The Finnish government has agreed on a fiscal plan for 2026-2029 aimed at boosting economic growth. The government has made significant tax proposals, which include reducing income taxes, simplifying taxation, raising gift and inheritance thresholds, and lowering corporate tax rates.1
No official government bills have been presented or approved, making implementation at this stage uncertain.
The Finnish policy changes could have significant implications for global mobility and the fiscal position of companies. Among the proposals are a reduction of the withholding tax for foreign experts and the introduction of tax incentives for citizens returning to Finland, measures that are intended to appeal to skilled professionals and expatriates to Finland, enhancing the country’s talent pool and making it an attractive destination for multinational companies and returning expatriates. Additionally, proposals to lower personal taxes for low- and middle-income earners, along with reduced marginal tax rates, would position Finland as a competitive option for international workers.
On the corporate side, the reduction of the corporate tax rate to 18 percent would potentially encourage investment by increasing after-tax profitability.
These measures collectively aim to attract talent, stimulate economic growth, create jobs, and increase consumer spending, potentially enhancing Finland’s position as a competitive player in the global market.
Currently, Finland's high tax rates can negatively impact companies' ability to attract international talent. For instance, high personal taxes may deter skilled professionals from relocating to Finland, as they might prefer countries with more favourable tax environments. Reducing marginal and foreign expert tax rates would potentially work to make Finland more appealing to high-income earners and international experts.
Looking at non-tax reasons for barriers to enhancing Finland’s appeal to foreign labour and foreign business includes considering the language. The difficulty of the Finnish language can be seen as inhibiting relocation of mobile employees and their family members; however, proposals to increase English-language services could help address this, thereby easing the transition for many expatriates and enhancing Finland's reputation as a welcoming destination.
Even though the threshold for inheritance and gift tax liability is still low compared to many other countries, raising these thresholds offers some financial planning opportunities that could be attractive for expatriates with substantial assets.
While eliminating certain tax deductions may increase taxpayers’ burdens, the impact on simplifying the tax system could make compliance easier for future taxpayers. However, offsetting those that are being eliminated is a proposal to expand household deductions to include movable property repairs, which would provide further tax relief.
The proposed reduction of the corporate tax rate from 20 percent to 18 percent is a strategic move to make Finland more attractive for businesses, as lower taxes can increase after-tax profitability. Additionally, by extending the loss carryforward period to 25 years, Finland is trying to create a more favourable environment for start-ups and businesses with long-term growth strategies, allowing them to offset profits with past losses over a longer period.
Taxpayers who wish to better understand the details of these proposals and what the potential impact to them would be under different scenarios, should they be enacted, are advised to consult with their usual tax professionals or a member of the People Services tax team with KPMG in Finland (see the Contact Us section).
FOOTNOTE:
1 Finnish Ministry of Finance press release, "General Government Fiscal Plan 2026–2029: Orpo Government: Decisions in mid-term policy review session will strengthen Finland’s competitiveness and security." Publication date 23.4.2025. Published in English on 24.4.2025.
Valtionneuvosto Statsradet (in Finnish), "Suomi kasvun tielle: Tehdään Suomesta Euroopan houkuttelevin kohde investoinneille ja kasvulle." ci sapien feugiat egestas.
The information contained in this newsletter was submitted by the KPMG International member firm in Finland.
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