiers can handle these filings for you to ensure you never miss a deadline.

Summary Checklist for 2026

• Check your invoice template: Ensure your standard VAT rate is set to 25.5%.

• Monitor your revenue: If you are nearing €20,000 in sales, prepare to register for VAT.

• Prepare for 2026: If you work in catering, publishing, or transport, note that your VAT rate will change to 13.5% next January.

Unsure What To Do?

Need help determining which VAT rate applies to your specific services?
Book a free consultation and we’ll make a quick assessment.

Start Easy

Grow at your own pace.
Palkkaguru handles all invoicing vat, clients info, reminders and even have a debt collection service available for you.