Finland to Cut Reduced VAT Rate from 14% to 13.5% in 2026

Finland plans to reduce its reduced VAT rate from 14% to 13.5% starting 1 January 2026. The change will cover food, restaurants, animal feed, cultural and sports services, books, pharmaceuticals, transport, and accommodation, while public broadcasting will move from 10% to 13.5%. The applicable rate depends on the delivery or service completion date, and advance payments made before 2026 remain taxed at 14%. The Tax Administration will issue guidance on transition rules.

Affected goods and services

The new 13.5% VAT rate would apply to:

• Groceries and food products
• Restaurant and catering services
• Animal feed and related substances
• Sports, physical exercise, and cultural services, including event admissions and facility operations
• Books (printed and electronic)
• Pharmaceuticals
• Passenger transport
• Accommodation services

Additionally, public radio and television broadcasting, currently taxed at 10%, would also move to the new 13.5% rate.

Determination of applicable VAT rate

The VAT rate for a transaction depends on:

• Goods: the date of delivery to the buyer
• Services: the date of completion of service performance

Advance payments

If a seller receives an advance payment before the new rate takes effect, the old VAT rate (14%) applies. Only payments received after the effective date are subject to the new 13.5% rate.

Administrative guidance

The Finnish Tax Administration will issue detailed guidance clarifying transitional and implementation rules for businesses.

This proposal forms part of Finland’s broader fiscal adjustments for 2026, likely aimed at stimulating consumer spending while aligning VAT treatment across sectors. The inclusion of broadcasting services under the 13.5% rate simplifies the VAT structure but increases tax liability for that sector. Businesses providing ongoing services or receiving prepayments must pay close attention to timing of supply and invoicing, as the applicable VAT rate hinges on delivery or completion dates rather than contract signing.