Finland is sometimes perceived as a high-tax country, but that perception misses the deeper story. In reality, the Nordic nation offers a competitive and forward-looking tax environment for companies that value innovation, sustainability, and growth – an environment that also supports social stability.

“Finland’s tax system includes several targeted incentives designed to support companies at every stage of growth,” explains Kaija Laitinen, Senior Advisor, Market Intelligence at Invest in Finland. “It’s about how the system encourages innovation and long-term success.”

To further strengthen its business appeal, the Finnish government has proposed reducing the corporate income tax rate from 20% to 18%, effective January 1, 2027. In addition, the period for carrying forward tax losses will be extended from 10 to 25 years for losses confirmed from the 2026 tax year onward.

These reforms reflect the country’s commitment to creating conditions that support high-growth, innovation-driven companies and business success. As an EU member, Finland also offers access to the single market, backed by a stable regulatory environment and strong rule of law, making it a strategic location for international companies.

Tax incentives that fuel innovation and growth

Companies conducting research and development benefit from a permanent tax incentive that includes a 100% basic deduction and an additional 50% deduction on eligible R&D costs. Laitinen highlights that “if R&D spending increases compared to the previous year, the deductible amount grows further. A 250% super deduction is available for subcontracted R&D services from Finnish universities and research institutes such as VTT.”

Learn more about Business Finland’s R&D funding

Starting in 2026, the withholding tax rate for foreign key employees working in Finland will be reduced from 32% to 25%. This applies under the Act on Key Employees, which allows eligible individuals to benefit from this flat tax rate for a maximum of seven years. There is also a proposed plan to introduce a similar flat tax rate of 25% for up to two years for highly-skilled Finnish citizens returning to Finland. However, this proposal has not yet been confirmed and remains under consideration.

Startups and scale-ups of non-listed companies can offer shares to employees without triggering a taxable benefit, provided the subscription price matches the share’s mathematical value. “This helps attract and retain talent while aligning employee interests with long-term success,” Laitinen notes. Details are available in the Tax Handbook for Startups and International Investors.

Supporting the green transition through tax credits

Finland is leading the way in supporting climate-neutral industrial transformation. Companies making large-scale investments of at least €50 million in clean technologies can apply for a 20% tax credit administered by Business Finland.

Eligible projects include renewable energy production and storage, excluding electricity generation. They also cover low-carbon industrial processes that either reduce greenhouse gas emissions by at least 40% or improve energy efficiency by 20%. In addition, strategic sectors are supported, such as the production of batteries, solar panels, wind turbines, heat pumps, electrolysis equipment, and carbon capture technologies.

“Finland’s corporate tax rate is not as high as people think; it’s competitive, and getting even more attractive with the planned reduction to 18%.”

“The green transition is a business opportunity,” says Laitinen. “Finland’s tax credit for clean investments helps companies grow sustainably while contributing to a climate-neutral future.”

The credit is applied to corporate income tax over 20 years, with a maximum of €150 million per company or group. Projects must comply with the “Do No Significant Harm” (DNSH) principle and be completed within 36 months of approval. Full details and application instructions are available on the Tax Credit for Large Clean Transition Investments page.

A business-friendly tax administration

One of Finland’s most underrated advantages is its advanced and business-friendly tax administration. Companies operating in Finland benefit from a transparent and predictable approach to taxation.

“The Finnish Tax Administration offers binding advance rulings on tax matters, helping businesses avoid surprises. A dedicated team provides free guidance to companies, and the administration emphasizes a modern, pre-emptive approach over traditional retrospective audits,” explains Laitinen.

Finland is also a leader in tax digitalization. In 2025, the Tax Administration and the Ministry of Finance began streamlining payment-related tasks for businesses by reducing bureaucracy and improving efficiency. These improvements will simplify both tax payments and refunds, saving time and costs for companies and accounting firms.

A society that supports business and people

In Finland, taxation is a shared investment in a society that works. The Finnish welfare model makes sure that tax revenue is reinvested into services that directly support both businesses and the people behind them.

Education is free from primary school through to doctoral studies, cultivating a highly skilled and future-ready workforce. Healthcare is accessible and affordable, reducing employer costs while supporting employee wellbeing. Many municipalities offer low-cost daycare, helping families balance work and life.

“Finland’s social infrastructure is a key part of its business appeal,” says Laitinen. “It creates a stable, secure environment where companies can thrive and employees can flourish.”

With one of the most trusted police forces in Europe and a strong rule of law, Finland provides a secure and predictable environment for companies to operate and grow. This foundation of public services creates a business climate built on stability and trust, where professional success and personal well-being go hand in hand.