YEL contributions, reduced VAT, credit register, taxation – changes coming in new year

How the YEL contribution rate will change

The YEL contribution rate for business owners will be 24.4% in 2026. The Finnish Centre for Pensions says YEL contributions will on average remain at the same level as in 2025. This is because of the end to age-linked contributions. However, in practice a large group is facing an increase in their YEL percentage, from 24.1% to 24.4%, an increase of 0.3 percentage points.

One age group wins from the end to age-linked pension contributions: 53–62-year-olds, whose YEL contributions have been 25.6% for years. Now, the harmonization of contribution percentages reduces their YEL bills if their YEL income remains the same. For business owners aged under 53 and 63 or over, the end to age-linked YEL contributions increases their contributions by 0.3 percentage points.

Reduced VAT rate to be lowered

As of the beginning of 2026, the reduced VAT rate of 14% applied to certain goods and services will be lowered to 13.5%.

The change applies to foodstuffs, restaurant and catering services, animal feed, passenger transport, accommodation services, guest marina services, medicines, as well as menstrual products, incontinence products and babies’ nappies.

The change also affects culture and sport, including books, sports and exercise services, admission to cultural events and venues, sporting events, use of sports facilities, performances by performing artists, athletes or other public performers, imported works of art, works of art sold by the creator or an occasional seller, and copyright-related compensation received by organizations representing copyright holders.

When the reduced VAT rate is lowered, the applicable tax rate for the sale of goods and services is determined by when the goods are delivered or the service is provided.

For goods, the time of delivery, i.e., when the goods are handed over to the buyer, generally determines the VAT rate.

For services, the decisive factor is usually the time at which the service is performed, i.e., when the service is available to the buyer.

An advance payment means a payment received by the seller before the goods have been delivered or the service performed. When the VAT rate changes, the decisive factor in advance payment is when the funds are available to the seller. If the advance payment has been received before the legislative change enters into force, the law in force at the time of receipt applies.

New authority to begin operations

The new Finnish Supervisory Agency (LVV) will begin operations at the start of 2026. Its remit includes tasks related to social and healthcare services, environmental administration, occupational safety and health, rescue services and preparedness, as well as education and early childhood education.

All duties currently carried out by Valvira, most of the duties of the Regional State Administrative Agencies, and the majority of the environmental and natural resources responsibilities of the Centres for Economic Development, Transport and the Environment (ELY Centres) will be transferred to the new authority. The operations of Valvira, the Regional State Administrative Agencies and the ELY Centres will end on 31 Dec. 2025.

Ten regional vibrancy centres will be established to replace the current ELY Centres.

The new authority will have offices in 18 localities and a staff of approximately 2,000.

New loans added to credit register

Since 1 Dec., lenders have begun reporting loans granted to sole traders, farmers and forestry owners to the positive credit register. Previously, only consumer credit and comparable loans had been reported to the positive credit register, which was introduced in April 2024.

The information can be used immediately in consumer lending once it has been reported to the register. For example, if a sole trader applies for a car loan, mortgage or credit card after 1 Dec., the lender will also see loans related to the applicant’s business activity on the credit register extract, provided they have been reported.

From next April onwards, lenders may also use information on new loans in business lending, provided they have applied for and been granted a data permit. Business lending includes situations where a sole trader makes purchases for business purposes or where a farmer acquires equipment for their operations.

If sole traders or farmers or forestry owners have no loans granted for business, agricultural or forestry activity, the change taking effect in early December does not affect their current situation.

Trade Register notifications to be filed electronically

From 1 Jan. 2026, all company forms except sole traders must submit notifications and applications to the Trade Register electronically.

Mandatory electronic filing applies, among other things, to company registrations, change and cessation notifications, applications and financial statements.

The Patent and Registration Office (PRH) says mandatory electronic filing is based on amendments to the Trade Register Act and the Business Information Act.

Changes in taxation

Taxation of earned income will be reduced, with the highest marginal tax rates for wage earners reduced from around 59% to approximately 52%. In addition, incentives for work among families with children will be strengthened by increasing the child-related increment of the earned income deduction by €55, raising it to €105 per jointly raised child and €210 per child in single-parent households.

The withholding tax regime for key employees will be eased and expanded. The withholding tax rate for key employees coming to work in Finland will be lowered from 32% to 25%, and the scope of the legislation will be extended to Finnish citizens returning to Finland. For Finnish citizens, the maximum period of application will be 60 months.

The tax exemption for employer-provided bicycles will be abolished. The change applies from 2026 onwards to bicycle benefits agreed between employer and employee on or after 24 Apr. 2025. Bicycle benefits agreed before that date will remain subject to the current rules until the end of the contractual period, but for no longer than five years from the introduction of the benefit.

The home office deduction from earned income will be abolished. Costs related to a dwelling or holiday home used by the taxpayer or their family are not deductible expenses incurred in earning or maintaining earned income. For income other than earned income taxed under the Income Tax Act, taxpayers may deduct for such premises the amount of the home office deduction determined by the Finnish Tax Administration.

Employer-paid legal advice costs for employees will be made tax-exempt. The amendment to the Income Tax Act applies not only to criminal cases, but also to civil disputes and the imposition of administrative sanctions.

Labour market organization membership fees will no longer be deductible against taxation. Membership fees of organizations whose rules allow objectives related to labour market activities will no longer be deductible. The removal of the deduction applies to both employee and employer organizations.

The tax treatment of bonuses in the financial sector will change. Customer bonuses, rebates, discounts or other monetary benefits based on a customer relationship will be taxable capital income if they accrue or are determined on the basis of the amount or value of loans, deposits or investments specified in the legislation. However, such benefits will be tax-exempt insofar as they are used for, or relate to, service charges or loan interest determined on the same basis as the benefit accrued.

The tax treatment of shares acquired through share exchanges will change. In share exchanges between related parties, the shares changing ownership will be valued, for the purposes of calculating the acquiring company’s net assets, at their mathematical value prior to the exchange. As of 1 Jan. 2026, this amendment will apply to share exchanges carried out on or after 1 Jan. 2017. For acquisition cost purposes, the shares will be valued at their combined mathematical value prior to the exchange. The amendment relating to acquisition cost will apply to share exchanges carried out on or after 1 Jan. 2026.

Inheritance and gift taxation will be eased. The minimum taxable inheritance threshold will be raised from €20,000 to €30,000, and the minimum taxable gift threshold from €5,000 to €7,500. Interest charged on the payment period for inheritance tax will be reduced to the reference rate plus two percentage points. In addition, the inheritance tax relief for generational transfers will be extended to allow application in cases involving minor heirs.

The forest deduction will be increased. The maximum forest deduction will rise from the current 60% to 75% of capital income from forestry for the tax year. The forest deduction base, i.e., the maximum deductible amount, will also increase from 60% to 75% of the combined acquisition costs of forest properties. The changes will enter into force from the 2026 tax year, meaning that the higher forest deduction can be claimed in the 2026 tax return filed in spring 2027.

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