Finnish Government Proposes Corporate Tax Rate Cut and Extended Loss Carry-Forward Period

On 28 April 2026, the Finnish Government published a draft government proposal setting out significant amendments to Finnish corporate tax legislation. The proposal implements a decision taken by Prime Minister Petteri Orpo's Government in the spring 2025 mid-term spending review and would reduce the corporate income tax rate from 20% to 18% and extend the business loss carry-forward period from 10 to 25 years for corporate taxpayers.

The Government proposes reducing the corporate income tax rate from the current 20% to 18%. The rate has stood at 20% since 2014, having been reduced from 24.5% (2012–2013) and 26% (2005–2011).

The reduced rate would apply for the first time to taxation carried out for tax year 2027. In respect of advance tax collection, the act would apply from the date of its entry into force.

Correspondingly, the withholding tax rate applicable to dividends, interest, and royalties paid to non-resident entities would be reduced to 18%. The corporate income tax rate applicable to the Finnish-source income of non-resident entities, including income attributable to a permanent establishment in Finland, would likewise be reduced to 18%.

The Government further proposes extending the business loss carry-forward period for corporate taxpayers from the current 10 years to 25 years. The extension would apply to losses confirmed for tax year 2026 and subsequent tax years. Losses confirmed for tax year 2025 or earlier would remain subject to the current 10-year carry-forward period.

The extended carry-forward period applies only to losses from business activities. Accordingly, losses from agricultural activities, as well as losses incurred by individuals, remain subject to the existing 10-year carry-forward period.

The reduction of the corporate income tax rate to 18% is intended to strengthen the competitiveness of Finnish companies in international markets. Following the change, Finland's nominal corporate income tax rate would fall below the EU and OECD country averages. Finland's effective average tax rate in 2025 was 19.6%, above the EU average of 19.0%, and the reduction to 18% would bring Finland's effective average tax rate down to 17.8%. This would enhance Finland's attractiveness as an investment destination in the context of international tax competition. New investments are also expected to create jobs in Finland, meaning the reform is accordingly anticipated to have a positive effect on employment, particularly in capital-intensive industries. The static revenue impact of the rate reduction is estimated at approximately EUR 832 million.

The extension of the loss carry-forward period will be of particular benefit to companies in R&D-intensive and capital-intensive industries, such as pharmaceuticals and technology start-ups, where long development cycles before commercialisation have meant that the current 10-year period has in practice proved to be insufficient. Approximately EUR 930–1,190 million of business losses currently expire unused in Finland each year. The extended carry-forward period is estimated to reduce corporate tax revenue by approximately EUR 100 million per year over the long term, with the impact accruing gradually from 2037 onwards and reaching full effect from 2051. The proposed 25-year period would also bring Finland closer to the approach taken in most western European EU member states and the other Nordic countries, where Sweden and Norway, for instance, impose no time limit on loss deductions.

The Finnish Ministry of Finance has published the draft government proposal for public consultation, with interested parties invited to submit comments by 25 May 2026. Following the close of the consultation period, the Ministry of Finance will finalise the proposal for submission to the Government, initiating the formal legislative process in Parliament. The proposed laws are intended to enter into force on 1 January 2027.

If you have any questions about the draft proposal and what it could mean for your business, please contact the Borenius Tax team or your regular Borenius contact.